Cash flow statement

Question

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Answer 1

Question

Chapter 12, Problem 19QS

(1)

To determine

To identify: Cash flow statement

(1)

Expert Solution

Explanation of Solution

1

M Company
Statement of Cash Flows
For the Year Ended 31 December, 2018
Particulars	Amount ($)	Amount ($)
Cash flow from operating activities:	10,500
Net income
Add: Non cash expenses
Depreciation expenses	7,200
Less: increase in working capital	(19,450)
Net cash flow from operating activities(A)		(1,750)
Investing activities
Cash flow from investing activities:
Cash paid for acquiring the equipment	(8,400)
Net cash flow from investing activities(B)		(8,400)
Financing activities
Cash flow from financing activities:
Cash received on issue of common stock	10,000
Net cash flow from financing activities(C)		10,000

Net decrease in cash (A)+ (B)+ (C)		(150)
Add: opening balance of cash and cash equivalents		30,550
Closing balance of cash and cash equivalents		30,400

Working note:

Calculate cash paid for acquiring the equipment

Particulars	Amount($)
Equipment as on 2017	49,900
Less: Equipment as on 2016	(41,500)
Cash paid for acquiring the equipment	8,400

(2)

To determine

To explain: About operating activities and cash level of the company.

(2)

Expert Solution

Explanation of Solution

Operating activities:

By using the operating activities, quality of the company can be determined. It will be said a company have good quality of earning.

If earning of the company is less that the cash flow from operating activity of the company. In this cash, cash flow from operating activities is less than the earning of the company.

So, it is said M. Company have low earning quality.

Cash level:

From the investor point of view, A company will be said in good position if it is using cash less than generating.
But here, cash from investing activities is negative its mean that company is using cash more that generating. So, M company is not in the position to increase dividend and reduce debts
Here M Company has not included the cash dividend under the cash flow from financial activities as it s not declared for year. Its mean that company is not in the position to pay the dividend to its shareholder.

Hence, the M Company has low earning cash balance.

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Students have asked these similar questions

Kate Corporation owns a patent on an automated system. The company has been amortizing the patent on a straight-line basis since 2013, when it was acquired at a cost of $60 million at the beginning of that year. Due to technological advancements, management has now decided that the patent will benefit the company for a total of five years instead of the original ten-year amortization period. This decision was made at the end of 2016 (before adjusting and closing entries). What is the appropriate 2016 amortization expense for the patent?

Calculate the Operating Cash Flow (OCF) from the following data: • Change in net fixed assets: $25,000 • Change in net working capital: $30,000 • Dividends Paid: $35,000 Depreciation Expense: $40,000 • Interest Paid: $22,000 • Net New Borrowing: $18,000 • Net New Equity Issued: $12,000

A machine costing $92,500 with a 9-year life and $88,200 depreciable cost was purchased on January 1. Compute the yearly depreciation expense using straight-line depreciation. Round the answer to the nearest whole dollar.

Answer 2

Question

Chapter 12, Problem 19QS

(1)

To determine

To identify: Cash flow statement

(1)

Expert Solution

Explanation of Solution

1

M Company
Statement of Cash Flows
For the Year Ended 31 December, 2018
Particulars	Amount ($)	Amount ($)
Cash flow from operating activities:	10,500
Net income
Add: Non cash expenses
Depreciation expenses	7,200
Less: increase in working capital	(19,450)
Net cash flow from operating activities(A)		(1,750)
Investing activities
Cash flow from investing activities:
Cash paid for acquiring the equipment	(8,400)
Net cash flow from investing activities(B)		(8,400)
Financing activities
Cash flow from financing activities:
Cash received on issue of common stock	10,000
Net cash flow from financing activities(C)		10,000

Net decrease in cash (A)+ (B)+ (C)		(150)
Add: opening balance of cash and cash equivalents		30,550
Closing balance of cash and cash equivalents		30,400

Working note:

Calculate cash paid for acquiring the equipment

Particulars	Amount($)
Equipment as on 2017	49,900
Less: Equipment as on 2016	(41,500)
Cash paid for acquiring the equipment	8,400

(2)

To determine

To explain: About operating activities and cash level of the company.

(2)

Expert Solution

Explanation of Solution

Operating activities:

By using the operating activities, quality of the company can be determined. It will be said a company have good quality of earning.

If earning of the company is less that the cash flow from operating activity of the company. In this cash, cash flow from operating activities is less than the earning of the company.

So, it is said M. Company have low earning quality.

Cash level:

From the investor point of view, A company will be said in good position if it is using cash less than generating.
But here, cash from investing activities is negative its mean that company is using cash more that generating. So, M company is not in the position to increase dividend and reduce debts
Here M Company has not included the cash dividend under the cash flow from financial activities as it s not declared for year. Its mean that company is not in the position to pay the dividend to its shareholder.

Hence, the M Company has low earning cash balance.

