ACCT 1220 Lecture Notes - Lecture 20: Cash Flow, Puffy Amiyumi, Direct Method (Education)

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orchidtoad181

4 Apr 2017

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Measure cash flows relating to non-current asset accounts; long-term investments; property, plant and equipment; intangible assets. Reported the same under both direct and indirect method. Asset acquisitions are uses of cash; disposals are sources of cash (for the proceeds of disposition) Determine the net cash provided (used) by financing activities by analyzing changes in noncurrent liabilities and shareholder"s equity accounts. Changes to notes, loans, and bonds payable are analyzed to determine cause of change. Amortization of premium or discount (if any) are non cash charges and have no effect. Analyze share capital and retained earnings accounts for changes and their cause. Profit is reported in the operating activities section. E13-12: do not need to know indirect method (need to know what it means) Positive (provided) | negative (used: direct method. * cash receipts = sales - increase in a/r. ** cash payments to suppliers = cogs - decrease in inventory + decrease in a/p.

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

Erroneous Statement of Cash Flows

Ryan Company's bookkeeper prepared the following 2016 statement of cash flows:

Flows of Cash Statement December 31, 2016
Sources (Inflows) of Cash
Net Source from Operations
Net income	$47,800
Add: Cash receipt from sale of land	6,500
Inflow from issuing 10% bonds payable	25,000
Depreciation expense	13,200
Reduction in inventory	1,900
Less: Outflow to buy equipment	(16,400)
Increase in prepaid expenses	(700)
Cash (principal) paid on long-term note	(9,500)
ordinary gain	(2,000)
Total source from operations		$65,800
Other Sources (Inflows) of Cash
Loss on sale of land	$2,300
Increase in accounts payable	1,000
Cash from issuing preferred stock	38,700
Patent amortization expense	2,100
Total other sources of cash		44,100
Sources (Financing) Not Affecting Cash
Issuance of common stock for patent		11,000
Total inflows of cash		$120,900
Uses (Outflows) of Cash
To purchase building	$(62,000)
Increase in accounts receivable	(7,800)
For acquiring marketable securities	(7,100)
Decrease in income taxes payable	(1,400)
Total uses of cash		(78,300)
Uses (Investing) Not Affecting Cash
Acquisition of patent by issuing common stock		(11,000)
Net inflow before dividends		$ 31,600
Less: Cash dividends		(24,000)
Net increase in cash		$7,600
Cash, January 1, 2016		15,300
Cash, December 31, 2016		$22,900

After a thorough investigation, you have determined that the amounts of the items listed on the statement are correct. However, you notice several items that are incorrectly classified and reported.

Required

Prepare a corrected 2016 statement of cash flows for the Ryan Company. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.

Operating Activities

________________ __________

Adjustment for non cash income items:

________________ __________

Adjustments for cash flow effects from working capital items:

________________ __________

Net cash provided by operating activities ____________

Investing Activities:

________________ __________

Net cash used for investing activities _________

Financing Activities:

________________ __________

Net cash provided by financing activies _________

Net increase in cash _________

Cash, january 1, 2016 _________

Cash, december 31, 2016 _________

Investing and Financing Activities not Affecting Cash

Investing Activities:

Acquistion of patent by issuing commons stock ______________

Financing Activities:

Issuance of common stock for patent ____________

ivorymallard438

Please analyze this company 10Q report and till me areas inwhich they are doing well and areas which need improvements.

	2018				2017
Cash Flows from Operating Activities
Net loss		$	(784,627	)		$	(397,181	)
Adjustments to reconcile net loss to net cash used in operatingactivities:
Depreciation and amortization			416,233				376,602
Stock-based compensation			141,639				103,717
Amortization of debt discounts andissuance costs			39,345				31,747
Inventory write-downs			18,546				26,918
Loss on disposals of fixedassets			52,237				41,120
Foreign currency transactionlosses			47,661				5,064
Loss related to SolarCityacquisition			-				11,571
Non-cash interest and otheroperating activities			(3,984	)			(6,589	)
Changes in operating assets andliabilities, net of effect of business combinations:
Accounts receivable			(169,142	)			91,541
Inventories			(322,081	)			(124,514	)
Operating lease vehicles			(97,196	)			(458,965	)
Prepaid expenses and other currentassets			(50,001	)			(75,504	)
MyPower customer notes receivableand other assets			(57,583	)			8,006
Accounts payable and accruedliabilities			317,983				2,531
Deferred revenue			45,795				103,941
Customer deposits			67,359				(51,004	)
Resale value guarantee			-				184,579
Other long-term liabilities			(60,560	)			56,609
Net cash used in operatingactivities			(398,376	)			(69,811	)
Cash Flows from Investing Activities
Purchases of property and equipment excluding capital leases,net of sales			(655,662	)			(552,624	)
Purchases of solar energy systems, leased and to be leased			(72,975	)			(219,948	)
Business combinations, net of cash acquired			-				(109,147	)
Net cash used in investingactivities			(728,637	)			(881,719	)
Cash Flows from Financing Activities
Proceeds from issuances of common stock in public offerings			-				400,175
Proceeds from issuances of convertible and other debt			1,775,481				1,838,166
Repayments of convertible and other debt			(1,389,388	)			(690,945	)
Repayments of borrowings under Solar Bonds issued to relatedparties			(17,500	)			(90,000	)
Collateralized lease (repayments) borrowings			(87,092	)			186,355
Proceeds from exercises of stock options and other stockissuances			94,018				57,307
Principal payments on capital leases			(18,787	)			(18,303	)
Common stock and debt issuance costs			(2,913	)			(11,094	)
Purchases of convertible note hedges			-				(204,102	)
Proceeds from issuances of warrants			-				52,883
Proceeds from investments by noncontrolling interests insubsidiaries			73,704				142,003
Distributions paid to noncontrolling interests insubsidiaries			(52,942	)			(63,696	)
Payments for buy-outs of noncontrolling interests insubsidiaries			(2,921	)			-
Net cash provided by financingactivities			371,660				1,598,749
Effect of exchange rate changes on cash and cash equivalents andrestricted cash			10,102				11,643
Net (decrease) increase in cash and cash equivalents andrestricted cash			(745,251	)			658,862
Cash and cash equivalents and restricted cash, beginning ofperiod			3,964,959				3,766,900
Cash and cash equivalents and restricted cash, end of period		$	3,219,708			$	4,425,762
Supplemental Non-Cash Investing and Financing Activities
Acquisitions of property and equipment included inliabilities		$	286,975			$	654,322
Estimated fair value of facilities under build-to-suitleases		$	56,169			$	65,244

ACCT 1220 Lecture Notes - Lecture 20: Cash Flow, Puffy Amiyumi, Direct Method (Education)

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