the statement of cash flows presentations for chapter 14 by glenn owen
TRANSCRIPT
The Statement of Cash FlowsThe Statement of Cash Flows
Presentations for Chapter 14 by Glenn Owen
Key PointsKey Points The structure and format of the statement of cash flows. Cash flows from operating, investing, and financing activities. How the statement of cash flows complements the other financial
statements and how it can be used by those interested in the financial condition of a company.
Important investing and financing transactions that do not appear on the statement of cash flows and how they are reported.
Economic consequences associated with the statement of cash flows.
Preparing a statement of cash flows from the information contained in two balance sheets, an income statement, and a statement of retained earnings.
General Description of the General Description of the Statement of Cash FlowsStatement of Cash Flows
Cash provided (used) by operating activities– Cash inflows and outflows associated with the acquisition
and sale of the company’s inventories and services
Cash provided (used) by investing activities– Cash inflows and outflows associated with the purchase and
sale of a company’s noncurrent assets
Cash provided (used) by financing activities– Cash inflows and outflows associated with
a company’s two sources of outside capital: liabilities and contributed capital
Determining Cash Determining Cash Inflow from SalesInflow from SalesSales
Allowance for Doubtful Accounts Bad Debt Expense
Accounts Receivable
12,000
1,000
Determining Cash Determining Cash Inflow from SalesInflow from SalesSales
32,000
Allowance for Doubtful Accounts Bad Debt Expense
(1)
Accounts Receivable
12,000
32,000
(1)
(1) Sales on account
1,000
Determining Cash Determining Cash Inflow from SalesInflow from SalesSales
32,000
Allowance for Doubtful Accounts
1,0001,100
Bad Debt Expense
1,100
(1)
(2)
Accounts Receivable
12,000
32,000
(1)
(2)
(1) Sales on account (2) Estimated allowance
Determining Cash Determining Cash Inflow from SalesInflow from SalesSales
32,000
Accounts Receivable
12,000
32,000
800
Allowance for Doubtful Accounts
800
1,0001,100
1,300
1,100
(1)
(2)(3)
(3)(1)
(2)
(1) Sales on account (2) Estimated allowance(3) Write-off of accounts receivable
Bad Debt Expense
Determining Cash Determining Cash Inflow from SalesInflow from SalesSales
32,000
Accounts Receivable
12,000
32,000
23,200
80020,000
Allowance for Doubtful Accounts
800
1,0001,100
1,300
Bad Debt Expense
1,100
(1) Sales on account (2) Estimated allowance(3) Write-off of accounts receivable (4) Collection on account
(1)(1)
(2)(3)
(4)(3)
(2)
Cash inflow from sales = $20,000
(4)
Determining Cash Determining Cash Paid to SuppliersPaid to Suppliers
Cost of Goods Sold Inventory
Accounts Payable
3,000
12,000
Determining Cash Determining Cash Paid to SuppliersPaid to Suppliers
Cost of Goods Sold
11,000
Inventory
3,00011,000
Accounts Payable
(1)(1)
12,000
(1) Sales
Determining Cash Determining Cash Paid to SuppliersPaid to Suppliers
Cost of Goods Sold
11,000
Inventory
3,000
12,000
11,000
Accounts Payable
12,00012,000
(1)(1)
(2)
(2)
(1) Sales (2) Inventory purchase on account
Determining Cash Determining Cash Paid to SuppliersPaid to Suppliers
Cost of Goods Sold
11,000
Inventory
3,000
12,000
4,000
11,000
Accounts Payable
15,000
12,00012,000
9,000(1) Sales (2) Inventory purchase(3) Payment on account. on account
(1)(1)
(2)
(2)(3)
Cash paid to suppliers = $15,000(3)
Determining Cash Inflow from Determining Cash Inflow from Sale of MachinerySale of Machinery
Loss on Sale of Machinery Machinery
8,000
Accumulated Depreciation
2,000
Depreciation Expense
Determining Cash Inflow from Determining Cash Inflow from Sale of MachinerySale of Machinery
Loss on Sale of Machinery Machinery
8,000
Accumulated Depreciation
2,0001,000
Depreciation Expense
1,000(1)(1)
(1) Depreciation
Determining Cash Inflow from Determining Cash Inflow from Sale of MachinerySale of Machinery
Loss on Sale of Machinery
100
Machinery
8,000
6,000
2,000
Accumulated Depreciation
500
2,0001,000
2,500
Depreciation Expense
1,000
(1) Depreciation (2) Sale of machinery for a loss
(2)
(1)(1)
(2)
(2)Cash inflow from machinery = $1,400
(2)
Review Problem Review Problem Operating Cash FlowsOperating Cash Flows
Income Statement Adjustments/ Operating Explanations Cash Flows
Review Problem Review Problem Operating Cash FlowsOperating Cash Flows
Income Statement Adjustments/ Operating Explanations Cash Flows
Sales $55,000 (500) [increase in a/r]$54,500
Review Problem Review Problem Operating Cash FlowsOperating Cash Flows
Income Statement Adjustments/ Operating Explanations Cash Flows
Sales $55,000 (500) [increase in a/r]$54,500
COGS (35,000) (2,500) [increase in inv.]
+3,500 [increase in a/p] (34,000)
Review Problem Review Problem Operating Cash FlowsOperating Cash Flows
Income Statement Adjustments/ Operating Explanations Cash Flows
Sales $55,000 (500) [increase in a/r]$54,500
COGS (35,000) (2,500) [increase in inv.]
