Statement of cash flows 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. Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities . Deduct increase in current assets. Deduct decrease in current liabilities. Add decrease in current assets. Add the increase in current liability. Add depreciation expense and amortization expense. Add loss on sale of plant assets. Less gain on sale of plant assets. To determine: the amount of net cash provided by operating activities of Incorporation A.

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Answer 1

Question

Chapter 12, Problem 12.1EYCT

(a)

To determine

Statement of cash flows

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets.

Deduct decrease in current liabilities.

Add decrease in current assets.

Add the increase in current liability.

Add depreciation expense and amortization expense.

Add loss on sale of plant assets.

Less gain on sale of plant assets.

To determine: the amount of net cash provided by operating activities of Incorporation A.

(b)

To determine

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

(c)

To determine

the method of computing net cash provided by operating activities of Incorporation A.

(d)

To determine

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

(e)

To determine

the amount of net cash used by investing activities of Incorporation A.

(f)

To determine

the amount of interest paid and amount of income taxes paid of Incorporation A.

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Baltimore Corporation has eight million shares outstanding, generates free cash flows of $60 million each year, and has a cost of capital of 10%. It also has $40 million of cash on hand. Baltimore wants to decide whether to repurchase stock or invest the cash in a project that generates free cash flows of $5 million each year. Should Baltimore invest or repurchase the shares? (A) Repurchase (B) Invest (C) Indifferent between options (D) Cannot say for sure

Answer 2

Question

Chapter 12, Problem 12.1EYCT

(a)

To determine

Statement of cash flows

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets.

Deduct decrease in current liabilities.

Add decrease in current assets.

Add the increase in current liability.

Add depreciation expense and amortization expense.

Add loss on sale of plant assets.

Less gain on sale of plant assets.

To determine: the amount of net cash provided by operating activities of Incorporation A.

(b)

To determine

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

(c)

To determine

the method of computing net cash provided by operating activities of Incorporation A.

(d)

To determine

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

(e)

To determine

the amount of net cash used by investing activities of Incorporation A.

(f)

To determine

the amount of interest paid and amount of income taxes paid of Incorporation A.

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Answer 3

Question

Chapter 12, Problem 12.1EYCT

(a)

To determine

Statement of cash flows

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets.

Deduct decrease in current liabilities.

Add decrease in current assets.

Add the increase in current liability.

Add depreciation expense and amortization expense.

Add loss on sale of plant assets.

Less gain on sale of plant assets.

To determine: the amount of net cash provided by operating activities of Incorporation A.

(b)

To determine

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

(c)

To determine

the method of computing net cash provided by operating activities of Incorporation A.

(d)

To determine

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

(e)

To determine

the amount of net cash used by investing activities of Incorporation A.

(f)

To determine

the amount of interest paid and amount of income taxes paid of Incorporation A.

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Answer 4

Question

Chapter 12, Problem 12.1EYCT

(a)

To determine

Statement of cash flows

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets.

Deduct decrease in current liabilities.

Add decrease in current assets.

Add the increase in current liability.

Add depreciation expense and amortization expense.

Add loss on sale of plant assets.

Less gain on sale of plant assets.

To determine: the amount of net cash provided by operating activities of Incorporation A.

(b)

To determine

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

(c)

To determine

the method of computing net cash provided by operating activities of Incorporation A.

(d)

To determine

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

(e)

To determine

the amount of net cash used by investing activities of Incorporation A.

(f)

To determine

the amount of interest paid and amount of income taxes paid of Incorporation A.

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Answer 5

Chapter 12, Problem 12.1EYCT

(a)

To determine

Statement of cash flows

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets.

Deduct decrease in current liabilities.

Add decrease in current assets.

Add the increase in current liability.

Add depreciation expense and amortization expense.

Add loss on sale of plant assets.

Less gain on sale of plant assets.

To determine: the amount of net cash provided by operating activities of Incorporation A.

(b)

To determine

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

(c)

To determine

the method of computing net cash provided by operating activities of Incorporation A.

(d)

To determine

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

(e)

To determine

the amount of net cash used by investing activities of Incorporation A.

(f)

To determine

the amount of interest paid and amount of income taxes paid of Incorporation A.

Answer 6

Chapter 12, Problem 12.1EYCT

(a)

To determine

Statement of cash flows

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets.

Deduct decrease in current liabilities.

Add decrease in current assets.

Add the increase in current liability.

Add depreciation expense and amortization expense.

Add loss on sale of plant assets.

Less gain on sale of plant assets.

To determine: the amount of net cash provided by operating activities of Incorporation A.

Answer 7

Chapter 12, Problem 12.1EYCT

(a)

To determine

Statement of cash flows

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets.

Deduct decrease in current liabilities.

Add decrease in current assets.

Add the increase in current liability.

Add depreciation expense and amortization expense.

Add loss on sale of plant assets.

Less gain on sale of plant assets.

To determine: the amount of net cash provided by operating activities of Incorporation A.

Answer 8

(b)

To determine

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

Answer 9

(b)

To determine

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

Answer 10

(c)

To determine

the method of computing net cash provided by operating activities of Incorporation A.

Answer 11

(c)

To determine

the method of computing net cash provided by operating activities of Incorporation A.

Answer 12

(d)

To determine

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

Answer 13

(d)

To determine

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

Answer 14

(e)

To determine

the amount of net cash used by investing activities of Incorporation A.

Answer 15

(e)

To determine

the amount of net cash used by investing activities of Incorporation A.

Answer 16

(f)

To determine

the amount of interest paid and amount of income taxes paid of Incorporation A.

Answer 17

(f)

To determine

the amount of interest paid and amount of income taxes paid of Incorporation A.

Answer 18

Expert Solution & Answer

Answer 19

Expert Solution & Answer

Answer 20

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Answer 21

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - Prob. 4Q Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Why is it necessary to use comparative balance...Ch. 12 - Prob. 8Q Ch. 12 - Prob. 9Q Ch. 12 - Prob. 10Q

Solution Summary: The author explains how Incorporation A uses the "Indirect method" for computing the net cash provided by operating activities.

the amount of amount of increase or decrease in cash and cash equivalents of Incorporation A.

the method of computing net cash provided by operating activities of Incorporation A.

the amount of increase or decrease in Accounts receivable, inventory and accounts payable.

the amount of net cash used by investing activities of Incorporation A.

the amount of interest paid and amount of income taxes paid of Incorporation A.

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Chapter 12 Solutions