Concept explainers
Statement of
Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.
Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company.
Cash flow from investing activities: This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company.
Cash flow from financing activities: This section of cash flows statement provides information about the
Non- cash transactions:
The transaction which does not involve any cash dealings is known as non-cash transactions. In these transactions, there will not be any inflow or outflow of cash.
To classify: The given items based on operating, investing, and financing activities.
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Financial accounting
- On January 1, Year 1, Brown Company borrowed cash from First Bank by issuing a $107,000 face-value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $30,879 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $59,000 cash per year. b. Prepare an income statement and balance sheetfor each of the four years. Rent revenue is collected in cash at the end of each year. (Hint: Record the transactions for each year in T-accounts before preparing the financial statements.)arrow_forwardA DI has the following balance sheet (in millions). Assets: Cash=9$ ; Loans=95 ; Securities= 26; total assets=130 Liabilities and equity: deposits= 75; purchased funds= 40; equity=15 ; total liabilites and equity= 130 The DI’s securities portfolio includes $16 million in T-bills and $10 million in GNMA securities. The DI has a $20 million line of credit to borrow in the repo market and $5 million in excess cash reserves (above reserve requirements) with the Fed. The DI currently has borrowed $22 million in Fed funds and $18 million from the Fed discount window to meet seasonal demands. 1) What is the DI’s total available (sources of) liquidity? 2) What is the DI’s current total uses of liquidity? 3) What is the net liquidity of the DI? 4) Calculate the financing gap. 5) What is the financing requirement? 6) The DI expects a net deposit drain of $20 million. Show the DI's balance sheet if the following conditions occur: a. The DI purchases liabilities to offset this expected drain. b.…arrow_forward1. Help me selecting the right answer. Thank youarrow_forward
- Mr. Nailor invests $21,000 in a money market account at his local bank. He receives annual interest of 7% for 6 years. How much return will his investment earn during this time period? Use Appendix A. (Round "FV Factor" to 3 decimal places.) $10,521 $29,205 $31,521 $13,986arrow_forwardOn May 1, Year 1, Benz's Sandwich Shop loaned $12,000 to Mark Henry for one year at 9 percent interest. Required: a. What is Benz's interest income for Year 1? b. What is Benz's total amount of receivables at December 31, Year 1? c. How will the loan and interest be reported on Benz's Year 1 statement of cash flows? d. What is Benz's interest income for Year 2? e. What is the total amount of cash that Benz's will collect in Year 2 from Mark Henry? f. How will the loan and interest be reported on Benz's Year 2 statement of cash flows? g. What is the total amount of interest that Benz's earned on the loan to Mark Henry? Note: For all requirements, round your answers to the nearest dollar amount. a. b. ذان C. e f. f. g. × Answer is not complete. Interest income Receivables Cash used in investing activities Interest income Cash Cash provided by operating activities Cash provided by investing activities Interest earned P ✔ >>arrow_forward! Required information [The following information applies to the questions displayed below.] On January 1, Year 1, Brown Co. borrowed cash from First Bank by issuing a $51,000 face value, four-year term note that had an 7 percent annual interest rate. The note is to be repaid by making annual cash payments of $15,057 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $27,540 cash per year. Required a. Prepare an amortization schedule for the four-year period. (Round your answers to the nearest whole dollar amount.) Year Year 1 Year 2 Year 3 Year 4 Principal Balance on January 1 BROWN CO. Amortization Schedule Applied to Interest Cash Payments December 31 Applied to Principal Principal Balance End of Periodarrow_forward
- NYJ, Inc. borrowed $500,000 on November 1, 20X1, and signed a nine-month note bearing interest at 8%. Principal and interest are payable in full at maturity. In connection with this note, NYJ, Inc. should record interest expense in 20X2 in the amount of: Select one: a. $15,000 b. $20,000 c. $17,500 d. $30,000 e. $23,333arrow_forwardOn January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $42,000 face value, four-year term note that had an 6 percent annual interest rate. The note is to be repaid by making annual cash payments of $12,121 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $22,260 cash per year. Prepare an income statement, a balance sheet, and a statement of cash flows for each of the four years.arrow_forwardWare Co. produces and sells motorcycle parts. On the first day of its fiscal year, Ware issued $29,000,000 of five-year, 13% bonds at a market (effective) interest rate of 10%, with interest payable semiannually. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Compute the following: The amount of cash proceeds from the sale of the bonds. Round your answer to the nearest dollar. $ fill in the blank 2 The amount of premium to be amortized for the first semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. $ fill in the blank 3 The amount of premium to be amortized for the second semiannual interest payment period, using the interest method. Round your answer to the nearest dollar. $ fill in the blank 4 The amount of the bond interest expense for the first year. Round your answer to the nearest…arrow_forward
- year (ending on September 26, 2020): Borrowed $18,277 from banks due in two years. Purchased additional investments for $21,900 cash; one-fifth were long term and the rest were short term. Purchased property, plant, and equipment; paid $9,581 in cash and signed a short-term note for $1,420. Issued additional shares of common stock for $1,479 in cash; total par value was $1 and the rest was in excess of par value. Sold short-term investments costing $19,019 for $19,019 cash. Declared $11,135 in dividends to be paid at the beginning of the next fiscal year. 1. Prepare a classified balance sheet for Orange at September 26, 2020, based on these transactions. Note: Enter your answers in millions.arrow_forwardRequired information [The following information applies to the questions displayed below.] On January 1, 2018, Brown Co. borrowed cash from First Bank by issuing a $100,000 face value, four-year term note that had an 8 percent annual interest rate. The note is to be repaid by making annual cash payments of $30,192 that include both interest and principal on December 31 of each year. Brown used the proceeds from the loan to purchase land that generated rental revenues of $52,000 cash per year. Required a. Prepare an amortization schedule for the four-year period. (Round your answers to the nearest whole dollar amount.) BROWN CO. Amortization Schedule Principal Balance on January 1 Principal Balance End Cash Applied to Interest Applied to Principal Year Payments December 31 of Period 2018 2019 2020 2021arrow_forwardMoonstone Company reported the following information at year-end: *Government treasury bills of P2,500,000, purchased on December 31 at which time they had two months to go until maturity. *Cash of P5,000,000 in the form of coin, currency and savings account. *Commercial papers of P1,500,000 with term on 9 months but purchased on Dec. 31 at which time they had three months to go until maturity. *Share investments of P500,000 that are very actively traded in stock market. What total amount should be reported as “cash”?arrow_forward
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