Additional information for 2015:

Depreciation expense was comprised of $6,000 for building and $3,000 fo

The company sold equipment with a book value of $7,000 (cost $8,000, le
$4,000 cash.
Issued $110,000 of long-term bonds in direct exchange for land.
A building costing $120,000 was purchased for cash. Equipment costing $
Issued common stock for $20,000 cash.
The company declared and paid a $29,000 cash dividend.
I. Cash flows from operating activities
Net income

Adjustment to reconcile net income to net

cash provided by operating activities
Depreciation expense
Loss on disposal of equipment
Decrease in account receivables
Increase in inventory
Increase in prepaid expenses
Increase in account payable
Decrease in income taxes payable
Net cash provided by operating activities
II. Cashflows from investing activities
Purchase of building
Purchase of equipment
Sale of equipment
Net cash used by investing activities

III. Cash flows from financing activities

Issuance of common stock
Payment of cash dividends
 Net cash used by financing activities

Net increase in cash

Cash at begining of period
Cash at end of period

or building and $3,000 for equipment.

Homework:
of $7,000 (cost $8,000, P13-7 depreciation $1,000) for
less accumulated

hange for land.

ash. Equipment costing $25,000 was also purchased for cash.

dividend.
 I. Cashflow from op
145,000 1. Net income

2. Add back noncas

9,000 Depreciation
3,000 Amortization
10,000 Depletion
- 5,000 3. Deduct gains/add
- 4,000 4. Adjust changes c
16,000 Add Decreas
- 2,000 Add Increase
172,000
II. Cashflow from in
- 120,000 III. Cashflow from fi
- 25,000 IV. Increase/decrea
4,000 V. Cash at begining
- 141,000 VI. Cash at the end

20,000
- 29,000
- 9,000

22,000
33,000
55,000
flow from operating activities
ncome

back noncash expenses

Depreciation
Amortization
Depletion
ct gains/add loss on sale of NCA's
t changes current assets and current liabilities accounts
Add Decrease in CA/ Deduct increase in CA
Add Increase in CL/ Deduct Decrease in CL

flow from investing activities

flow from financing activities
ease/decrease in net cash
at begining of period
at the end of period
accounts
CLASSIFICATION OF CASHFLOW

SOCF
Income Statement Operating acti

Balance Sheet Current assets Operating acti

Non-current assets Investing acti
Current liabilities Operating acti
Non-current liabilities Financing acti
Equity Financing acti

Example:
1. Purchased inventory for $5000 cash
2.         Collected $1,000 cash for services performed
3.         Purchased equipment for $10,000 cash
4. Sell $2000 goods on account
PREPARATION OF SOCF
a. Direct method
b. Indirect method
Adjust Net income => Net cash from operating activities

Net income = Revenue - Expenses

= Cash revenue + Noncash Revenue

Net cash from OA = Net income - Noncash revenue + n

I. Cashflow from operating activities

1. Net income
2. Add back noncash expenses
Depreciation
Amortization
Depletion
3. Deduct gains/add loss on sale of NCA's
4. Adjust changes current assets and current liabilities a
Add Decrease in CA/ Deduct increase in CA
Add Increase in CL/ Deduct Decrease in CL

II. Cashflow from investing activities

III. Cashflow from financing activities
IV. Increase/decrease in net cash
V. Cash at begining of period
VI. Cash at the end of period
Operating activities Cash

Operating activities
nvesting activities Advertising expe
Operating activities
inancing activities
inancing activities Buy inventory for
Inventory

s performed
0 cash
ting activities

sh Revenue - Cash expenses - Noncash expenses

revenue + noncash expenses + cash receipt but not revenue -

nt liabilities accounts
ease in CA
ease in CL
 Sales revenue => Cash inflow from operating activiti

dvertising expense => cash outflow from operating activi

Cash

uy inventory for $1000 cash

nventory =>cash outflow from operating activiti
Cash
t not revenue - cash payment but not expenses
operating activities

operating activities

operating activities
 ASSETS = LIABILITIES + STOCKHOLDER'S EQUITY

COMPANY'S NAME
BALANCE SHEET
As at MMM DD, YYYY

ASSETS LIABILITIES
Current assets Current liabilities
Cash Account payable
Account receivable Taxes payable
Inventory Accrued expenses
Supplies Unearned revenue
Prepaid expenses ......
....
Non-current assets Non-current liabilities
Long-term invesment Long-term loans
PPE ....
Intangible assets Total liabilities
EQUITY
Total assets Common stock
Retained earnings
Total equity

Total liabilities & equity

nt liabilities
ccount payable
axes payable
ccrued expenses
nearned revenue

urrent liabilities
ong-term loans

iabilities

on stock
ed earnings

lities & equity