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# AddEx LO5 - Chapter 12 The Statement of Cash Flows 12-1...

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© 2008 Nelson, a division of Thomson Canada Limited. Chapter 12 The Statement of Cash Flows 12-1 EXERCISE 12-7 DETERMINATION OF MISSING AMOUNTS—CASH FLOW FROM OPERATING ACTIVITIES LO 4 Case 1: Accounts Receivable, Net Beginning balance 150,000 Credit sales 175,000 X = Cash collections Ending balance 65,000 \$150,000 + \$175,000 – X = \$65,000 X = \$260,000 \$260,000 + \$60,000 (Cash sales) = \$320,000 . Case 2: Inventory Beginning balance 80,000 X = Purchases 175,000 Cost of goods sold expense Ending balance 55,000 \$80,000 + X – \$175,000 = \$55,000 X = \$150,000 . Accounts Payable 25,000 Beginning balance X = Cash payments 150,000 Purchases 15,000 Ending balance \$25,000 + \$150,000 – X = \$15,000 X = \$160,000 .

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© 2008 Nelson, a division of Thomson Canada Limited. Chapter 12 The Statement of Cash Flows 12-2 Case 3: Prepaid Insurance Beginning balance 17,000 X = Cash payments 15,000 Insurance expense Ending balance 20,000 \$17,000 + X – \$15,000 = \$20,000 X = \$18,000 . Case 4: Income Taxes Payable 95,000 Beginning balance X = Cash payments 300,000 Tax expense 115,000 Ending balance \$95,000 + \$300,000 – X = \$115,000 X = \$280,000 .
© 2008 Nelson, a division of Thomson Canada Limited. Chapter 12 The Statement of Cash Flows 12-3 PROBLEM 12-2 STATEMENT OF CASH FLOWS—INDIRECT METHOD LO 4 Changes in account balances and explanations (in thousands of dollars): Net Change Dr. (Cr.) Explanation Cash (38) Accounts receivable 50 Inventory 30 Prepaid insurance (10) Land 150 Purchase ( c ) Plant and equipment 200 Purchase ( c ) Accumulated depreciation (50)

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