+3,500 [increase in a/p] (34,000)
Rent (2,000) (1,000) [increase in pp rent](3,000)
Interest (2,000) (500) [decrease in premium](2,500)
Misc. (9,000) (3,000) [decrease in other pay](12,000)
Depreciation (5,000) [no cash effect]0
Amortization (1,000) [no cash effect]0
Gain 1,000 [no cash effect]0
Review Problem Review Problem Operating Cash FlowsOperating Cash Flows
Income Statement Adjustments/ Operating Explanations Cash Flows
Sales $55,000 (500) [increase in a/r]$54,500
COGS (35,000) (2,500) [increase in inv.]
+3,500 [increase in a/p] (34,000)
Rent (2,000) (1,000) [increase in pp rent](3,000)
Interest (2,000) (500) [decrease in premium](2,500)
Misc. (9,000) (3,000) [decrease in other pay](12,000)
Depreciation (5,000) [no cash effect]0
Amortization (1,000) [no cash effect]0
Gain 1,000 [no cash effect]0
Net income $ 2,000 Net cash from operations$ 3,000
Review Problem Review Problem Investing Cash FlowsInvesting Cash Flows
Investing Activities Adjustments/ Investing Explanations Cash Flows
Review Problem Review Problem Investing Cash FlowsInvesting Cash Flows
Investing Activities Adjustments/ Investing Explanations Cash Flows
Sale of machinery Cash proceeds$ 3,000
Review Problem Review Problem Investing Cash FlowsInvesting Cash Flows
Investing Activities Adjustments/ Investing Explanations Cash Flows
Sale of machinery Cash proceeds$ 3,000
Purchase of machinery Cash purchases
(10,000)
Net cash provided (used) by investing activities$ (7,000)
Review Problem Review Problem Financing Cash FlowsFinancing Cash Flows
Financing Activities Adjustments/ Financing Explanations Cash Flows
Review Problem Review Problem Financing Cash FlowsFinancing Cash Flows
Financing Activities Adjustments/ Financing Explanations Cash Flows
Issue of common stock
$ 6,000
Review Problem Review Problem Financing Cash FlowsFinancing Cash Flows
Financing Activities Adjustments/ Financing Explanations Cash Flows
Issue of common stock
$ 6,000 Cash dividends
(1,500)
Net cash provided (used) by financing activities$ (4,500)
Review Problem SummaryReview Problem SummaryStatement of Cash FlowsStatement of Cash FlowsXYZ EnterprisesStatement of Cash FlowsFor the Year Ended December 31, 2003
Review Problem SummaryReview Problem SummaryStatement of Cash FlowsStatement of Cash Flows
Cash provided (used) by operating activities $ 3,000
XYZ EnterprisesStatement of Cash FlowsFor the Year Ended December 31, 2003
Review Problem SummaryReview Problem SummaryStatement of Cash FlowsStatement of Cash Flows
Cash provided (used) by operating activities $ 3,000
Cash provided (used) by investing activities (7,000)
XYZ EnterprisesStatement of Cash FlowsFor the Year Ended December 31, 2003
Review Problem SummaryReview Problem SummaryStatement of Cash FlowsStatement of Cash Flows
Cash provided (used) by operating activities $ 3,000
Cash provided (used) by investing activities (7,000)
Cash provided (used) by financing activities 4,500
XYZ EnterprisesStatement of Cash FlowsFor the Year Ended December 31, 2003
Review Problem SummaryReview Problem SummaryStatement of Cash FlowsStatement of Cash Flows
Cash provided (used) by operating activities $ 3,000
Cash provided (used) by investing activities (7,000)
Cash provided (used) by financing activities 4,500
Net increase (decrease) in cash balance $ 500
Beginning cash balance 2,500
Ending cash balance $ 3,000
XYZ EnterprisesStatement of Cash FlowsFor the Year Ended December 31, 2003
C O P Y R I G H T
C o p y r i g h t © 2 0 0 3 , J o h n W i l e y & S o n s , I n c . A l l r i g h t s r e s e r v e d .R e p r o d u c t i o n o r t r a n s l a t i o n o f t h i s w o r k b e y o n d t h a t p e r m i t t e d i n S e c t i o n 1 1 7 o f t h e 1 9 7 6 U n i t e d S t a t e s C o p y r i g h t A c t w i t h o u t t h ee x p r e s s w r i t t e n p e r m i s s i o n o f t h e c o p y r i g h t o w n e r i s u n l a w f u l . R e q u e s t f o r f u r t h e r i n f o r m a t i o n s h o u l d b e a d d r e s s e d t o t h e P e r m i s s i o n s D e p a r t m e n t , J o h n W i l e y & S o n s , I n c . T h e p u r c h a s e r m a y m a k e b a c k - u p c o p i e s f o r h i s / h e r o w n u s e o n l y a n d n o t f o r d i s t r i b u t i o n o r r e s a l e . T h e P u b l i s h e r a s s u m e s n o r e s p o n s i b i l i t yf o r e r r o r s , o m i s s i o n s , o r d a m a g e s , c a u s e d b y t h e u s e o f t h e s e p r o g r a m s o r f r o m t h e u s e o f t h e i n f o r m a t i o n c o n t a i n e d h e r e i n .