Statement of cash flows : It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company. Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid. Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments. Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable. Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid. The below table shows the way of calculation of cash flows from operating activities: Cash flows from operating activities (Direct method) Add: Cash receipts. Cash receipt from customer Less: Cash payments: To supplier For operating expenses Income tax expenses Net cash provided from or used by operating activities Table (1) To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Question

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Answer 1

Question

Chapter 14, Problem 14.23EX

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Expert Solution & Answer

Answer to Problem 14.23EX

R Company
Statement of Cash Flows - Direct Method (Partial)
Year Ended June 30
Details	Amount ($)	Amount ($)
Cash flows from operating activities:
Add: Cash receipt:
Cash received from customers	440,440
Total cash receipt		440,440

Less: Cash payments:
Cash payment for merchandise	(161,260)
Cash payment for operating expenses	(115,720)
Cash payment for income taxes	(39,600)
Total cash payments		(316,580)
Net cash provided by operating activities		$123,860

Explanation of Solution

Working notes:

Calculate the amount of cash received from customers:

$(Cash received from customers)=[Sales revenue (+Decrease in Accounts Receivable OR − Increase in Accounts Receivable)]=(Sales revenue − Increase in Accounts Receivable)=($445,500−$5,060[31,240−36,300])=$440,440$

Calculate the amount of cash paid for merchandise:

$Cash paid for merchandise=[Cost of Goods Sold (+Decrease in Accounts Payable/Increase in Inventory OR − Increase in Accounts Payable /Decrease in Inventory)]=(Cost of goods sold − Increase in Accounts Payable + Increase in Inventory)={$154,000−$4,840[$62,700−67,540]+$12,100[$80,300−$92,400]}=$161,260$

Calculate the amount of cash paid for operating expenses:

$Cash paid for operating expenses}=[Operating expenses other than depreciation (+Decrease in accrued expense payableIncrease in prepaid expenses OR − Increase in accrued expense tax payableDecrease in prepaid expenses)]=(Operating expenses other than depreciation+ Decrease in accrued expense payable−Decrease in prepaid expenses)=($115,280+$1,760[$20,900−$19,140]−$1,320[$15,840−$14,520])=$115,720$

Conclusion

Therefore, the net cash provided by operating activities under direct method is $123,860.

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Cariveh Co sells automotive supplies from 25 different locations in one country. Each branch has up to 30 staff working there, although most of the accounting systems are designed and implemented from the company's head office. All accounting systems, apart from petty cash, are computerised, with the internal audit department frequently advising and implementing controls within those systems.Cariveh has an internal audit department of six staff, all of whom have been employed at Cariveh for a minimum of five years and some for as long as 15 years. In the past, the chief internal auditor appoints staff within the internal audit department, although the chief executive officer (CEO) is responsible for appointing the chief internal auditor.The chief internal auditor reports directly to the finance director. The finance director also assists the chief internal auditor in deciding on the scope of work of the internal audit department.You are an audit manager in the internal audit department…

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Answer 2

Question

Chapter 14, Problem 14.23EX

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Expert Solution & Answer

Answer to Problem 14.23EX

R Company
Statement of Cash Flows - Direct Method (Partial)
Year Ended June 30
Details	Amount ($)	Amount ($)
Cash flows from operating activities:
Add: Cash receipt:
Cash received from customers	440,440
Total cash receipt		440,440

Less: Cash payments:
Cash payment for merchandise	(161,260)
Cash payment for operating expenses	(115,720)
Cash payment for income taxes	(39,600)
Total cash payments		(316,580)
Net cash provided by operating activities		$123,860

Explanation of Solution

Working notes:

Calculate the amount of cash received from customers:

$(Cash received from customers)=[Sales revenue (+Decrease in Accounts Receivable OR − Increase in Accounts Receivable)]=(Sales revenue − Increase in Accounts Receivable)=($445,500−$5,060[31,240−36,300])=$440,440$

Calculate the amount of cash paid for merchandise:

$Cash paid for merchandise=[Cost of Goods Sold (+Decrease in Accounts Payable/Increase in Inventory OR − Increase in Accounts Payable /Decrease in Inventory)]=(Cost of goods sold − Increase in Accounts Payable + Increase in Inventory)={$154,000−$4,840[$62,700−67,540]+$12,100[$80,300−$92,400]}=$161,260$

Calculate the amount of cash paid for operating expenses:

$Cash paid for operating expenses}=[Operating expenses other than depreciation (+Decrease in accrued expense payableIncrease in prepaid expenses OR − Increase in accrued expense tax payableDecrease in prepaid expenses)]=(Operating expenses other than depreciation+ Decrease in accrued expense payable−Decrease in prepaid expenses)=($115,280+$1,760[$20,900−$19,140]−$1,320[$15,840−$14,520])=$115,720$

Conclusion

Therefore, the net cash provided by operating activities under direct method is $123,860.

