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*PROBLEM 12-10A (Continued)
Computations:
(1) Cash receipts from customers
(2) Cash payments to suppliers
Cost of goods sold .......................................................... $135,460
(3) Cash payments for operating expenses
Operating expenses exclusive of
depreciation ............................................... $12,410
PROBLEM 12-11A
SPICER COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ............................................................. $ 37,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cash flows from investing activities
Sale of land ($130,000 + $40,000 – $145,000) ...... 25,000
Sale of equipment ................................................. 8,000
PROBLEM 12-12A
Transaction
Free Cash
Flow
($125,000)
(a)
Recorded credit sales $2,500.
NE
(b)
Collected $1,900 owed by customers.
I
(c)
Paid amount owed
to suppliers, $2,750.
D
CT 12-1 FINANCIAL REPORTING PROBLEM
(a) Net cash provided by operating activities (in millions):
2014 $59,713
2013 $53,666
(b) The decrease in cash and cash equivalents for the year ended
September 27, 2014 was $415 million.
CT 12-2 COMPARATIVE ANALYSIS PROBLEM
(a)
(in thousands)
Columbia
Sportswear
VF Corporation
CT 12-3 COMPARATIVE ANALYSIS PROBLEM
(a)
(All amounts in millions)
Amazon
Wal-Mart
CT 12-4 REAL-WORLD FOCUS
CT 12-5 REAL-WORLD FOCUS
(a) At the end of 2009 the nonfinancial companies in the Standard and
Poor’s 500 had accumulated $932 billion. This represented a 31%
increase over the prior year.
(b) First, cash (and short term investments) do not generate a very good
CT 12-6 REAL-WORLD FOCUS
(a) The stock was issued at a price of $70 per share. A few months
previously it sold for more than $300 per share.
(b) The company issued shares of stock, even though its stock price was
CT 12-7 DECISION MAKING ACROSS THE ORGANIZATION
(a) COMPUTER SERVICES COMPANY
Statement of Cash Flows
For the Year Ended January 31, 2017
Cash flows from operating activities
Net loss .................................................... $ (35,000)*
Adjustments to reconcile net income
to net cash provided by operating
activities:
CT 12-7 (Continued)
*Computation of net income (loss)
Sales of merchandise ............................... $385,000
Interest revenue ........................................ 6,000
Gain on sale of investment
(b) From the information given, it appears that from an operating stand-
point, Computer Services Company did not have a superb first year,
having suffered a $35,000 net loss. Maria is correct; the statement of
cash flows is not prepared in correct form. The correct format
CT 12-8 COMMUNICATION ACTIVITY
MEMO
To: Walt Jax
From: Student
Re: Statement of cash flows
The statement of cash flows provides information about the cash receipts
and cash payments of a firm, classified as operating, investing, and financing
activities. The operating activities section of the company’s statement of
cash flows shows that cash increased by $172,000 as a result of transactions
CT 12-9 ETHICS CASE
(a) The stakeholders in this situation are:
Hans Pfizer, president of Pendleton Automotive Corporation.
Kurt Nolte, controller.
(b) The president’s statement, “We must get that amount above $1 million,”
puts undue pressure on the controller. This statement along with his
statement, “I know you won’t let me down Kurt,” encourages Kurt to do
something unethical.
CT 12-10 ALL ABOUT YOU
(a) The article describes three factors that determine how much money
you should set aside. (1) Your willingness to take risk. You need to evaluate
how willing you are to experience wide swings in your financial position.
(2) Your needs. You need to carefully evaluate your situation and evaluate
(3) Your upcoming expenses. Here you need to look further out into the
horizon and consider the implications of larger events such as a big trip,
a wedding, or education costs.
CT 12-11 FASB CODIFICATION ACTIVITY
(a) Cash equivalents are short-term, highly liquid investments that have
both of the following characteristics:
a. Readily convertible to known amounts of cash
b. So near their maturity that they present insignificant risk of changes
in value because of changes in interest rates.
(b) Financing activities include obtaining resources from owners and
providing them with a return on, and a return of, their investment;
receiving restricted resources that by donor stipulation must be used
CT 12-11 (Continued)
(d) Operating activities include all transactions and other events that are
not defined as investing or financing activities (see paragraph 230-10-
45-12 through 45-15). Operating activities generally involve producing
(e) The primary objective of a statement of cash flows is to provide
relevant information about the cash receipts and cash payments of an
entity during a period.
As indicated in the glossary at this same section, cash includes not
only currency on hand but demand deposits with banks or other
financial institutions. Cash also includes other kinds of accounts that
have the general characteristics of demand deposits in that the
(f) Information about all investing and financing activities of an entity
during a period that affect recognized assets or liabilities but that do
not result in cash receipts or cash payments in the period shall be
IFRS CONCEPTS AND APPLICATION
IFRS 12-1
Under IFRS bank overdrafts are treated as part of cash and cash
equivalents on the balance sheet. As a result, on the statement of cash
IFRS 12-2
The treatment of these items under IFRS and GAAP is as follows:
IFRS GAAP
(a) Interest paid Operating or financing Operating
(b) Interest received Operating or investing Operating
IFRS 12-3 INTERNATIONAL FINANCIAL REPORTING PROBLEM
(a) The company reports interest paid as an operating activity.
(b) The company reports dividends received as an operating activity.
