9th Edition

ISBN: 9781259722660

Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher: McGraw-Hill Education

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The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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Textbook Question

Chapter 21, Problem 21.6BYP

Real World Case 21–6

Analyze cash flow activities; Staples, Inc.

• LO21–1 through LO21–8

Real World Financials

Staples, Inc., is the world’s leading office products company. Locate the statement of cash flows of Staples for the fiscal year ended January 30, 2016, on the Internet.

Required:

1. In the three years reported, what was Staples’ primary investing activity? How was this activity financed? Be specific.
2. During the most recent fiscal year, Staples purchased certificates of deposit. How were these purchases reported in the statement of cash flows? (Note: This is not an investing activity.)
3. How are issuances of debt securities and issuances of equity securities classified in a statement of cash flows?
4. How are payments to investors in debt securities (interest) and payments to investors in equity securities (dividends) classified in a statement of cash flows? Is this a conceptual inconsistency? Explain.
5. Staples’ statement of cash flows reports expenditures for acquisition of businesses. It also reports additions to long-term debt. Suppose the businesses had been acquired not with cash, but by exchange for debt securities. Would such a transaction be reported? Explain.

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Chapter 21, Problem 21.5BYP

Chapter 21, Problem 21.7BYP

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Chapter 21 Solutions

Intermediate Accounting

Ch. 21 - Effects of all cash flows affect the balances of...Ch. 21 - Prob. 21.2Q Ch. 21 - Prob. 21.3Q Ch. 21 - Prob. 21.4Q Ch. 21 - Prob. 21.5Q Ch. 21 - Prob. 21.6Q Ch. 21 - Prob. 21.7Q Ch. 21 - The sale of stock and the sale of bonds are...Ch. 21 - Does the statement of cash flows report only...Ch. 21 - Prob. 21.10Q

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Solution Summary: The author explains the accounting procedure followed by Company S to record issuances of debt and equity securities.

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