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Answer 3

Question

Chapter 12, Problem 19QS

(1)

To determine

To identify: Cash flow statement

(1)

Expert Solution

Explanation of Solution

1

M Company
Statement of Cash Flows
For the Year Ended 31 December, 2018
Particulars	Amount ($)	Amount ($)
Cash flow from operating activities:	10,500
Net income
Add: Non cash expenses
Depreciation expenses	7,200
Less: increase in working capital	(19,450)
Net cash flow from operating activities(A)		(1,750)
Investing activities
Cash flow from investing activities:
Cash paid for acquiring the equipment	(8,400)
Net cash flow from investing activities(B)		(8,400)
Financing activities
Cash flow from financing activities:
Cash received on issue of common stock	10,000
Net cash flow from financing activities(C)		10,000

Net decrease in cash (A)+ (B)+ (C)		(150)
Add: opening balance of cash and cash equivalents		30,550
Closing balance of cash and cash equivalents		30,400

Working note:

Calculate cash paid for acquiring the equipment

Particulars	Amount($)
Equipment as on 2017	49,900
Less: Equipment as on 2016	(41,500)
Cash paid for acquiring the equipment	8,400

(2)

To determine

To explain: About operating activities and cash level of the company.

(2)

Expert Solution

Explanation of Solution

Operating activities:

By using the operating activities, quality of the company can be determined. It will be said a company have good quality of earning.

If earning of the company is less that the cash flow from operating activity of the company. In this cash, cash flow from operating activities is less than the earning of the company.

So, it is said M. Company have low earning quality.

Cash level:

From the investor point of view, A company will be said in good position if it is using cash less than generating.
But here, cash from investing activities is negative its mean that company is using cash more that generating. So, M company is not in the position to increase dividend and reduce debts
Here M Company has not included the cash dividend under the cash flow from financial activities as it s not declared for year. Its mean that company is not in the position to pay the dividend to its shareholder.

Hence, the M Company has low earning cash balance.

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Answer 4

Question

Chapter 12, Problem 19QS

(1)

To determine

To identify: Cash flow statement

(1)

Expert Solution

Explanation of Solution

1

M Company
Statement of Cash Flows
For the Year Ended 31 December, 2018
Particulars	Amount ($)	Amount ($)
Cash flow from operating activities:	10,500
Net income
Add: Non cash expenses
Depreciation expenses	7,200
Less: increase in working capital	(19,450)
Net cash flow from operating activities(A)		(1,750)
Investing activities
Cash flow from investing activities:
Cash paid for acquiring the equipment	(8,400)
Net cash flow from investing activities(B)		(8,400)
Financing activities
Cash flow from financing activities:
Cash received on issue of common stock	10,000
Net cash flow from financing activities(C)		10,000

Net decrease in cash (A)+ (B)+ (C)		(150)
Add: opening balance of cash and cash equivalents		30,550
Closing balance of cash and cash equivalents		30,400

Working note:

Calculate cash paid for acquiring the equipment

Particulars	Amount($)
Equipment as on 2017	49,900
Less: Equipment as on 2016	(41,500)
Cash paid for acquiring the equipment	8,400

(2)

To determine

To explain: About operating activities and cash level of the company.

(2)

Expert Solution

Explanation of Solution

Operating activities:

By using the operating activities, quality of the company can be determined. It will be said a company have good quality of earning.

If earning of the company is less that the cash flow from operating activity of the company. In this cash, cash flow from operating activities is less than the earning of the company.

So, it is said M. Company have low earning quality.

Cash level:

From the investor point of view, A company will be said in good position if it is using cash less than generating.
But here, cash from investing activities is negative its mean that company is using cash more that generating. So, M company is not in the position to increase dividend and reduce debts
Here M Company has not included the cash dividend under the cash flow from financial activities as it s not declared for year. Its mean that company is not in the position to pay the dividend to its shareholder.

Hence, the M Company has low earning cash balance.

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Answer 5

Chapter 12, Problem 19QS

(1)

To determine

To identify: Cash flow statement

(1)

Expert Solution

Explanation of Solution

1

M Company
Statement of Cash Flows
For the Year Ended 31 December, 2018
Particulars	Amount ($)	Amount ($)
Cash flow from operating activities:	10,500
Net income
Add: Non cash expenses
Depreciation expenses	7,200
Less: increase in working capital	(19,450)
Net cash flow from operating activities(A)		(1,750)
Investing activities
Cash flow from investing activities:
Cash paid for acquiring the equipment	(8,400)
Net cash flow from investing activities(B)		(8,400)
Financing activities
Cash flow from financing activities:
Cash received on issue of common stock	10,000
Net cash flow from financing activities(C)		10,000

Net decrease in cash (A)+ (B)+ (C)		(150)
Add: opening balance of cash and cash equivalents		30,550
Closing balance of cash and cash equivalents		30,400

Working note:

Calculate cash paid for acquiring the equipment

Particulars	Amount($)
Equipment as on 2017	49,900
Less: Equipment as on 2016	(41,500)
Cash paid for acquiring the equipment	8,400

(2)

To determine

To explain: About operating activities and cash level of the company.

