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Statement of cash flows

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A. 1. $6,738 (from the income statement)
2. $1,000 (from the income statement)
3. $(950) (subtract increase in accounts receivable)
4. $(1,500) (subtract increase in inventories)
5. $(100) (subtract increase in prepaid insurance)
6. $(250) (subtract decrease in rent payable)
7. $350 (add increase in wages payable)
B. Purchase of property, plant and equipment $(5,015)
Purchase of land (1,000)
C. Addition to loan payable $4,000
Sale of common stock 1,000
Purchase of treasury stock (3,000)
Payment of dividends (1,000)
D. Planet Accessories Company
Statement of Cash Flows (indirect format)
Year Ended December 31, 2007
Operating Activities
Net income $ 6,738
Add/deduct items to reconcile net income
to cash flow from operating activities:
Depreciation $ 1,000 1
Increase in accounts receivable (950) 2
Increase in inventories (1,500) 3
Increase in prepaid insurance (100) 4
Decrease in rent payable (250) 5
Increase in wages payable 350 6 (1,450)
Cash flow from operating activities 5,288
Investing Activities
Purchase of property, plant and equipment (5,015)7
Purchase of land (1,000)8
Cash flow for investing activities (6,015)
Financing Activities
Addition to loan payable 4,000 9
Sale of common stock 1,000 10
Purchase of treasury stock (3,000) 11
Payment of dividends (1,000) 12
Cash flow from financing activities 1,000
Net increase in cash during ...

Solution Summary

The solution has three problems - 1. Preparing a statement of cash flows for Plant Accessories Company, 2. Analysing the statement of cash flows for Embarcadero Company and 3. Determining the impact on cash flows and net income for a given set of transactions

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Statement of Cash Flows: Time for change! SFAS No. 95

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As contained in the Week Four electronic reserve readings article readings, this article, Broome, O. W. (2004, March/April). Statement of cash flows: Time for change! Financial Analysts Journal, 60(2), 16. , describes the current SFAS No. 95 requirements for the statement of cash flows, cites recent cases of abuse and disinformation involving the statement, and makes significant recommendations for improving the statement. Based on the comments in the article do you think the three sections of the statement of cash flows provide enough information for the reader? Of the three which provides the most information or is this an 'it depends' answer?

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