2811422519

2811422519 - Chapter 12 The Statement of Cash Flows Check...

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Unformatted text preview: Chapter 12 The Statement of Cash Flows Check Points (10 min.) CP 12-1 The statement of cash flows helps investors and creditors: a. Predict future cash flows by reporting past cash receipts and payments, which are reasonably good predictors of future cash receipts and disbursements. b. Evaluate management decisions by reporting on how managers got cash and how they used cash to run the business. Chapter 12 The Statement of Cash Flows 37 (5-10 min.) CP 12-2 Four things that could cause operating cash flows to be negative (under the indirect method) are: 1. Net loss 2. A large gain on the sale of assets 3. Increases in current assets other than cash 4. Decreases in current liabilitites Students need to identify only three items. (5-10 min.) CP 12-3 Cash flows from operating activities: Net income.. $65,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation... 9,000 Gain on sale of land. (4,000) Increase in accounts receivable, inventory, and prepaid expenses ($78,000 $65,000)... (13,000) Decrease in current liabilities ($42,000 $40,000). (2,000 ) Net cash provided by operating activities:... $55,000 Financial Accounting 6/e Solutions Manual 38 (10 min.) CP 12-4 O+ a. Increase in accounts O+ h. Loss on sale of land payable O+ i. Depreciation expense N b. Sales revenue O j. Increase in inventory F c. Payment of dividends O+ k. Decrease in prepaid O d. Decrease in accrued expense liabilities O+ l. Decrease in accounts F e. Issuance of common receivable stock I m. Purchase of O f. Gain on sale of equipment building N n. Collection of cash N g. Retained earnings from customers (10 min.) CP 12-5 Wohlgemuth, Inc. Statement of Cash Flows (partial) Year ended June 30, 20X5 Cash flows from operating activities: Net income.. $ 60,000* Adjustments to reconcile net income to net cash provided by operating activities: Depreciation... $ 8,000 Increase in current assets other than cash. (30,000) Decrease in current liabilities (5,000 ) (27,000 ) Net cash provided by operating activities.. $ 33,000 _____ *$203,000 $100,000 $35,000 $8,000 = $60,000 Chapter 12 The Statement of Cash Flows 39 (15 min.) CP 12-6 Wohlgemuth, Inc. Statement of Cash Flows Year ended June 30, 20X5 Cash flows from operating activities: Net income.. $60,000* Adjustments to reconcile net income to net cash provided by operating activities: Depreciation... $ 8,000 Increase in current assets other than cash. (30,000) Decrease in current liabilities (5,000 ) (27,000 ) Net cash provided by operating activities..Net cash provided by operating activities....
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2811422519 - Chapter 12 The Statement of Cash Flows Check...

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