\hline \text { Anthony Lucas } & \text { Wide receiver } & 194 & 4.51 & 6.9 \\ 4. When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating cash flow except: The acquisition of assets by assuming directly related liabilities. The bill will not be paid until early January 2013, and no entry is recorded when the bill is received. 3. - Information about all investing and financing activities of an entity during a period that affect recognized assets or liabilities but that do not result in cash receipts or cash payments in the period shall be disclosed. Instructions1. Ford Company reports depreciation expense of $48,000 for Year 2. Must be presented using the direct method of disclosure. \hline \text { Tutan Reyes } & \text { Offensive tackle } & 299 & 5.35 & 6.1 \\ Cash flows from financing activities. Jordan's net income for the year ended December 31, Year 2 was $192,000. Used in investing activities$(13,400) Cash comprises cash on hand (e.g. 30,000 decrease iv. \hline \text { Jerry Porter } & \text { Wide receiver } & 221 & 4.55 & 7.4 \\ Depending on your business and how well it performs, debt can be cheaper than equity, but the opposite is also true. What if your company hits hard times or the economy, once again, experiences a meltdown? $25,000 How does sea level rise cause coastal erosion? The indirect method reconciles net income to net operating cash flow. A reconciliation of ending retained earnings to net cash flow from operations. Increase in A/R (29,000) Explanation Balance at the end of the period. Zero. Kelli Company acquired land by assuming a mortgage for the full acquisition cost. -Decrease in merchandise inventory. It depends if the acquiring company is public or private. Multiple Choice The receipt of dividends, however, is generally considered a cash inflow from an operating activity. With no addition or subtraction. Multiple Choice Increase in merchandise inventory (3,850) Sale of property, plant, and equipment. Investing activities include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets, that is, assets held for or used in the production of goods or services (other than the materials held in inventory). Operating section is the only difference A statement of cash flows is required as part of a full set of financial statements of all business and not-for-profit entities. $120,000 Calculate the net cash provided or used by operating activities. 4. A company is preparing its year-end cash flow statement using the indirect method. A company's income statement showed the following: net income, $127,000; depreciation expense, $36,500; and gain on sale of plant assets, $10,500. Purchase Acquisition: An accounting method used in mergers and acquisitions with which the purchasing company treats the target firm as an investment, adding the target's assets to its own fair . \text{Sales Returns and Allowances} & 22,500\\ Interest paid on bank loan Gain on sale of plant assets (8,000) Cash flows from financing activities. \hline \text { Michael Thompson } & \text { Offensive tackle } & 287 & 5.05 & 6.8 \\ The following selected information is available for Ford Company from its comparative balance sheet. 2. Each circumstance is different. )}\\ The choice often depends upon which source of funding is most easily accessible for the company, its cash flow, and how important maintaining control of the company is to its principal owners. $150,000 \hline \text { Sylvester Morris } & \text { Wide receiver } & 216 & 4.59 & 8.3 \\ It depends. Internal Revenue Service. Which one you need depends on your business goals, tolerance for risk, and need for control. \hline \text { Peter Warrick } & \text { Wide receiver } & 194 & 4.53 & 9 \\ \hline \text { Ryan Johanningmeir } & \text { Guard } & 310 & 5.28 & 6 \\ Change from straight-line to accelerated depreciation. $50 $156,200. Statement of cash flows. \hline \text { Todd Pinkston } & \text { Wide receiver } & 169 & 4.37 & 7 \\ Obtaining an asset by entering into a capital lease; Reverse noncash charges deducted from net income. A stock dividend declared during the year. Investing activities include (1) making and collecting loans; (2) acquiring and disposing of debt or equity instruments; and (3) acquiring and disposing of property, plant, and equipment and other productive assets (but not materials in inventory) held for or used in the production of goods and services. Journalize the entries to record the following:}\\ Which of the following items is included in the financing activities section of the statement of cash flows? $15,000 Debt financing can be riskier if you are not profitable as there will be loan pressure from your lenders. $500,000 What are the underlying dimensions of the Kilmann-Saxton Culture-Gap Survey? \hline \text { Damion McIntosh } & \text { Guard } & 328 & 5.31 & 5.3 \\ \hspace{23pt}\text{b. Which one of the following should be classified as a cash flow from an operating activity on the statement of cash flows? What other financial statement should be considered, and why? Increase in accounts payable 7,950 - Interest paid On July 1, 2016, Merideth Industries Inc. issued $28,500,000 of 10-year, 8% bond at a market (effective) interest rate of 9%, receiving cash of$26,646,292. $(140,000) These expenditures include (1) cash payments for property, plant, and equipment; (2) other long-lived assets; (3) equity and debt instruments held for investment purposes; and (4) cash advances and loans made to other