INTERMEDIATE ACCOUNTING (LL) W/CONNECT
9th Edition
ISBN: 9781260679694
Author: SPICELAND
Publisher: MCG
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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
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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QUESTION FOUR [25]
The following information was extracted from Zayra Proprietary Limited’s annual financial statements
for the year ended 29 February 2024 in preparation of the Statement of Cash Flows for the current
year:
Zayra Proprietary Limited
Statement of Financial Position as at 29 February 2024
(with comparative values for 28 February 2023):
29 February
2024
28 February
2023
ASSETS R R
Equipment 636 000 324 000
Inventory 82 800 45 600
Trade Receivables 22 800 27 600
Bank 237 600 120 000
Total Assets 979 200 517 200
EQUITY AND LIABILITIES
EQUITY 662 400 424 800
Ordinary share capital 396 000 300 000
Retained Earnings 336 000 124 800
3
LIABILITIES 247 200 92 400
Mortgage Bond 186 000 48 000
Trade Payables 25 200 19 200
SARS: Tax Payable 36 000 25 200
Total Equity and Liabilities 909 600 517 200
Additional Information:
1. Authorised share capital: 1 000 000 Ordinary shares
2. Issued share capital: 100 000 Ordinary shares were sold for cash during the current financial
period.
3.…
aa.3
Q 23.21:
Last year, Alpha Corporation spent $250,000 to repurchase 15,000 shares of its own outstanding common stock. The company also paid $40,000 in interest on a construction loan that it had obtained from its bank. How should these transactions be reflected on Alpha’s annual statement of cash flows, and why?
A :
The two transactions should be reported in separate sections of the statement because one involves long-term assets while the other involves long-term liability. Specifically, Alpha should record a $250,000 cash outflow in the investing section and a $40,000 cash outflow in the financing section.
B :
The two transactions should be reported in separate sections of the statement because one involves a change in equity while the other involves a change in income. Specifically, Alpha should record a $250,000 cash outflow in the financing section and a $40,000 cash outflow in the operating section.
C :
Both transactions should be reported in the…
Chapter 21 Solutions
INTERMEDIATE ACCOUNTING (LL) W/CONNECT
Ch. 21 - Effects of all cash flows affect the balances of...Ch. 21 - Prob. 21.2QCh. 21 - Prob. 21.3QCh. 21 - Prob. 21.4QCh. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 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
Ch. 21 - Perhaps the most noteworthy item reported on an...Ch. 21 - Prob. 21.12QCh. 21 - Given sales revenue of 200,000, how can it be...Ch. 21 - Prob. 21.14QCh. 21 - When determining the amount of cash paid for...Ch. 21 - Prob. 21.16QCh. 21 - When using the indirect method of determining net...Ch. 21 - Prob. 21.18QCh. 21 - Prob. 21.19QCh. 21 - Where can we find authoritative guidance for the...Ch. 21 - U.S. GAAP designates cash outflows for interest...Ch. 21 - Prob. 21.1BECh. 21 - Prob. 21.2BECh. 21 - Prob. 21.3BECh. 21 - Prob. 21.4BECh. 21 - Prob. 21.5BECh. 21 - Prob. 21.6BECh. 21 - Prob. 21.7BECh. 21 - Prob. 21.8BECh. 21 - Investing activities LO215 Carter Containers sold...Ch. 21 - Financing activities LO216 Refer to the situation...Ch. 21 - Prob. 21.11BECh. 21 - Prob. 21.12BECh. 21 - Classification of cash flows LO213 through LO216...Ch. 21 - Determine cash paid to suppliers of merchandise ...Ch. 21 - Determine cash received from customers LO213...Ch. 21 - Prob. 21.4ECh. 21 - Prob. 21.5ECh. 21 - Prob. 21.6ECh. 21 - Determine cash paid for bond interest LO213...Ch. 21 - Determine cash paid for bond interest LO213 For...Ch. 21 - Determine cash paid for income taxes LO213...Ch. 21 - Prob. 21.10ECh. 21 - Prob. 21.11ECh. 21 - Installment note; statement of cash flow effects ...Ch. 21 - Prob. 21.13ECh. 21 - Identifying cash flows from investing activities...Ch. 21 - Prob. 21.15ECh. 21 - Prob. 21.16ECh. 21 - Indirect method; reconciliation of net income to...Ch. 21 - Spreadsheet entries from statement of retained...Ch. 21 - Prob. 21.19ECh. 21 - Prob. 21.20ECh. 21 - Cash flow s from operating activities (direct...Ch. 21 - Indirect method; reconciliation of net income to...Ch. 21 - Prob. 21.23ECh. 21 - Cash flows from operating activities (indirect...Ch. 21 - Prob. 21.25ECh. 21 - Cash flow s from operating activities (indirect...Ch. 21 - Prob. 21.27ECh. 21 - Prob. 21.28ECh. 21 - Prob. 21.29ECh. 21 - Prob. 21.30ECh. 21 - Prob. 21.31ECh. 21 - Prob. 21.32ECh. 21 - Prob. 21.1PCh. 21 - Statement of cash flows; direct method LO213,...Ch. 21 - Prob. 21.3PCh. 21 - Statement of cash flows; direct method LO213,...Ch. 21 - Statement of cash flows; direct method LO213,...Ch. 21 - Cash flows from operating activities (direct...Ch. 21 - Prob. 21.7PCh. 21 - Cash flows from operating activities (direct...Ch. 21 - Cash flows from operating activities (direct...Ch. 21 - Prob. 21.10PCh. 21 - Prepare a statement of cash flows; direct method ...Ch. 21 - Prob. 21.12PCh. 21 - Prob. 21.13PCh. 21 - Statement of cash flows; indirect method; limited...Ch. 21 - Integrating problem; bonds; lease transactions;...Ch. 21 - Statement of cash flows; indirect method LO214,...Ch. 21 - Prob. 21.17PCh. 21 - Statement of cash flows; indirect method LO214,...Ch. 21 - Prob. 21.19PCh. 21 - Prob. 21.20PCh. 21 - Prob. 21.21PCh. 21 - Prob. 21.1BYPCh. 21 - Prob. 21.2BYPCh. 21 - Research Case 213 Information from cash flow...Ch. 21 - Analysis Case 215 Smudged ink; find missing...Ch. 21 - Real World Case 216 Analyze cash flow activities;...Ch. 21 - Prob. 21.7BYPCh. 21 - Prob. 21.8BYPCh. 21 - Research Case 219 FASB codification; locate and...Ch. 21 - IFRS Case 2110 Statement of cash flows...Ch. 21 - Prob. CCTC
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