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Chapter 14: 24E (page 732)

Use the Rouse Exercise Equipment data in Exercise E14-23. Prepare the company’s statement of cash flows—indirect method—for the year ended December 31, 2018. Assume investments are purchased with cash.

Short Answer

Expert verified

Cash inflow from operating activity is $160,000.

Cash outflow from investing activity is $115,000

Cash outflow from financing activity is $44,000

The net cash inflow from all the above activities is $1,000

Step by step solution

01

Cash Flow Statement

A cash flow statement shows the movement of cash in an organization. It is divided into three parts operating, investing, and financing activity

02

Cash flow statement

Particulars

Amount ($)

Amount ($)

Cash flow from operating activity

Net profit

107,000

Add: Depreciation

54,000

Less: Increase in account receivable

(11,000)

Add: Decrease in inventory

11,000

Add: Increase in account payable

1,000

Less: Decrease in salary payable

(2,000)

Cash flow from operating activity (A)

160,000

Cash flow from investing activity

Acquisition of plant asset

(92,000)

Purchase of investment

(23,000)

Cash flow from investing activity (B)

(115,000)

Cash flow from financing activity

Issue of shares

11,000

Payment of dividend

(47,000)

Payment of note payable

(8,000)

Cash flow from Financing activity (C)

(44,000)

Net Cash flow from all the activities (A+B+C)

1,000

Add: Opening cash balance

16,000

Closing cash balance

17,000

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Most popular questions from this chapter

Preparing the direct method statement of cash flows Use the data in Short Exercise S14A-12 and your results. Prepare the business’s complete statement of cash flows for the year ended June 30, 2018, using the direct method for operating activities.

Question: How does the direct method differ from the indirect method when preparing the operating activities section of the statement of cash flows?

Question: Describe the two formats for reporting operating activities on the statement of cash flows.

Question: Preparing the statement of cash flows—indirect method Use the Preston Media Corporation data in Short Exercise S14-7 and the results you calculated from the requirements. Prepare Preston Media’s statement of cash flows— indirect method—for the year ended December 31, 2018.


Question: Computing cash flows for investing and financing activities Consider the following facts for Java Jolt:

  1. Beginning and ending Retained Earnings are \(45,000 and \)70,000, respectively. Net income for the period is \(60,000.
  2. Beginning and ending Plant Assets are \)124,500 and \(134,500, respectively.
  3. Beginning and ending Accumulated Depreciation—Plant Assets are \)21,500 and \(26,500, respectively.
  4. Depreciation Expense for the period is \)17,000, and acquisitions of new plant assets total \(29,000. Plant assets were sold at a \)5,000 gain. Requirements
  5. How much are cash dividends?
  6. What was the amount of the cash receipt from the sale of plant assets?
See all solutions

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