A reconciliation of net income to cash provided by operationsStatement of Cash Flow – Easy Practice Problems 5 & 6Financing ActivitiesInvesting ActivitiesAcct 315 - Statement of Cash Flow Homework Problem # 8Noncurrent LiabilitiesWorksheetFinancing ActivitiesAcct 592 – Spring 2005Company, Inc.Statement of Cash FlowsFor the year ended December 31, 199XCash Flows from Operating ActivitiesCash received from customersCash received as interest income *Cash received as dividend income Cash paid for cost of goods sold *Cash paid for selling expensesCash paid for general & administrative expensesCash paid for interest (including interest on capital leases)Cash paid for income taxesCash that would have been paid for taxes except for “excess tax deduction” related to stock based compensation Net cash provided by (or used by) operating activitiesCash Flows from Investing ActivitiesCash received from sale of property, plant, & equipmentCash received from sale of investments (other than trading securities)Cash received from repayment of note receivablesCash paid to acquire property, plant, and equipmentCash paid to acquire investmentsCash paid out as a loanNet cash provided by (or used by) investing activitiesCash Flows from Financing ActivitiesCash received as proceeds from issuance of debtCash received as proceeds from issuance of stockCash received as proceeds from reissuance of treasury stockCash paid to repay debt (principal payment)Cash paid on principal related to capital leasesCash paid to reacquire stock (purchase treasury stock)Cash paid as dividendsCash retained due to “excess tax deduction” related to stock optionsNet cash provided by (or used by) financing activitiesNet increase (decrease) in cashBeginning cash and cash equivalents balance=Ending cash and cash equivalents balanceSchedule of Noncash Investing and Financing ActivitiesAssets for Liabilities &/or EquityLiabilities &/or Equity for AssetsLiabilities for Equity and Equity for LiabilitiesCapital lease (acquisition of asset and obligation for lessee)A reconciliation of net income to cash provided by operations*Brackets indicate items that are normally combined created by T. Gordon 1/14/2019 Page 1Acct 592 – Spring 2005Example 1 - Statement of Cash Flow – DIRECT METHODYearendingYearendingPalouse Pottery 12/31/06 Ref Debit Ref Credit 12/31/07 TargetCash 15,000 X 27,000 42,000 27,000 Accounts Receivable 40,000 37,500 (2,500)Allowance for doubtful accounts (3,000) (4,500) (1,500)Merchandise Inventory 25,000 43,000 18,000 Prepaid Expenses 3,000 6,000 3,000 Plant, property & equipment 215,000 236,000 21,000 Accumulated Depreciation (80,000) (82,000) (2,000)215,000 278,000 Accounts Payable (23,000) (31,000) (8,000)Salaries Payable (2,000) (9,000) (7,000)Interest payable (2,000) (1,500) 500 Income Taxes Payable (1,500) (5,500) (4,000)Dividends Payable 0 (8,000) (8,000)Long term liabilities (25,000) (15,000) 10,000 Common stock, $1 par (100,000) (145,000) (45,000)Retained Earnings (61,500) (63,000) (1,500) (215,000) (278,000) 0 1997 1997 Closing entry for Rev/(Exp) Rec/(Disb)Sales 93,000 Gain/(loss) on sale of PP&E (4,000)Realized gain/(loss) - land 20,000 Cost of goods sold (35,000)Salaries & other operating expenses(37,000)Bad debt expense (2,000)Depreciation & amortization (11,000)Interest expense (2,500)Income taxes expense (7,000)Net income (accrual basis) 14,500 Statement of Cash Flows(INFLOWS) (OUTFLOWS)Operating ActivitiesInvesting ActivitiesFinancing ActivitiesNoncash Financing/Investing CHANGE IN CASH X 27,000 TotalsAdditional information:a. Wrote off $500 accounts receivable as uncollectible d. Sold land for $30,000 that had been acquired for $10,000b. Sold operational assets for $4,000 cash that had cost $17,000 and had a book value of $8,000e. Paid a $10,000 long-term note installmentf. Purchase plant, property & equipment for $48,000 cash.c. Declared a cash dividend of $13,000 g. Issued common stock for $45,000 cash. created by T. Gordon 1/14/2019 Page 2Acct 592 – Spring 2005Example 1 - Statement of Cash Flow – INDIRECT METHODYearendingYearendingPalouse Pottery 12/31/06 Ref Debit Ref Credit 12/31/07 TargetCash 15,000 X 27,000 42,000 27,000 Accounts Receivable 40,000 37,500 (2,500)Allowance for doubtful accounts (3,000) (4,500) (1,500)Merchandise Inventory 25,000 43,000 18,000 Prepaid Expenses 3,000 6,000 3,000 Plant, property & equipment 215,000 236,000 21,000 Accumulated Depreciation (80,000) (82,000) (2,000)215,000 278,000 Accounts Payable (23,000) (31,000) (8,000)Salaries Payable (2,000) (9,000) (7,000)Interest payable (2,000) (1,500) 500 Income Taxes Payable (1,500) (5,500) (4,000)Dividends Payable 0 (8,000) (8,000)Long term liabilities (25,000) (15,000) 10,000 Common stock, $1 par (100,000) (145,000) (45,000)Retained Earnings (61,500) (63,000) (1,500) (215,000) (278,000) 0 Statement of Cash Flows(INFLOWS) (OUTFLOWS)Operating ActivitiesInvesting ActivitiesFinancing ActivitiesNoncash Financing/Investing CHANGE IN CASH X 27,000 TotalsAdditional information:a. Wrote off $500 accounts receivable as uncollectible d. Sold land for $30,000 that had been acquired for $10,000b. Sold operational assets for $4,000 cash that had cost $17,000 and had a book value of $8,000e. Paid a $10,000 long-term note installmentf. Purchase plant, property & equipment for $48,000 cash. created by T. Gordon 1/14/2019 Page 3Acct 592 – Spring 2005c. Declared a cash dividend of $13,000 g. Issued common stock for $45,000 cash.Example 2 - Statement of Cash FlowYearendingYearendingMoscow Moving & Storage 12/31/06 Ref Debit Ref Credit 12/31/07 TargetCash 15,000 5,000 (10,000)Accounts Receivable 30,000 28,500 (1,500)Allowance for doubtful accounts (1,500) (2,000) (500)Merchandise Inventory 10,000 17,000 7,000 Prepaid Expenses 4,500 500 (4,000)Plant, property & equipment 220,100 289,100 69,000 Accumulated Depreciation (20,000) (16,000) 4,000 258,100 322,100 Accounts Payable (10,000) (13,000) (3,000)Salaries Payable (3,000) (1,000) 2,000 Interest payable 0 (1,000) (1,000)Long term liabilities (30,000) (10,000) 20,000 Common stock, $1 par (100,000) (181,000) (81,000)Retained Earnings (115,100) (116,100) (1,000) (258,100) (322,100) 0 1997 1997 Closing entry for Rev/(Exp) Receipt/(Disb)Sales 80,000 Gain/(loss) on sale of PP&E (2,000)Cost of goods sold (35,000)Salaries & other operating expenses(26,000)Bad debt expense