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CHAPTER 11

THE STATEMENT OF CASH FLOWS


Problems
Problem 11-1

2003 sales..........................................................................................................................................................................
$8,743,000
Less: Change in accounts receivable..................................................................................................................................
(70,000)
Cash generated from sales during 2003.............................................................................................................................
$8,673,000
Problem 11-2
a. Issuance of a 12-month note in return for $2 million cash is a financing source of cash. Use of $2
million cash to purchase equipment is an investment use of cash.
b. Cash proceeds from the issuance of common stock is a financing source of cash. The use of cash to
retire mortgage bonds is a financing use of cash.
c. No cash effect.
d. No cash effect.
e. Cash proceeds from the sale of machinery is an investment source of cash.
The above responses assume the direct method is used to present its cash flow of statement.
Problem 11-3

Kidsn Caboodle
Statement of Cash Flows

Cash received from customers............................................................................................................


$155,000
Cash used in operations.......................................................................................................................
(146,900)
Cash from operations.......................................................................................................................
$8,100

Equipment...........................................................................................................................................
(10,500)
Cash used for investments...............................................................................................................
(10,500)

Loan....................................................................................................................................................
21,000
Cash from financing.........................................................................................................................
21,000

Increase in cash................................................................................................................................
$ 18,600
Problem 11-4

Net loss.................................................................................................................................................
$(11,000)
Depreciation..........................................................................................................................................
26,400
15,400
Accounts receivable (reduced)..............................................................................................................
17,600
Accounts payable (increased)................................................................................................................
8,800
Accrued salaries (increased)..................................................................................................................
3,300
Other accruals (increased).....................................................................................................................
2,200

Cash flow from operations....................................................................................................................


47,300

Accounting: Text and Cases 12e Instructors Manual

Anthony/Hawkins/Merchant

Investments........................................................................................................................................................
0

Long-term debt (reduced)..................................................................................................................................


(29,700)

Change in cash................................................................................................................................................
17,600
Beginning cash...............................................................................................................................................
4,400
Ending cash....................................................................................................................................................
$22,000
Problem 11-5

Operating Activities
Cash received from customers........................................................................................................................
$62,100
Interest received..............................................................................................................................................
345
Operating cash payments................................................................................................................................
(54,165)
Interest payment.............................................................................................................................................
(1,035)
Net cash provided by operations.....................................................................................................................
7,245

Investing Activities
Sale of old machine.........................................................................................................................................
3,105
Down payment on new truck..........................................................................................................................
(3,450)

Net cash used in investing activities...............................................................................................................


(345)
Financing Activities
Payment of debt
............................................................................

(3,450)

Net cash used in financing activities...............................................................................................................


(3,450)

Increase in cash...............................................................................................................................................
3,450
Beginning cash...............................................................................................................................................
3,450
Ending cash....................................................................................................................................................
$ 6,900