BRIEF EXERCISE 5 12Cash Flow Statement Operating Activities Net income 40000

Brief exercise 5 12cash flow statement operating

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BRIEF EXERCISE 5-12 Cash Flow Statement Operating Activities       Net income ............................................................ $40,000       Depreciation expense .......................................... $  4,000       Increase in accounts receivable ......................... (10,000)       Increase in accounts payable .............................     7,000     1,000             Net cash provided by operating activities...   41,000 Investing Activities       Purchase of equipment ....................................... (8,000) Financing Activities       Issue notes payable ............................................. $20,000       Property dividends ..............................................    (5,000 )             Net cash flow from financing activities .......   15,000 Net increase in cash ($41,000 – $8,000 +  $15,000) ....................................................................... $48,000 Free Cash Flow = $41,000 (Net cash provided by operating activities) – $8,000 (Purchase of equipment) – $5,000 (Dividends) = $28,000. BRIEF EXERCISE 5-13 Cash flows from operating activities       Net income ............................................................ $151,000       Adjustments to reconcile net income to           net cash provided by operating activities             Depreciation expense .................................... $44,000             Increase in accounts payable ....................... 9,500             Increase in accounts receivable ...................   (13,000 )     40,500       Net cash provided by operating activities ......... $191,500 BRIEF EXERCISE 5-14 Sale of land and building .......................................... $191,000 Purchase of land ........................................................ (37,000) Purchase of equipment .............................................       (53,000 )       Net cash provided by investing activities ......... $101,000
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BRIEF EXERCISE 5-15 Issuance of common stock ....................................... $147,000 Purchase of treasury stock ....................................... (40,000) Payment of cash dividend ......................................... (95,000) Retirement of bonds ..................................................  (100,000 )       Net cash used by financing activities ................ $ (88,000 ) BRIEF EXERCISE 5-16 Free Cash Flow Analysis Net cash provided by operating activities ............... $400,000 Purchase of equipment ................................. (53,000)   Purchase of land* .......................................... (37,000) Dividends .......................................................    (95,000 ) Free cash flow ............................................................ $215,000 *If the land were purchased as an investment, it would be excluded in the computation of free cash flow. EXERCISE 5-8 (10–15 minutes) 1. Dividends payable of $2,375,000 will be reported as a current liability [(1,000,000 – 50,000) X $2.50]. 2. Bonds   payable   of   $25,000,000   and   interest   payable   of   $3,000,000 ($100,000,000 X 12% X 3/12) will be reported as a current liability. Bonds payable of $75,000,000 will be reported as a long-term liability. 3. Customer advances of $17,000,000 will be reported as a current liability ($12,000,000 + $30,000,000 – $25,000,000).
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  • Spring '14
  • JoyceA.Hicks
  • Accounting, ........., Doubtful Accounts, CASH  FLOW

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