Académique Documents
Professionnel Documents
Culture Documents
Cash Cash
Equivalents Currency
Outflows
• Salaries and wages
• Payments to suppliers
• Taxes and fines
• Interest paid to lenders
• Other
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
12-10
C2
Investing Activities
Inflows
• Selling long-term productive
assets
• Selling equity investments
• Collecting principal on loans
• Other
Outflows
• Purchasing long-term
productive assets
• Purchasing equity
investments
• Purchasing debt investments
• Other
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
12-11
C2
Financing Activities
Inflows
• Issuing its own equity
securities
• Issuing bonds and notes
• Issuing short- and long-term
liabilities
Outflows
• Pay dividends
• Purchasing treasury stock
• Repaying cash loans
• Paying owners’ withdrawals
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2008
12-12
C3 Noncash Investing and
Financing
Items requiring separate
disclosure include:
• Retirement of debt by issuing
equity securities.
• Conversion of preferred stock to
common stock.
• Leasing of assets in a capital
lease transaction.
Cash Flows
Net
from Operating
Income
Activities
Net
Netincome
income $$ 125,000
125,000
Deduct:
Deduct:Increase
Increasein
inaccounts
accounts
For the indirect
receivable
receivable
method, start with
net
Cash
Cash income.
provided
providedby
byoperating
operating
activities
activities
Net
Netincome
income $$ 125,000
125,000
Add:
Add:Depreciation
Depreciationexpense
expense 12,500
12,500
Deduct:
Deduct:Increase
Increaseininaccounts
accounts
receivable
receivable
Add noncash expenses such
as depreciation, depletion,
amortization,
Cash
Cash provided orby
provided bad debt
byoperating
operating
expense.
activities
activities
Net
Netincome
income $$ 125,000
125,000
Add:
Add:Depreciation
Depreciationexpense
expense 12,500
12,500
Deduct:
Deduct:Increase
Increaseininaccounts
accounts
receivable
receivable (7,500)
(7,500)
Cash
Cashprovided bybyoperating
Change
provided in Account Balance During Year
operating
activities Increase Decrease
activities
Current Subtract from net Add to net income.
Assets income.
Current Add to net income. Subtract from net
Liabilities income.
Net
Netincome
income $$ 125,000
125,000
Add:
Add:Depreciation
Depreciationexpense
expense 12,500
12,500
Deduct:
Deduct:Increase
Increaseininaccounts
accounts
receivable
receivable (7,500)
(7,500)
Add:
Add:Increase
Increaseininaccounts
accountspayable
payable 10,000
10,000
Cash
Cashprovided
provided by
by operating
operating
Change in Account Balance During Year
activities
activities Increase Decrease
Current Subtract from net Add to net income.
Assets income.
Current Add to net income. Subtract from net
Liabilities income.
Net
Netincome
income $$ 125,000
125,000
Add:
Add:Depreciation
Depreciationexpense
expense 12,500
12,500
Deduct:
Deduct:Increase
Increaseininaccounts
accounts
receivable
receivable (7,500)
(7,500)
Add:
Add:Increase
Increaseininaccounts
accountspayable
payable 10,000
10,000
Cash
Cashprovided
providedbybyoperating
operating
activities
activities $$ 140,000
140,000
P2
Indirect Method
B&G Company
Comparative Balance Sheets
December 31
Increase
or
2008 2007 (Decrease)
Assets
Cash $ 63,000 $ 22,000 $ 41,000
Accounts receivable 85,000 76,000 9,000
Inventories 170,000 189,000 (19,000)
Land 75,000 100,000 (25,000)
Equipment 270,000 200,000 70,000
Accumulated depreciation-equipment (66,000) (32,000) (34,000)
Total Assets $ 597,000 $ 555,000 $ 42,000
Cash
Balance, Jan. 1, 2008 22,000 Payments for merchandise 150,000
Receipts from customers 466,000 Payments for wages 145,000
Receipts from sale of land 25,000 Payments for interest 10,000
Receipts from stock issuance 35,000 Payments for taxes 20,000
Payments for equipment 70,000
Payments for bond retirement 50,000
Payments for dividends 40,000
Balance, Dec. 31, 2008 63,000
B&G Company
Statement of Cash Flows
For the Year Ended December 31, 2008
Cash flows from operating activities
Cash received from customers $ 466,000
Cash paid for merchandise (150,000)
Cash paid for wages (145,000)
Cash paid for interest (10,000)
Cash paid for taxes (20,000)
Net cash provided by operating activities 141,000
Cash flows from investing activities
Proceeds from sale of land 25,000
Purchase of equipment (70,000)
Net cash used by investing activities (45,000)
Cash flows from financing activities
Proceeds from issuance of common stock 35,000
Redemption of bonds (50,000)
Payment of dividends (40,000)
Net cash used by financing activities (55,000)
Net increase in cash 41,000
Cash, January 1, 2008 22,000
Cash, December 31, 2008 $ 63,000
End of Chapter 12