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Answer 3

Question

Chapter 14, Problem 14.23EX

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Expert Solution & Answer

Answer to Problem 14.23EX

R Company
Statement of Cash Flows - Direct Method (Partial)
Year Ended June 30
Details	Amount ($)	Amount ($)
Cash flows from operating activities:
Add: Cash receipt:
Cash received from customers	440,440
Total cash receipt		440,440

Less: Cash payments:
Cash payment for merchandise	(161,260)
Cash payment for operating expenses	(115,720)
Cash payment for income taxes	(39,600)
Total cash payments		(316,580)
Net cash provided by operating activities		$123,860

Explanation of Solution

Working notes:

Calculate the amount of cash received from customers:

$(Cash received from customers)=[Sales revenue (+Decrease in Accounts Receivable OR − Increase in Accounts Receivable)]=(Sales revenue − Increase in Accounts Receivable)=($445,500−$5,060[31,240−36,300])=$440,440$

Calculate the amount of cash paid for merchandise:

$Cash paid for merchandise=[Cost of Goods Sold (+Decrease in Accounts Payable/Increase in Inventory OR − Increase in Accounts Payable /Decrease in Inventory)]=(Cost of goods sold − Increase in Accounts Payable + Increase in Inventory)={$154,000−$4,840[$62,700−67,540]+$12,100[$80,300−$92,400]}=$161,260$

Calculate the amount of cash paid for operating expenses:

$Cash paid for operating expenses}=[Operating expenses other than depreciation (+Decrease in accrued expense payableIncrease in prepaid expenses OR − Increase in accrued expense tax payableDecrease in prepaid expenses)]=(Operating expenses other than depreciation+ Decrease in accrued expense payable−Decrease in prepaid expenses)=($115,280+$1,760[$20,900−$19,140]−$1,320[$15,840−$14,520])=$115,720$

Conclusion

Therefore, the net cash provided by operating activities under direct method is $123,860.

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Answer 4

Question

Chapter 14, Problem 14.23EX

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Expert Solution & Answer

Answer to Problem 14.23EX

R Company
Statement of Cash Flows - Direct Method (Partial)
Year Ended June 30
Details	Amount ($)	Amount ($)
Cash flows from operating activities:
Add: Cash receipt:
Cash received from customers	440,440
Total cash receipt		440,440

Less: Cash payments:
Cash payment for merchandise	(161,260)
Cash payment for operating expenses	(115,720)
Cash payment for income taxes	(39,600)
Total cash payments		(316,580)
Net cash provided by operating activities		$123,860

Explanation of Solution

Working notes:

Calculate the amount of cash received from customers:

$(Cash received from customers)=[Sales revenue (+Decrease in Accounts Receivable OR − Increase in Accounts Receivable)]=(Sales revenue − Increase in Accounts Receivable)=($445,500−$5,060[31,240−36,300])=$440,440$

Calculate the amount of cash paid for merchandise:

$Cash paid for merchandise=[Cost of Goods Sold (+Decrease in Accounts Payable/Increase in Inventory OR − Increase in Accounts Payable /Decrease in Inventory)]=(Cost of goods sold − Increase in Accounts Payable + Increase in Inventory)={$154,000−$4,840[$62,700−67,540]+$12,100[$80,300−$92,400]}=$161,260$

Calculate the amount of cash paid for operating expenses:

$Cash paid for operating expenses}=[Operating expenses other than depreciation (+Decrease in accrued expense payableIncrease in prepaid expenses OR − Increase in accrued expense tax payableDecrease in prepaid expenses)]=(Operating expenses other than depreciation+ Decrease in accrued expense payable−Decrease in prepaid expenses)=($115,280+$1,760[$20,900−$19,140]−$1,320[$15,840−$14,520])=$115,720$

Conclusion

Therefore, the net cash provided by operating activities under direct method is $123,860.

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Answer 5

Chapter 14, Problem 14.23EX

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Expert Solution & Answer

Answer to Problem 14.23EX

R Company
Statement of Cash Flows - Direct Method (Partial)
Year Ended June 30
Details	Amount ($)	Amount ($)
Cash flows from operating activities:
Add: Cash receipt:
Cash received from customers	440,440
Total cash receipt		440,440

Less: Cash payments:
Cash payment for merchandise	(161,260)
Cash payment for operating expenses	(115,720)
Cash payment for income taxes	(39,600)
Total cash payments		(316,580)
Net cash provided by operating activities		$123,860

Explanation of Solution

Working notes:

Calculate the amount of cash received from customers:

$(Cash received from customers)=[Sales revenue (+Decrease in Accounts Receivable OR − Increase in Accounts Receivable)]=(Sales revenue − Increase in Accounts Receivable)=($445,500−$5,060[31,240−36,300])=$440,440$

Calculate the amount of cash paid for merchandise:

$Cash paid for merchandise=[Cost of Goods Sold (+Decrease in Accounts Payable/Increase in Inventory OR − Increase in Accounts Payable /Decrease in Inventory)]=(Cost of goods sold − Increase in Accounts Payable + Increase in Inventory)={$154,000−$4,840[$62,700−67,540]+$12,100[$80,300−$92,400]}=$161,260$

Calculate the amount of cash paid for operating expenses:

$Cash paid for operating expenses}=[Operating expenses other than depreciation (+Decrease in accrued expense payableIncrease in prepaid expenses OR − Increase in accrued expense tax payableDecrease in prepaid expenses)]=(Operating expenses other than depreciation+ Decrease in accrued expense payable−Decrease in prepaid expenses)=($115,280+$1,760[$20,900−$19,140]−$1,320[$15,840−$14,520])=$115,720$

Conclusion

Therefore, the net cash provided by operating activities under direct method is $123,860.

