Chapter 3, Problem 3.4.1P

Statement of cash flows
Data for San Mateo Health Care for January are provided in Problems 3-1, 3-2, and 3-3.
Instructions

Prepare a statement of cash flows for January.

To determine

Concept Introduction:

Cash Flow statement:

The Cash flow statement shows the movement of cash during a particular period. The Cash flows are categorized into three categories as follows:

• Cash flows from operating activities
• Cash Flows from investing activities
• Cash flows from financing activities

(Note: Cash flows from operating activities can be prepared using direct or indirect method)

To Prepare:

The Cash Flow Statement

Answer to Problem 3.4.1P

The Cash Flow Statement is as follows:

Statement of Cash Flows-Direct Method
Cash flow from Operating activities:
Collection from Customers	$ 246,000
Payments to Suppliers	$(116,000)
Payments to Employees	$ (51,000)
Payment of Income tax	$ (7,500)
Interest Expense	$ (2,500)
Dividend Revenue	$ 7,000
Net Cash Provided by Operating activities		$ 76,000
Cash flow from Investing activities:
Cash Payment for Acquisition of Plant Assets	$(102,000)
Cash Receipts from Sale of Land	$ 29,000
Net Cash Used by Investing activities		$(73,000)
Cash flow from Financing activities:
Cash Receipts from Issuance of Common Stock	$ 38,000
Payment of Long Term notes payable	$ (10,000)
Payment of Dividends	$ (9,000)
Net Cash Provided by Financing activities		$ 19,000
Net Cash Flows		$ 22,000
Add: Beginning Cash Balance		$ 21,000
Ending Cash Balance		$ 43,000

The Cash Flow Statement is prepared as follows:

Statement of Cash Flows-Direct Method
Cash flow from Operating activities:
Collection from Customers (233000+13000)	$ 246,000
Payments to Suppliers (104000+12000)	$(116,000)
Payments to Employees (48000+3000)	$ (51,000)
Payment of Income tax	$ (7,500)
Interest Expense	$ (2,500)
Dividend Revenue	$ 7,000
Net Cash Provided by Operating activities		$ 76,000
Cash flow from Investing activities:
Cash Payment for Acquisition of Plant Assets	$(102,000)
Cash Receipts from Sale of Land	$ 29,000
Net Cash Used by Investing activities		$(73,000)
Cash flow from Financing activities:
Cash Receipts from Issuance of Common Stock	$ 38,000
Payment of Long Term notes payable	$ (10,000)
Payment of Dividends	$ (9,000)
Net Cash Provided by Financing activities		$ 19,000
Net Cash Flows		$ 22,000
Add: Beginning Cash Balance		$ 21,000
Ending Cash Balance		$ 43,000

Explanation of Solution

The Cash Flow Statement is prepared as follows:

Statement of Cash Flows-Direct Method
Cash flow from Operating activities:
Collection from Customers (233000+13000)	$ 246,000
Payments to Suppliers (104000+12000)	$(116,000)
Payments to Employees (48000+3000)	$ (51,000)
Payment of Income tax	$ (7,500)
Interest Expense	$ (2,500)
Dividend Revenue	$ 7,000
Net Cash Provided by Operating activities		$ 76,000
Cash flow from Investing activities:
Cash Payment for Acquisition of Plant Assets	$(102,000)
Cash Receipts from Sale of Land	$ 29,000
Net Cash Used by Investing activities		$(73,000)
Cash flow from Financing activities:
Cash Receipts from Issuance of Common Stock	$ 38,000
Payment of Long Term notes payable	$ (10,000)
Payment of Dividends	$ (9,000)
Net Cash Provided by Financing activities		$ 19,000
Net Cash Flows		$ 22,000
Add: Beginning Cash Balance		$ 21,000
Ending Cash Balance		$ 43,000