Nguyen Dieu Huyen
Chapter 13
BE 13-1
(a) Issued bonds for 150,000 cash.
(b) Purchased equipment for 200,000 cash.
(c) Sold land costing 50,000 for 50,000
cash.
(d) Declared and paid a 20,000 cash
dividend.
Cash inflow from Financing activity
Cash outflow from Investing activity
(a) Purchase of equipment.
(b) Sale of building.
(c) Redemption of bonds.
(d) Depreciation.
(e) Payment of dividends.
(f) Issuance of ordinary shares.
Investing
Investing
Financing
Operating
Financing
Financing
Cash inflow from Investing activity
Cash outflow from Financing activity
BE 13-2
BE 13-3
Wiegman Company.
Statement of Cash Flows—Indirect Method
For the Year Ended December 31, 2020
Cash flows from financing activities
Proceeds from issuance of bonds payable
Dividends paid
500,000
-60,000
Net cash used by financing activities
440,000
BE 13-4
Cash flows from operating activities
Net income
Adjustments to reconcile net income to
net cash provided by operating activities
Add: Depreciation expense
Less: Increase in account receivable
Add:Increase in account payable
Net cash provided by operating activities
2,000,000
160,000
-350,000
280,000
90,000
2,090,000
BE 13-7
Purchased Disposals of plant assets
Less: accumulated depreciation
Less: Loss on disposal of plant assets
Cash flow from disposal of plant assets
22,000
8,500
6,500
7,000
BE 13-8
Cash provided by operating activities
Less: Cash spent for fixed assets
Dividend
Free cash flow
155,397,000
130,820,000
0
24,577,000
Cash provided by operating activities
Less: Cash spent for fixed assets
Dividend
Free cash flow
450,000
250,000
0
200,000
Cash provided by operating activities
Less: Cash spent for fixed assets
Dividend
Free cash flow
643,000
280,000
80,000
363,000
BE 13-9
There is plenty of free cash flow to distribute as dividends so an increase in the dividend
appears will bewarranted
Other factors should be considered: liabilities and whether the cash should be set aside for
reinvestment.
E13-1
(a)Issued CHF50,000 par value ordinary
shares for cash.
Financing activities
(b) Purchased a machine for CHF30,000,
giving a long-term note in exchange.
(c) Issued CHF200,000 par value ordinary
shares upon conversion of bonds having a
face value of CHF 200,000
(d) Declared and paid a cash dividend of
CHF18,000.
(e) Sold a long-term investment with a cost
of CHF15,000 for CHF15,000 cash.
(f) Collected CHF16,000 of accounts
receivable.
(g) Paid CHF18,000 on accounts payable.
Non cash investing and financing activities
Non cash investing and financing activities
Financing activities
Operating activities
Operating activities
Operating activities
E13-2
a) Payment of interest on notes payable.
(b) Exchange of land for patent.
(c) Sale of building at book value.
(d) Payment of dividends.
(e) Depreciation.
(f) Receipt of dividends on investment in
shares
(g) Receipt of interest on notes receivable.
(h) Issuance of share capital—ordinary.
(i) Amortization of patent.
(j) Issuance of bonds for land.
(k) Purchase of land.
(l) Conversion of bonds into ordinary
shares.
(m) Loss on sale of land.
(n) Retirement of bonds.
Financing activities
Non cash investing and financing activities
Investing activities
Financing activities
Operating activities
Operating activities
Operating activities
Financing activities
Operating activities
Financing activities
Investing activities
Financing activities
Investing activities
Financing activities
E13-3
a.
Cash
Loss on Disposal of Plant Assets
Land
10,000
2,000
Cash
22,000
12,000
Share capital - ordinary
Depreciation expense
Accumulated depreciation
22,000
14,000
14,000
Salaries and wages expense
Cash
7,000
Equipment
Share capital - ordinary
Share premium-ordinary
9,000
Cash
Accumulated Depreciation—Equipment
Gain on Disposal of Plant Assets
3,200
8,000
7,000
1,000
8,000
1,200
Equipment
b
10,000
The cash receipt (NT$30,000) is reported in the
investing section. The loss ($2,000) is added to
net income in the operating section.
The cash receipt ($22,000) is reported in the
financing section
Depreciation expense ($14,000) is added to net
income in the operating section.
Salaries and wages expense is not reported
separately on the statement of cash flows. It is
part of the computation of net income in the
income statement and is included in the net
income amount on the statement of cash flows
(operating section).
Since this does not involve cash, no impact on
the cash flow statement but it does change the
company's financial position, it would be
reported in the schedule of non-cash investing
and financing activities.
The cash receipt ($3,200) is reported in the
investing section. The gain ($1,200) is deducted
from net income in the operating section.
1. Sold land (cost £12,000) for £10,000.
2. Issued ordinary shares at par value for
£22,000.
3. Recorded depreciation on buildings for
£14,000.
4. Paid salaries of £7,000.
5. Issued 1,000 shares of £1 par value
ordinary shares for equipment worth
£9,000.
6. Sold equipment (cost £10,000,
accumulated depreciation £8,000) for
£3,200.