(2)

Expert Solution

Explanation of Solution

Operating activities:

By using the operating activities, quality of the company can be determined. It will be said a company have good quality of earning.

If earning of the company is less that the cash flow from operating activity of the company. In this cash, cash flow from operating activities is less than the earning of the company.

So, it is said M. Company have low earning quality.

Cash level:

From the investor point of view, A company will be said in good position if it is using cash less than generating.
But here, cash from investing activities is negative its mean that company is using cash more that generating. So, M company is not in the position to increase dividend and reduce debts
Here M Company has not included the cash dividend under the cash flow from financial activities as it s not declared for year. Its mean that company is not in the position to pay the dividend to its shareholder.

Hence, the M Company has low earning cash balance.

Answer 6

Chapter 12, Problem 19QS

(1)

To determine

To identify: Cash flow statement

(1)

Expert Solution

Explanation of Solution

1

M Company
Statement of Cash Flows
For the Year Ended 31 December, 2018
Particulars	Amount ($)	Amount ($)
Cash flow from operating activities:	10,500
Net income
Add: Non cash expenses
Depreciation expenses	7,200
Less: increase in working capital	(19,450)
Net cash flow from operating activities(A)		(1,750)
Investing activities
Cash flow from investing activities:
Cash paid for acquiring the equipment	(8,400)
Net cash flow from investing activities(B)		(8,400)
Financing activities
Cash flow from financing activities:
Cash received on issue of common stock	10,000
Net cash flow from financing activities(C)		10,000

Net decrease in cash (A)+ (B)+ (C)		(150)
Add: opening balance of cash and cash equivalents		30,550
Closing balance of cash and cash equivalents		30,400

Working note:

Calculate cash paid for acquiring the equipment

Particulars	Amount($)
Equipment as on 2017	49,900
Less: Equipment as on 2016	(41,500)
Cash paid for acquiring the equipment	8,400

Answer 7

Chapter 12, Problem 19QS

(1)

To determine

To identify: Cash flow statement

Answer 8

(1)

Expert Solution

Explanation of Solution

1

M Company
Statement of Cash Flows
For the Year Ended 31 December, 2018
Particulars	Amount ($)	Amount ($)
Cash flow from operating activities:	10,500
Net income
Add: Non cash expenses
Depreciation expenses	7,200
Less: increase in working capital	(19,450)
Net cash flow from operating activities(A)		(1,750)
Investing activities
Cash flow from investing activities:
Cash paid for acquiring the equipment	(8,400)
Net cash flow from investing activities(B)		(8,400)
Financing activities
Cash flow from financing activities:
Cash received on issue of common stock	10,000
Net cash flow from financing activities(C)		10,000

Net decrease in cash (A)+ (B)+ (C)		(150)
Add: opening balance of cash and cash equivalents		30,550
Closing balance of cash and cash equivalents		30,400

Working note:

Calculate cash paid for acquiring the equipment

Particulars	Amount($)
Equipment as on 2017	49,900
Less: Equipment as on 2016	(41,500)
Cash paid for acquiring the equipment	8,400

Answer 9

(1)

Expert Solution

Answer 10

(1)

Expert Solution

Answer 11

Expert Solution

Answer 12

(2)

To determine

To explain: About operating activities and cash level of the company.

(2)

Expert Solution

Explanation of Solution

Operating activities:

By using the operating activities, quality of the company can be determined. It will be said a company have good quality of earning.

If earning of the company is less that the cash flow from operating activity of the company. In this cash, cash flow from operating activities is less than the earning of the company.

So, it is said M. Company have low earning quality.

Cash level:

From the investor point of view, A company will be said in good position if it is using cash less than generating.
But here, cash from investing activities is negative its mean that company is using cash more that generating. So, M company is not in the position to increase dividend and reduce debts
Here M Company has not included the cash dividend under the cash flow from financial activities as it s not declared for year. Its mean that company is not in the position to pay the dividend to its shareholder.

Hence, the M Company has low earning cash balance.

Answer 13

(2)

To determine

To explain: About operating activities and cash level of the company.

Answer 14

(2)

Expert Solution

Explanation of Solution

Operating activities:

By using the operating activities, quality of the company can be determined. It will be said a company have good quality of earning.

If earning of the company is less that the cash flow from operating activity of the company. In this cash, cash flow from operating activities is less than the earning of the company.

So, it is said M. Company have low earning quality.

Cash level:

From the investor point of view, A company will be said in good position if it is using cash less than generating.
But here, cash from investing activities is negative its mean that company is using cash more that generating. So, M company is not in the position to increase dividend and reduce debts
Here M Company has not included the cash dividend under the cash flow from financial activities as it s not declared for year. Its mean that company is not in the position to pay the dividend to its shareholder.

Hence, the M Company has low earning cash balance.