ACCTG311 Lecture Notes - Lecture 11: Cash Flow Statement, Deferral, Accounts Payable

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apricotmoose247

16 Dec 2015

School

University of Alberta

Department

Accounting

Course

ACCTG311

Professor

Kristie Dewald

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Document Summary

The equipment purchased with the bank loan is excluded. The assumption is that this was not cash in and then cash out, but rather a direct exchange (it isn"t the clearly presented here, but would be more clear in an exam). Cash flow is an important measure of return, compute the cash current debt and cash total debt coverage for 2015 and 2014 and interpret the results. (assume that cash from operations in 2014 was ,000. ) = cash prov. by operating activities / avg current liab. = cash prov by operating activities / avg total liab. Interpretation: the first ratio has improved slightly from the year before. This shows that anyco was able to generate cash in its day to day operations sufficient to cover its current liabilities. In 2015, anyco is generating cash flows from operations to cover its current liabilities by almost two fold.

Related Questions

Statement of Cash Flows

The following is a list of the items to be included in thepreparation of Warrick Company's 2016 statement of cash flows:

Net income, $59,200

Payment for purchase of building, $98,000

Increase in accounts receivable, $7,400

Proceeds from issuance of common stock, $37,100

Increase in accounts payable, $4,500

Proceeds from sale of land, $7,000

Depreciation expense, $12,600

Payment of dividends, $36,000

Gain on sale of land, $5,300

Decrease in inventory, $3,700

Payment for purchase of long-term investments, $9,600

Amortization of discount on bonds payable, $1,900

Proceeds from issuance of note, $18,000

Increase in deferred taxes payable, $5,000

Equipment acquired by capital lease, $19,500

Decrease in salaries payable, $2,300

Beginning cash balance, $20,300

Required

1. Prepare the statement of cash flows.

WARRICK COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
Operating Activities:
Net income	$
Adjustment for noncash income items:
Add: Depreciation expense
Add: Amortization of discount on bonds payable
Add: Accumulated depreciation
Less: Gain on sale of land
Adjustments for cash flow effects from working capital items:
Increase in accounts receivable
Decrease in inventory
Increase in accounts payable
Decrease in salaries payable
Net cash provided by operating activities		$
Investing Activities:
Payment for purchase of building	$
Proceeds from sale of land
Payment for purchase of long-term investments
Net cash used for investing activities
Financing Activities:
Proceeds from issuance of common stock	$
Payment of accounts payable
Proceeds from issuance of note
Net cash provided by financing activities
Net Decrease in Cash		$
Cash, January 1, 2016
Cash, December 31, 2016		$

Investing and Financing Activities Not Affecting Cash
Investing Activities:
Acquisition of equipment under capital lease		$
Financing Activities:
Incurrence of capital lease obligation for equipment

The Natural Company's cash balance at December 31, 2015, was$150,000. The following information was reported on the companystatement of cash flows for 2015, fill in the table below toidentify where each item belongs on the statement cash flow and ifit is added or subtracted, then calculate the operating activitiesfor the statement of cash flow.

		Identify the Section of the Statement of Cash Flow (Operating,Investing, Financing)	Add or Subtract?
Net Income	$360,000
Depreciation and Amortization	110,000
Increase in Accounts Receivable	58,000
Increase in Inventory	120,000
Decrease in Accounts Payable	40,000
Dividends Paid to Shareholders	25,000
Proceeds from the Sale of Common Stock	500,000
Repayment of Bonds Payable	200,000
Proceeds from Sale of Equipment with a book value of $84,000	50,000
Purchase of Land and Building	300,000

goldcat206

Trafalgar Industries, Inc. is a manufacturer of steel products for customers such as Home Depot, Loweâs, Chrysler, Ford, and General Motors. In the year ended December 31, 2013, it reported the following activities:


Net income (loss)	$	(6,533	)
Purchase of equipment		14,040
Payments on notes payable to bank		207,469
Net proceeds from stock issuance		762
Depreciation		26,150
Proceeds from sale of equipment		12,520
Increase in accounts receivable		1,970
Proceeds from notes payable to bank		212,100

Required:

Based on this information, present the cash flows from the investing and financing activities sections of the cash flow statement. (Amounts to be deducted should be indicated by a minus sign.)

TRAFALGAR INDUSTRIES, INC.
Statement of Cash Flows (Partial)
For the Year Ended December 31, 2013
Cash Flows from Investing Activities:





Cash Flows from Financing Activities:

Depreciation

Increase in Accounts Receivable

Net Proceeds from Stock Issuance

Other Financing Cash Outflows

Payment of Dividends

Payments on Notes Payable to Bank

Proceeds from Notes Payable to Bank

Proceeds from Sale of Equipment

Purchase of Equipment

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ACCTG311 Lecture Notes - Lecture 11: Cash Flow Statement, Deferral, Accounts Payable

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