parties. Use the key terms from the list below to complete the sentences that follow. Debt financing sometimes comes with restrictions on the company's activities that may prevent it from taking advantage of opportunities outside the realm of its core business. Which of the following items is reported on the statement of cash flows under financing activities? Financing. -Source of cash used for plant expansion. $82,600. Cash payments to acquire equity or debt instruments of other enterprises and interest in join venture (current and long-term investments) 4. Explanation \hline \text { Manula Savea } & \text { Guard } & 308 & 5.32 & 6.1 \\ Question 18 An example of a cash outflow from operating activities is loans made by the company to other parties. The interest payment on June 30, 2017, and the amortization of the bond discount, us-}\\ Year 1 Multiple Choice View full document. factorsofproductione.humancapitalf.opportunitycostg.scarcityh.servicesi.utilityj.value. Personal loans, usually from a family or friend, Listing on an exchange with an initial public offering (IPO). $149,400. \hline \text { Bobby Williams } & \text { Offensive tackle } & 332 & 5.26 & 6.8 \\ Payment of cash dividend to the shareholders. Mortgage repayment $17,600. At the end of the lease term, Bulls expects the residual value of the asset to be$12,000, and this amount is guaranteed by a third party. The loan must be paid back in three years. Gain on sale of plant asset. Finally, although you may be a limited liability company (LLC)or other business entity that provides some separation between the company and personal funds, the lender may still require you to guarantee the loan with your family'sfinancial assets. Starts with net income and reconciles it. "Resources.". Investopedia requires writers to use primary sources to support their work. $(140,000) (Round to the nearest dollar. In acquisitions, buyers usually pay the seller with cold, hard cash. -Another name for the statement of financial position. Next, the interest you pay is tax-deductible. Which of the following cash flows per share should be reported in a statement of cash flows? Why is the Arabian Peninsula considered one of the most strategically important regions in the world? $145,800. True. Retained earnings 695,000 588,300 Since there are no required monthly payments associated with equity financing, the company has more capital available to invest in growing the business. \hline \text { Greg Robinson-Ran } & \text { Offensive tackle } & 333 & 5.59 & 6 \\ \hline \text { Trevor Gaylor } & \text { Wide receiver } & 199 & 4.57 & 6.2 \\ During the current year, Beck Co. purchased equipment for cash of $47,000, and sold equipment with a $10,000 carrying amount for a gain of $5,000. The shareholders make gain from such holdings in the form of returns or increase in stock value. See Page 1. Debt financing involves borrowing money and paying it back with interest. Common Stock, $5 par 50,700 Equity activities. $300 Paid-in capital in excess of par Payments to acquire long-term investments. 200 Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. \text{Store Supplies Expense} & 4,928\\ Noncash financing and investing activity. Purchase of inventory In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for, In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from. Debt is a bet on your futureability to payback the loan. Determinethetotalinterestexpensefor2016. Increase in accounts receivable. )}\\ c. Payments at the time of purchase or soon before or after purchase to acquire property, plant, and equipment and other productive assets -Schedule of noncash investing or financing activity. $85,000. Ace prepares its statement of cash flows using the indirect method. - Other operating cash receipts Cash payments include; i) payments to acquire fixed assets ii) payments to acquire investments in subsidiary net of balances of cash and cash equivalents acquired iii) payments to acquire investments in other entities iv) loans made and payments to acquire debt of other entities. $150,000. The contract stipulates a lease term of 5 years, with equal annual rental payments of $4,523 at the end of each year. Multiple Choice -Decrease in income taxes payable. Which of the following should be disclosed as supplemental information in the statement of cash flows? Cash Outflows: Cash payments to acquire materials for manufacture or goods for resale. $507,000 $456,300 Sale of property, plant, and equipment. The equity securities are sold on January 1, 2022 at P42. $106,400. Compute the cash paid for dividends during Year 2. Operating. Information necessary to prepare the year-end adjusting entries appears below. If the direct method is used, a reconciliation of net income and net cash flows from operating activities is required to be provided in a separate schedule. David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. \text{Freight-In} & 20,156\\ \hspace{23pt}\text{contract rate is less than the market rate of interest? \hspace{23pt}\text{ing the straight-libe method. Ability of the company to generate profit. a. Investing activity. Operating cash inflows. $12,700. Operating. No reconciliation should be provided. payments to acquire treasury stock. Cash inflows from investing activities b. An issuance of equity securities to retire debt. $192,000. Cash inflow of $15,000 and cash outflow of $47,000. Financing activity. 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