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: This method uses the basis of cash for preparing the cash flows statement. Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year. 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 Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations. Cash flows from investing activities Add: Proceeds from sale of fixed assets Sale of marketable securities / investments Interest received Dividend received Deduct: Purchase of fixed assets/long-lived assets Purchase of marketable securities Net cash provided from or used by investing activities Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations. Cash flows from financing activities Add: Issuance of common stock Proceeds from borrowings Proceeds from issuance of debt Deduct: Payment of dividend Repayment of debt Interest paid Redemption of debt Net cash provided from or used by financing activities To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

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Answer 1

Question

Chapter 14, Problem 14.43BP

Requirement 1:

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: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

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

Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

Cash flows from investing activities

Add: Proceeds from sale of fixed assets

         Sale of marketable securities / investments

         Interest received

         Dividend received

Deduct: Purchase of fixed assets/long-lived assets

              Purchase of marketable securities

Net cash provided from or used by investing activities

Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.

Cash flows from financing activities

Add: Issuance of common stock

          Proceeds from borrowings

          Proceeds from issuance of debt

Deduct: Payment of dividend

              Repayment of debt

              Interest paid

              Redemption of debt

Net cash provided from or used by financing activities

To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

Requirement 2:

To determine

To Prepare: The balance Sheet of DRC at December 31, 2018.

Requirement 3:

To determine

To Prepare: Statement of cash flows under direct method.

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Cullen Beatty plans to start a consulting business-Cullen Consulting Services. In preparation to do this, on April 1, 20X1, he invested $56,000 in cash and $23,000 in equipment, and opened an account at Office Plus by purchasing $1,750 in office supplies which is due by the end of the month. He then signed a one-year lease agreement on an office building for $8,400, paying the full amount in advance. Prepare a Balance Sheet for Cullen Consulting Services as of April 1, 20X1, before he conducts any services. Cash Equipment Prepaid rent CULLEN CONSULTING SERVICES Balance Sheet April 1, 20X1 Assets Liabilities $ 47,600 Accounts payable 23,000 8,400 Owner's Equity $ 1,750 Cullen Beatty, Capital 77,250 Total Assets $ 79,000 Total Liabilities and Owner's Equity $ 79,000

The December 31, 2021, balance sheet of Chen, Incorporated, showed long-term debt of $1,420,000, $144,000 in the common stock account, and $2,690,000 in the additional paid-in surplus account. The December 31, 2022, balance sheet showed long-term debt of $1,620,000, $154,000 in the common stock account and $2,990,000 in the additional paid-in surplus account. The 2022 income statement showed an interest expense of $96,000 and the company paid out $149,000 in cash dividends during 2022. The firm’s net capital spending for 2022 was $1,000,000, and the firm reduced its net working capital investment by $129,000. What was the firm's 2022 operating cash flow, or OCF?

Answer 2

Question

Chapter 14, Problem 14.43BP

Requirement 1:

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: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

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

Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

Cash flows from investing activities

Add: Proceeds from sale of fixed assets

         Sale of marketable securities / investments

         Interest received

         Dividend received

Deduct: Purchase of fixed assets/long-lived assets

              Purchase of marketable securities

Net cash provided from or used by investing activities

Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.

Cash flows from financing activities

Add: Issuance of common stock

          Proceeds from borrowings

          Proceeds from issuance of debt

Deduct: Payment of dividend

              Repayment of debt

              Interest paid

              Redemption of debt

Net cash provided from or used by financing activities

To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

Requirement 2:

To determine

To Prepare: The balance Sheet of DRC at December 31, 2018.

Requirement 3:

To determine

To Prepare: Statement of cash flows under direct method.

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Answer 3

Question

Chapter 14, Problem 14.43BP

Requirement 1:

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: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

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

Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

Cash flows from investing activities

Add: Proceeds from sale of fixed assets

         Sale of marketable securities / investments

         Interest received

         Dividend received

Deduct: Purchase of fixed assets/long-lived assets

              Purchase of marketable securities

Net cash provided from or used by investing activities

Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.

Cash flows from financing activities

Add: Issuance of common stock

          Proceeds from borrowings

          Proceeds from issuance of debt

Deduct: Payment of dividend

              Repayment of debt

              Interest paid

              Redemption of debt

Net cash provided from or used by financing activities

To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

Requirement 2:

To determine

To Prepare: The balance Sheet of DRC at December 31, 2018.

