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Chap013 Probs - Chapter 13 Statement of Cash Flows Chapter...

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Chapter 13 - Statement of Cash Flows Chapter 13 Statement of Cash Flows EXERCISES E13–1. F 1. Dividends paid F 2. Repayments of long-term debt O 3. Depreciation and amortization F 4. Proceeds from issuance of common stock to employees O 5. [Change in] Accounts payable and accrued expenses NA 6. Cash collections from customers F 7. Net repayments of notes payable to banks O 8. Net income I 9. Payments to acquire property and equipment O 10.[Change in] Inventory E13–7. Req. 1 Cash flows from operating activities—indirect method Net loss ...................................................................................................... ($4,900) Depreciation expense ................................................................................ 7,000 Amortization of copyrights ......................................................................... 200 Accounts receivable decrease ($8,000 – $15,000) .................................. 7,000 Salaries payable increase ($15,000 – $1,000) ......................................... 14,000 Other accrued liabilities decrease ($1,000 – $5,100) ............................... (4,100) Net cash provided by operating activities ............................................ $19,200 Req. 2 The first reason for the net loss was the depreciation expense. This is a non-cash expense. Depreciation expense, along with decreased working capital requirements (current assets - current liabilities), turned the net loss into positive operating cash flow from operations. The reasons for the difference between net income and cash flow are important because they help the financial analyst determine if the trends are sustainable or whether they represent one-time events. 13-1
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Chapter 13 - Statement of Cash Flows E13–14. Req. 1 Cash flows from operating activities—indirect method Net income ................................................................................................. $5,142 Depreciation and amortization ................................................................... 1,543 Increase in accounts receivable ................................................................ (549) Increase in inventory ................................................................................. (345) Increase in prepaid expense ..................................................................... (68) Increase in accounts payable .................................................................... 718 Decrease in taxes payable ........................................................................ (180)
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