E13-5
Nasreen Co's
Statement of Cash Flows—Indirect Method
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Add: Depreciation expense
Less: Increase in account receivable
Add: Decrease in Inventory
Less: Increase in prepaid expense
24,000
-31,000
14,000
-2,000
Add: Increase in Expense payables
Less: Decrease in account payable
6,000
-10,000
Net cash provided by operating activities
153,000
1,000
154,000
Cash flows from investing activities
Cash flows from financing activities
Net increase in cash
Cash at beginning of period
Cash at end of period
6,000
99,000
105,000
E13-6
Cost of equipment sold
Less: Accumulated depreciation
Loss on disposal of plant assets
Free cash flow
49,000
28,000
5,000
16,000
Chaudry
Statement of Cash Flows—Indirect Method
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Add: Depreciation expense
Loss on disposal of plant assets
67,000
23,000
5,000
28,000
95,000
Net cash provided by operating activities
Cash flows from investing activities
Purchase of equipment
Construction of equipment
Cost of equipment sold
Net cash provided by investing activities
-70,000
-53,000
16,000
Cash flows from financing activities
Payment of Cash dividend
Net cash provided by financing activities
-17,000
Net increase in cash
Cash at beginning of period
Cash at end of period
-107,000
-17,000
E13-7
Land
Buildings
Accumulated depreciation- buildings
Account receivable
Cash
Total
Meera Company
Comparative Statements of Financial Position December 31
2014
2013 Change Increase/ Decrease
20,000
26,000
-6,000 Decrease
70,000
70,000
0
-15,000
-10,000
-5,000 Decrease
20,800
23,400
-2,600 Decrease
14,700
10,700
4,000 Increase
110,500
120,100
Share capital - ordinary
Retained earnings
Account payable
Total
75,000
23,130
12,370
110,500
Loss on disposal of plant assets
26,000 - 20,000 - 5,000
72,000
20,000
28,100
120,100
3,000 Increase
3,130 Increase
-15,730 Decrease
1000
Meera Company
Statement of Cash Flows—Indirect Method
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Add: Depreciation expense
Add: Decrease in Account Receivable
Loss on disposal of plant assets ( Land)
22,630
5,000
2,600
1,000
Less: Decrease in account payable
-15,730
-7,130
15,500
Net cash provided by operating activities
Cash flows from investing activities
Sale of land
Net cash provided by investing activities
5,000
Cash flows from financing activities
Issue of common stock
Payment of Cash dividend
Net cash provided by financing activities
3,000
-19,500
5,000
-16,500
Net increase in cash
Cash at beginning of period
Cash at end of period
Cash provided by operating activities
4,000
10,700
14,700
15,500
Less: Cash spent for fixed assets
Dividend
Free cash flow
0
19,500
-4,000
E13-8
Land
Equipment
Accumulated depreciation- equipment
Inventory
Account receivable
Cash
Total
Syal Company
Comparative Statements of Financial Position December 31
2014
73,000
260,000
-66,000
170,000
85,000
73,000
595,000
Share capital - ordinary
Retained earnings
Bonds payable
Account payable
Total
216,000
194,000
150,000
35,000
595,000
2013 Change Increase/ Decrease
100,000
-27,000 Decrease
200,000
60,000 Increase
-34,000
-32,000 Decrease
187,000
-17,000 Decrease
71,000
14,000 Increase
33,000
40,000 Increase
557,000
174,000
136,000
200,000
47,000
557,000
42,000
58,000
-50,000
-12,000
Syal Company
Statement of Cash Flows—Indirect Method
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Add: Depreciation expense
Less: Increase in Account Receivable
Add: Decrease in Inventory
32,000
-14,000
17,000
Less: Decrease in account payable
-12,000
103,000
23,000
126,000
Net cash provided by operating activities
Cash flows from investing activities
Sale of land
Investment
Net cash provided by investing activities
27,000
-60,000
-33,000
Increase
Increase
Decrease
Decrease
Cash flows from financing activities
Issue of common stock
Payment of Bond
Payment of Dividend
Net cash provided by financing activities
42,000
-50,000
-45,000
-53,000
Net increase in cash
Cash at beginning of period
Cash at end of period
40,000
33,000
73,000
E13-9
a
Equipment
Accumulated depreciation- equipment
Investment
Account receivable
Cash
Total
Cassandra Company
Comparative Statements of Financial Position December 31
2014
2013 Change Increase/ Decrease
60,000
70,000
-10,000 Decrease
-14,000
-10,000
-4,000 Decrease
20,000
16,000
4,000 Increase
25,200
22,300
2,900 Increase
17,000
17,700
-700 Decrease
108,200
116,000
Share capital - ordinary
Retained earnings
Bonds payable
Account payable
Total
50,000
33,600
10,000
14,600
108,200
45,000
29,900
30,000
11,100
116,000
5,000
3,700
-20,000
3,500
Increase
Increase
Decrease
Increase
Equipment
Date
Debit
Balance
Sale of equipment
Loss on disposal of plant assets
Accumulated Depreciation
Credit
Balance
70,000.00
3,500
4,700
1,800
60,000
Accumulated depreciation
Date
Balance
Accumulated depreciation - Equipment
Depreciation expense
Debit
Credit
Balance
10000
1800
5800
14000
Cassandra Company
Statement of Cash Flows—Indirect Method
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Add: Depreciation expense
Less: Increase in Account Receivable
Loss on disposal of plant assets
18,300
5,800
-2,900
4,700
Add: Increase in account payable
3,500
11,100
29,400
Net cash provided by operating activities
Cash flows from investing activities
Sale of equipment
Investment
Net cash provided by investing activities
3,500
-4,000
Cash flows from financing activities
Issue of common stock
Payment of Bond
Payment of Dividend
Net cash provided by financing activities
5,000
-20,000
-14,600
-500
-29,600
Net increase in cash
Cash at beginning of period
Cash at end of period
b
Cash provided by operating activities
Less: Cash spent for fixed assets
Dividend
Free cash flow
-700
17,700
17,000
29,400
0
14,600
14,800