Answer 6

Chapter 14, Problem 14.23EX

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Expert Solution & Answer

Answer to Problem 14.23EX

R Company
Statement of Cash Flows - Direct Method (Partial)
Year Ended June 30
Details	Amount ($)	Amount ($)
Cash flows from operating activities:
Add: Cash receipt:
Cash received from customers	440,440
Total cash receipt		440,440

Less: Cash payments:
Cash payment for merchandise	(161,260)
Cash payment for operating expenses	(115,720)
Cash payment for income taxes	(39,600)
Total cash payments		(316,580)
Net cash provided by operating activities		$123,860

Explanation of Solution

Working notes:

Calculate the amount of cash received from customers:

$(Cash received from customers)=[Sales revenue (+Decrease in Accounts Receivable OR − Increase in Accounts Receivable)]=(Sales revenue − Increase in Accounts Receivable)=($445,500−$5,060[31,240−36,300])=$440,440$

Calculate the amount of cash paid for merchandise:

$Cash paid for merchandise=[Cost of Goods Sold (+Decrease in Accounts Payable/Increase in Inventory OR − Increase in Accounts Payable /Decrease in Inventory)]=(Cost of goods sold − Increase in Accounts Payable + Increase in Inventory)={$154,000−$4,840[$62,700−67,540]+$12,100[$80,300−$92,400]}=$161,260$

Calculate the amount of cash paid for operating expenses:

$Cash paid for operating expenses}=[Operating expenses other than depreciation (+Decrease in accrued expense payableIncrease in prepaid expenses OR − Increase in accrued expense tax payableDecrease in prepaid expenses)]=(Operating expenses other than depreciation+ Decrease in accrued expense payable−Decrease in prepaid expenses)=($115,280+$1,760[$20,900−$19,140]−$1,320[$15,840−$14,520])=$115,720$

Conclusion

Therefore, the net cash provided by operating activities under direct method is $123,860.

Answer 7

Chapter 14, Problem 14.23EX

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Direct method)

Add: Cash receipts.

Cash receipt from customer

Less: Cash payments:

To supplier

For operating expenses

Income tax expenses

Net cash provided from or used by operating activities

Table (1)

To Prepare: The cash flows from operating activities section of the statement of cash flows using direct method.

Answer 8

Expert Solution & Answer

Answer to Problem 14.23EX

R Company
Statement of Cash Flows - Direct Method (Partial)
Year Ended June 30
Details	Amount ($)	Amount ($)
Cash flows from operating activities:
Add: Cash receipt:
Cash received from customers	440,440
Total cash receipt		440,440

Less: Cash payments:
Cash payment for merchandise	(161,260)
Cash payment for operating expenses	(115,720)
Cash payment for income taxes	(39,600)
Total cash payments		(316,580)
Net cash provided by operating activities		$123,860

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Working notes:

Calculate the amount of cash received from customers:

$(Cash received from customers)=[Sales revenue (+Decrease in Accounts Receivable OR − Increase in Accounts Receivable)]=(Sales revenue − Increase in Accounts Receivable)=($445,500−$5,060[31,240−36,300])=$440,440$

Calculate the amount of cash paid for merchandise:

$Cash paid for merchandise=[Cost of Goods Sold (+Decrease in Accounts Payable/Increase in Inventory OR − Increase in Accounts Payable /Decrease in Inventory)]=(Cost of goods sold − Increase in Accounts Payable + Increase in Inventory)={$154,000−$4,840[$62,700−67,540]+$12,100[$80,300−$92,400]}=$161,260$

Calculate the amount of cash paid for operating expenses:

$Cash paid for operating expenses}=[Operating expenses other than depreciation (+Decrease in accrued expense payableIncrease in prepaid expenses OR − Increase in accrued expense tax payableDecrease in prepaid expenses)]=(Operating expenses other than depreciation+ Decrease in accrued expense payable−Decrease in prepaid expenses)=($115,280+$1,760[$20,900−$19,140]−$1,320[$15,840−$14,520])=$115,720$

Answer 12

Conclusion

Therefore, the net cash provided by operating activities under direct method is $123,860.

Answer 13

Ch. 14 - Prob. 1DQ Ch. 14 - Prob. 2DQ Ch. 14 - A corporation issued 2,000,000 of common stock in...Ch. 14 - A retail business, using the accrual method of...Ch. 14 - If salaries payable was 100,000 at the beginning...Ch. 14 - Prob. 6DQ Ch. 14 - A corporation issued 2,000,000 of 20-year bonds...Ch. 14 - Fully depreciated equipment costing 50,000 was...Ch. 14 - Prob. 9DQ Ch. 14 - Name five common major classes of operating cash...

Answer to Problem 14.23EX

Explanation of Solution

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Chapter 14 Solutions