$ in millions
Pension expense (given) 82
Plan assets (expected return) 90
Exercise 21–28
Exercise 21–29
Requirement 1
The specific citation that specifies the guidelines for cash equivalents is FASB
Requirement 2
Cash Equivalents
Cash equivalents are short-term, highly liquid investments that have both of the
following characteristics:
Generally, only investments with original maturities of three months or less qualify
under that definition. Original maturity means original maturity to the entity
holding the investment. For example, both a three-month U.S. Treasury bill and a
The FASB Accounting Standards Codification represents the
single source of authoritative U.S. generally accepted accounting principles. The
specific citation for each of the following items is:
1. Disclosure of interest and income taxes paid if the indirect method is used:
2. Primary objectives of a statement of cash flows:
3. Disclosure of noncash investing and financing activities:
Exercise 21–30
RED, INC.
Spreadsheet for the Statement of Cash Flows
Dec.31 Changes Dec. 31
2017 Debits Credits 2018
Balance Sheet
Assets:
Cash 110 (13)86 24
Accounts receivable 132 (3)46 178
Prepaid insurance 3 (4) 4 7
Liabilities:
Accounts payable 100 (6)13 87
Shareholders’ Equity:
Exercise 21–31
Exercise 21–31 (continued)
Spreadsheet for the Statement of Cash Flows
(continued)
Dec.31 Changes Dec. 31
2017 Debits Credits 2018
Statement of Cash Flows
Net income (1)103
Adjustments for noncash effects:
Net cash flows (25)
Investing activities:
Net cash flows (221)
Financing activities:
Net cash flows 160
Net decrease in cash (13)86 (86 )
Exercise 21–31 (concluded)
RED, INC.
Statement of Cash Flows
For year ended December 31, 2018 ($ in millions)
Cash flows from operating activities:
Net income $ 103
Adjustments for noncash effects:
Cash flows from investing activities:
Cash flows from financing activities:
Issuance of note payable 50
Net decrease in cash (86)
BALANCE SHEET
ACCOUNTS
Cash (Statement of Cash Flows)
Exercise 21–32
________________________________________________________
86
Operating Activities:
Investing Activities:
Financing Activities:
Accounts Receivable Prepaid Insurance
________________________ ________________________
Inventory Buildings and Equipment
________________________ ________________________
Accumulated Depreciation Accounts Payable
________________________ ________________________
Exercise 21–32 (continued)
Accrued Expenses Payable Notes Payable
________________________ ________________________
Bonds Payable Retained Earnings
________________________ ________________________
INCOME STATEMENT ACCOUNTS
Sales Cost of Goods Sold
________________________ ________________________
Depreciation Expense Operating Expenses
________________________ ________________________
Net Income (Income Summary)
________________________
Exercise 21–32 (concluded)
RED, INC.
Statement of Cash Flows
For year ended December 31, 2018 ($ in millions)
Cash flows from operating activities:
Cash inflows:
From customers $1,954
Cash flows from investing activities:
Cash flows from financing activities:
Issuance of note payable 50
Net decrease in cash (86)
Classifications
+ I Investing activity (cash inflow)
Problems Problem 21–1
Transactions
Example + I 1. Sale of land.
+ F 2. Issuance of common stock for cash.
– F 3. Purchase of treasury stock.
+ I 9. Collection of note receivable (principal amount).
+ F 10. Issuance of bonds.
X 11. Issuance of stock dividend.
N 12. Payment of property dividend.
– F 13. Payment of cash dividends.
+ F 14. Issuance of short-term note payable for cash.
+ F 15. Issuance of long-term note payable for cash.