Requirement 3:

To determine

To Prepare: Statement of cash flows under direct method.

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Answer 4

Question

Chapter 14, Problem 14.43BP

Requirement 1:

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: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

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

Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

Cash flows from investing activities

Add: Proceeds from sale of fixed assets

         Sale of marketable securities / investments

         Interest received

         Dividend received

Deduct: Purchase of fixed assets/long-lived assets

              Purchase of marketable securities

Net cash provided from or used by investing activities

Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.

Cash flows from financing activities

Add: Issuance of common stock

          Proceeds from borrowings

          Proceeds from issuance of debt

Deduct: Payment of dividend

              Repayment of debt

              Interest paid

              Redemption of debt

Net cash provided from or used by financing activities

To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

Requirement 2:

To determine

To Prepare: The balance Sheet of DRC at December 31, 2018.

Requirement 3:

To determine

To Prepare: Statement of cash flows under direct method.

Expert Solution & Answer

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See solution

Answer 5

Chapter 14, Problem 14.43BP

Requirement 1:

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: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

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

Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

Cash flows from investing activities

Add: Proceeds from sale of fixed assets

         Sale of marketable securities / investments

         Interest received

         Dividend received

Deduct: Purchase of fixed assets/long-lived assets

              Purchase of marketable securities

Net cash provided from or used by investing activities

Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.

Cash flows from financing activities

Add: Issuance of common stock

          Proceeds from borrowings

          Proceeds from issuance of debt

Deduct: Payment of dividend

              Repayment of debt

              Interest paid

              Redemption of debt

Net cash provided from or used by financing activities

To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

Requirement 2:

To determine

To Prepare: The balance Sheet of DRC at December 31, 2018.

Requirement 3:

To determine

To Prepare: Statement of cash flows under direct method.

Answer 6

Chapter 14, Problem 14.43BP

Requirement 1:

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: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

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

Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

Cash flows from investing activities

Add: Proceeds from sale of fixed assets

         Sale of marketable securities / investments

         Interest received

         Dividend received

Deduct: Purchase of fixed assets/long-lived assets

              Purchase of marketable securities

Net cash provided from or used by investing activities

Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.

Cash flows from financing activities

Add: Issuance of common stock

          Proceeds from borrowings

          Proceeds from issuance of debt

Deduct: Payment of dividend

              Repayment of debt

              Interest paid

              Redemption of debt

Net cash provided from or used by financing activities

To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

Answer 7

Chapter 14, Problem 14.43BP

Requirement 1:

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: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

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

Cash flows from investing activities: Cash provided by or used in investing activities is a section of statement of cash flows. It includes the purchase or sale of equipment or land, or marketable securities, which is used for business operations.

Cash flows from investing activities

Add: Proceeds from sale of fixed assets

         Sale of marketable securities / investments

         Interest received

         Dividend received

Deduct: Purchase of fixed assets/long-lived assets

              Purchase of marketable securities

Net cash provided from or used by investing activities

Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.

Cash flows from financing activities

Add: Issuance of common stock

          Proceeds from borrowings

          Proceeds from issuance of debt

Deduct: Payment of dividend

              Repayment of debt

              Interest paid

              Redemption of debt

Net cash provided from or used by financing activities

To Prepare: Single step income statement of DRC for the year ended December 31, 2018 (using single-step format).

Answer 8

Requirement 2:

To determine

To Prepare: The balance Sheet of DRC at December 31, 2018.

Answer 9

Requirement 2:

To determine

To Prepare: The balance Sheet of DRC at December 31, 2018.

Answer 10

Requirement 3:

To determine

To Prepare: Statement of cash flows under direct method.

Answer 11

Requirement 3:

To determine

To Prepare: Statement of cash flows under direct method.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 14 - The purposes of the statement of cash flows are to...Ch. 14 - The main categories of cash flow activities are a....Ch. 14 - Operating activities are most closely related to...Ch. 14 - Which item does not appear on a statement of cash...Ch. 14 - Leather Shop earned net income of 57,000 after...Ch. 14 - The Plant Assets account and Accumulated...Ch. 14 - Mountain Water Corp. issued common stock of 28,000...Ch. 14 - Prob. 8QC Ch. 14 - Prob. 9QC Ch. 14 - If accrued liabilities increased during the year,...

To Prepare: The balance Sheet of DRC at December 31, 2018.

To Prepare: Statement of cash flows under direct method.

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