27400-business-cash flow (1)

27400-business-cash flow (1) - PROJECT #3 FINANCIAL...

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PROJECT #3 FINANCIAL ACCOUNTING FALL 2004 3) Also discuss the merits of using the direct method versus the indirect method of preparation 2) Write 350-500 word paper discussing how the different sections of the Statement of Cash Flows assist different sets of users.
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Balance Sheet 31-Jan 28-Feb Current Assets CASH $37,000 $42,000 ACCOUNTS RECEIVABLES $53,000 $64,000 INVENTORIES $94,000 $81,000 $184,000 $187,000 Plant and Equipment Production Equipment $152,000 $166,000 Less ACCUM. DEPRECIATION $(21,000) $(24,000) $131,000 $142,000 Total Assets $315,000 $329,000 Current Liabilities Short term debt $44,000 $44,000 ACCOUNTS PAYABLE $41,000 $37,000 OTHER Accrued LIABILITIES $24,000 $21,000 $109,000 $102,000 Long term debt $46,000 $33,000 Total Liabilities $155,000 $135,000 Owner's Equity COMMON STOCK $96,000 $104,000 RETAINED EARNINGS $64,000 $90,000 Total Owner's Equity $160,000 $194,000 Total Liabilities and Owner's equity $315,000 $329,000 Statement of Cash Flow Step 1 Net income from operations Total Net Income= $36,000 Therefore Net Income from operations $36,000 Step 2 Calculate depreciation for the year Accumulated depreciation for the prior month= $21,000 Accumulated depreciation for the cur ent month= $24,000 Therefore depreciation for the year= $3,000 Step 3 : Statement of Cash Flow Cash flow from operating activities Net Income from operations $36,000 $3,000 $39,000 $(5,000) $34,000 Cash flow from investing activities Purchase of equipment $(14,000) =166000-152000 $(14,000) Cash flow from financing activities Issue of additional stock $8,000 =104000-96000 Less Retiring of long term debt $(13,000) =46000-33000 Less Payment of cash dividends $(10,000) $(15,000) Net increase in cash $5,000 =34000-14000-15000 Cash at the end of cur ent year
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This note was uploaded on 01/24/2012 for the course ACCT 514A taught by Professor Mcdanel during the Spring '11 term at Indiana Wesleyan.

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27400-business-cash flow (1) - PROJECT #3 FINANCIAL...

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