Statement of cash flows : This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period. Spreadsheet: The spreadsheet is a supplementary device which helps to prepare the adjusting entries and the statement of cash flows easier. The spreadsheet is a working tool of the accountant but it is not a permanent accounting record. To Explain: The purpose of the “changes” columns of a spreadsheet to prepare a statement of cash flows.

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Chapter 21, Problem 21.12Q

To determine

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.

Spreadsheet: The spreadsheet is a supplementary device which helps to prepare the adjusting entries and the statement of cash flows easier. The spreadsheet is a working tool of the accountant but it is not a permanent accounting record.

To Explain: The purpose of the “changes” columns of a spreadsheet to prepare a statement of cash flows.

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On January 1, 2024, Sunfish Co. issued a $22 million, 8%, 6-year convertible bond with annual coupon payments. Each $1,000 bond was convertible into 35 shares of Sunfish's common shares. Shark Investments purchased the entire bond issue for $22.7 million on January 1, 2024. Shark estimated that without the conversion feature, the bonds would have sold for $21,013,098 (to yield 9%). On January 1, 2025, Shark converted bonds with a par value of $8.8 million. At the time of conversion, the shares were selling at $30 each. Required Prepare the journal entry to record the issuance of convertible bonds. Prepare the journal entry to record the conversion according to IFRS (book value method). Prepare the journal entry to record the conversion according ASPE (market value method).

RoseBud Motel Ltd. (RM) had 100,000 ordinary shares outstanding during all of 2025, all owned by the owner Johnny Rose. In 2023, RM issued $500,000, 3% non-cumulative preferred shares. Each $100 preferred share is convertible into one ordinary share. RM also had 6,000, $100 cumulative preferred shares outstanding that are each entitled to an annual dividend of $1.60. Each preferred share is convertible into two ordinary shares. RM’s net income for the year ended December 31, 2025, was $400,000. Its income tax rate was 20%. The annual dividend was declared and paid during 2025 on the cumulative preferred shares but not on the non-cumulative shares. Required Calculate RM’s basic EPS for 2025. Are the non-cumulative convertible preferred shares dilutive or antidilutive in nature? The cumulative convertible preferred shares? Support your answer with calculations. Calculate RM’s diluted EPS for 2025.