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33:010:272 Lecture Notes - Lecture 11: Current Liability, Accrual, Negative Number

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School
Rutgers University
Department
Accounting
Course
33:010:272
Professor
westcott

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Document Summary

Chapter 13 statement of cash flows: usefulness of the statement of cash flows, reasons for difference between net income and net cash provided by operating activities, classification of cash flows -> memorize, operating activities a. i. Stockholders" equity: for noncash activities, reported at the bottom as footnote, examples b. i. Exchanges of plant assets: format and method a. 99% indirect method: preparing, three sources of info a. i. Tells you more about what happen to cash. Will be given: (1) operating activities section, purpose a. i. To convert net income from accrual basis to cash basis: steps b. i. Add back any losses and subtract any gains on sale of plant assets/ investments (income statement) b. iv. Calculate the changes in current assets and current liabilities (comparative balance sheet) b. iv. 1. Increase in asset -> decrease in cash b. iv. 1. b. Increase in liabilities and equity-> increase in cash b. iv. 1. d. Decrease in liabilities and equity -> decrease in cash: tips c. i.

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Related Questions

The balance sheet for Plasma Screens Corporation along with additional information, are provided below:

PLASMA SCREENS CORPORATION
Balance Sheets
December 31, 2018 and 2017
2018 2017
Assets:
Current assets:
Cash $ 82,000 $ 120,000
Accounts receivable 72,000 96,000
Inventory 65,000 80,000
Prepaid rent 5,000 4,000
Long-term assets:
Land 500,000 500,000
Equipment 800,000 600,000
Accumulated depreciation (380,000) (300,000)
Total assets $ 1,144,000 $ 1,100,000
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 78,000 $ 82,000
Interest payable 5,000 9,000
Income tax payable 9,000 7,000
Long-term liabilities:
Notes payable 75,000 150,000
Stockholders' equity:
Common stock 600,000 600,000
Retained earnings 377,000 252,000
Total liabilities and stockholders' equity $ 1,144,000 $ 1,100,000


Additional Information for 2018:

1. Net income is $160,000.

2. The company purchases $200,000 in equipment.

3. Depreciation expense is $80,000.

4. The company repays $75,000 in notes payable.

5. The company declares and pays a cash dividend of $35,000.

Prepare the statement of cash flows using the indirect method.

PLASMA SCREENS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash flows from operating activities:
Net cash flows from operating activities
Cash Flows from Investing Activities
Net cash flows from investing activities
Cash Flows from Financing Activities
Net cash flows from financing activities
Cash at the beginning of the period
Cash at the end of the period

The balance sheet for Plasma Screens Corporation, along with additional information, are provided below:

PLASMA SCREENS CORPORATION
Balance Sheets
December 31, 2018 and 2017
2018 2017
Assets:
Current assets:
Cash $ 142,950 $ 154,000
Accounts receivable 76,800 90,500
Inventory 92,000 77,300
Prepaid rent 3,400 1,700
Long-term assets:
Land 465,000 465,000
Equipment 762,000 655,000
Accumulated depreciation (421,000) (262,000)
Total assets $ 1,121,150 $ 1,181,500
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 96,000 $ 82,300
Interest payable 6,750 13,500
Income tax payable 7,400 4,700
Long-term liabilities:
Notes payable 112,500 225,000
Stockholders' equity:
Common stock 685,000 685,000
Retained earnings 213,500 171,000
Total liabilities and stockholders' equity $ 1,121,150 $ 1,181,500

Additional Information for 2018:

1. Net income is $66,000.

2. The company purchases $107,000 in equipment.

3. Depreciation expense is $159,000.

4. The company repays $112,500 in notes payable.

5 .The company declares and pays a cash dividend of $23,500.

Required:

Prepare the statement of cash flows using the indirect method.

PLASMA SCREENS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash Flows from Operating Activities
Adjustments to reconcile net income to net cash flows from operating activities
Net cash flows from operating activities
Cash Flows from Investing Activities
Net cash flows from investing activities
Cash Flows from Financing Activities
Net cash flows from financing activities
Cash at the beginning of the period
Cash at the end of the period

Natalie Daniels has completed the basic format to be used inpreparing the statement of cash flows (indirect method) for CPUHardware Designers. All amounts are in thousands (000s).


CPU HARDWARE DESIGNERS
Statement of Cash Flows
For the year ended December 31, 2015
Cash Flows fromOperating Activities
Netincome
Adjustments for noncash effects:
Changesin current assets and current liabilities:
Net cash flows from operatingactivities
Cash Flows fromInvesting Activities
Netcash flows from investing activities
Cash Flows fromFinancing Activities
Net cash flows from financingactivities
Net increase(decrease) in cash $ (28,000)
Cash at thebeginning of the period 90,000
Cash at the end ofthe period $ 62,000


Below, in random order, are line items to be included in thestatement of cash flows.


Cash received fromthe sale of land $ 4,000
Issuance of commonstock 300,000
Depreciationexpense 30,000
Increase in accountsreceivable 70,000
Increase in accountspayable 11,000
Loss on sale ofland 8,000
Purchase ofequipment 230,000
Increase ininventory 40,000
Increase in prepaidrent 11,000
Payment ofdividends 50,000
Net income 80,000
Repayment of notespayable

60,000
Required:

Prepare the statement of cash flows for CPU Hardware Designersusing the indirect method. (List cash outflows and any decrease in cashas negative amounts. Enter your answers inthousands.)


CPU HARDWARE DESIGNERS
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash Flows from Operating Activities:
Adjustments to reconcile net income to net cash flows fromoperating activities
Net cash flows from operating activities $0
Cash Flows from Investing Activities:
Net cash flows from investing activities 0
Cash Flows from Financing Activities:
Net cash flows from financing activities 0
Cash at the beginning of the period
Cash at the end of the period $0