Financial statements -Assignment 4.1
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1. Financial
statements all have a goal. The cash flow statement does as well.
Requirements
R1. Describe how the
Statement of Cash Flows helps investors and creditors perform each of the
following functions:
a. Predict future cash flows
b. Evaluate management decisions
c. Predict the ability to make debt payments to lenders and pay
dividends to stockholders
2. Cash-flow items
must be categorized into one of four categories.
Requirements
R1. Answer the
following questions about the Statement of Cash Flows:
a. List the categories of cash flows in order of presentation.
b. What is the “key reconciling figure” for the Statement of Cash
Flows? Where do you get this figure?
c. What is the first dollar amount to report for the indirect method?
3. Triumph
Corporation is preparing its Statement of Cash Flows by the indirect method.
Triumph has the following items for you to consider in preparing the statement:
Requirement
Identify each item as an
Operating activity—addition to net
income (O+), or subtraction from net income (O–)
Investing activity—addition to cash
flow (I+), or subtraction from cash flow (I–)
Financing activity—addition to cash
flow (F+), or subtraction from cash flow(F–)
Activity
that is not used to prepare the indirect cash-flow statement (N)
4. DVR Equipment, Inc., reported the following data
for 2011:
Requirement
Compute DVR’s net cash provided by operating
activities—indirect method.
5. Street Cellular
accountants have assembled the following data for the year ended June 30, 2012:
Requirement
Prepare the operating activities section using the
indirect method for Street Cellular’s Statement of Cash Flows for the year
ended June 30, 2012.
6. Use the data in
exercise 5 to complete this exercise.
Requirement
Prepare Street Cellular’s Statement of Cash Flows using the
indirect method for the year ended June 30, 2012. Stop after determining the
net increase (or decrease) in cash.
7. White Media
Corporation had the following Income Statement and Balance Sheet for 2011:
Requirements
R1. Compute for
White Media Corporation during 2011 the
a. Acquisition of equipment. The business sold no equipment during
the year.
b. Payment of a long-term note payable. During the year the business
issued a $5,100 note payable.
8. Use the White
Media Corporation data in exercise 7 and the results you calculated from the
requirements.
Requirement
Prepare White Media’s Statement of Cash Flows—indirect
method—for the year ended December 31, 2011.
9. Brianna’s
Wedding Shops earned net income of $76,000, which included depreciation of
$17,000. Brianna’s paid $122,000 for a building and borrowed $63,000 on a
long-term note payable.
Requirement
How much did Brianna’s cash balance increase or decrease
during the year?
10. Roberta McLeary
Company expects the following for 2011:
Requirement
How much free cash flow does McLeary
expect for 2011?
11. The cash flow
statement categorizes like transactions for optimal reporting.
Requirement
Identify each of the following transactions as an (a)
Operating activity (O),
Investing activity (I),
Financing activity (F),
Noncash investing and financing
activity (NIF)
Transaction that is not reported on the
Statement of Cash Flows (N).
For each cash flow, indicate whether the item increases (+)
or decreases (–) cash.The indirect method is used to report cash flows
from operating activities.
12. Consider the following transactions:
Requirement
Indicate whether each transaction would result in an
operating activity, an investing activity, or a financing activity for an
indirect method Statement of Cash Flows and the accompanying schedule of
noncash investing and financing activities.
13. The accounting records of CD Sales, Inc., include
the following accounts:
Requirement
Compute CD’s net cash provided by (used for) operating
activities during March. Use the indirect method.
14. Cole Gymnastics Equipment, Inc., reported the
following financial statements for 2011:
Requirement
Compute the amount of Cole Gymnastics’
acquisition of plant assets. Cole Gymnastics sold no plant assets
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