DEVRY-FI504-WK6-Module-1 - FI504 (Accounting & Finance)...

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Week-6 Module (Statement of Cash Flows) Module 6.1(Statement of Cash Flows) Pretest: Under the cash basis accounting, revenues are recorded when cash is received and expenses are recorded when paid A-1: (Cash Basis Net Income) CBNI = Credit Sales – Remaining in A/R – Paid Expenses – PPD Rent = $200,000 - $15,000 - $105,000 - $1,000 = $xx,xxx Note: Accrued salaries and interest expenses are not yet paid and depreciation expense is a non-cash expenses and are not included in the cash basis net income for 2008 B-1: (Operating Activities) Change in cash = Net income + Change in depreciation + decrease in A/R – increase in inventory – increase in PPF Expenses – decrease in A/P + increase in Salaries Payable = $55,000 + 12,000 + 3,000 - $14,000 - $4,000 - $8,000 + $2,000 = $xx,xxx B-2: Cash flows from Operating Activities = Net Income + change in depreciation – increase in A/R + decrease in inventory + increase in A/P = $10,000 + $2,000 - $1,000 + 1,000 + $2,000 = $xx,xxx C-1: (Investing Activities) Decrease in Non-Current Assets + Increase in Non-Current Assets _ Decrease in Investment Accounts + Increase in Investment Accounts – = Change in cash due to Investing Activities = (44,000) C-2: Decrease in Non-Current Assets + Increase in Non-Current Assets _ Decrease in Investment Accounts + Increase in Investment Accounts – 1 | P a g e
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= Change in cash due to Investing Activities = (4,000) D-1: (Financing Activities) Change in Cash due to Financing Activities = Decrease in N/P + Increase in B/P + Increase in CS - Dividends Paid = -$7,000 + $20,000 + $30,000 - $7,000 = $xx,xxx D-2: Change in Cash due to Financing Activities = Decrease in N/P + Increase in B/P + Increase in CS - Dividends Paid = -$6,000 + $1,000 + $3,000 = $x,xxx E-1: (Overall Change in Cash): A/R increase ($5,000) Inventory decrease 8,000 Office supplies decrease 2,000 Other CA increase (7,000) Fixed Assets increase (20,000) A/P decrease (15,000) Bonds Payable (B/P) decrease (25,000) Accrued expense increase 2,000 CS increase 5,000 Net Income 75,000 Dividends paid (12,000) Overall change in cash $8,000 E-2: A/R increase $5,000 Supplies increase (1,000) Inventory increase (3,000) PPD Rent increase 2,000 Fixed Assets increase (18,000) Depreciation increase 4,000 A/P increase 3,000 Accrued expense decrease
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This note was uploaded on 08/12/2011 for the course ACCT 505 taught by Professor Doe during the Spring '11 term at Keller Graduate School of Management.

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DEVRY-FI504-WK6-Module-1 - FI504 (Accounting & Finance)...

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