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Accounting Chapter 21 Homework No reproduction or distribution without

Page Count
14 pages
Word Count
2447 words
Book Title
INTERMEDIATE ACCOUNTING WITH AIR FRANCE-KLM 2013 ANNUAL REPORT 8th Edition
Authors
David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Exercise 2123
Direct Method
Cash Flows from Operating Activities:
Cash received from customers $672
2142 Intermediate Accounting, 8/e
Exercise 2124
Indirect Method
Cash Flows from Operating Activities:
Net income $ 91
Adjustments for noncash effects:
Depreciation expense 90
Exercise 2125
Direct Method
Cash Flows from Operating Activities:
Cash received from customers $1,332 a
2144 Intermediate Accounting, 8/e
Exercise 2125 (concluded)
Calculations using summary entries:
a. Summary Entry Cash (received from customers) 1,332
Accounts receivable 12
Sales revenue 1,320
Exercise 2126
Indirect Method
Cash Flows from Operating Activities:
Net income $182
Adjustments for noncash effects:
Depreciation expense 180
2146 Intermediate Accounting, 8/e
Exercise 2127
RED, INC.
Spreadsheet for the Statement of Cash Flows
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Balance Sheet
Assets:
Cash 110 (11) 86 24
Liabilities:
Accounts payable 100 (2) 13 87
Accrued expenses payable 11 (4) 5 6
Income Statement
Revenues:
Exercise 2127 (continued)
Spreadsheet for the Statement of Cash Flows
(continued)
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Statement of Cash Flows
Operating activities:
Cash inflows:
Net cash flows (221)
Financing activities:
Issuance of note payable (8) 50
Exercise 2127 (concluded)
RED, INC.
Statement of Cash Flows
For year ended December 31, 2016 ($ in millions)
Cash flows from operating activities:
Cash inflows:
From customers $1,954
Cash outflows:
Cash flows from investing activities:
Purchase of equipment (230)
Cash flows from financing activities:
Issuance of note payable 50
Exercise 2128
$ in millions
Pension expense (given) 82
2150 Intermediate Accounting, 8/e
Exercise 2129
Requirement 1
The specific citation that specifies the guidelines for cash equivalents is FASB ASC
30510–20: “Cash and Cash Equivalents–OverallGlossary.” Several other
Requirement 2
Specifically, the guidelines are:
Cash Equivalents
Cash equivalents are short-term, highly liquid investments that have both of the
following characteristics:
a. Readily convertible to known amounts of cash.
Exercise 2130
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:
3. Disclosure of noncash investing and financing activities:
2152 Intermediate Accounting, 8/e
Exercise 2131
RED, INC.
Spreadsheet for the Statement of Cash Flows
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Balance Sheet
Assets:
Cash 110 (13) 86 24
Accounts receivable 132 (3) 46 178
Exercise 2131 (continued)
Spreadsheet for the Statement of Cash Flows
(continued)
Dec.31 Changes Dec. 31
2015 Debits Credits 2016
Statement of Cash Flows
Net income (1) 103
Adjustments for noncash effects:
Investing activities:
Financing activities:
Issuance of note payable (10) 50
Exercise 2131 (concluded)
RED, INC.
Statement of Cash Flows
For year ended December 31, 2016 ($ in millions)
Cash flows from operating activities:
Net income $ 103
Adjustments for noncash effects:
Depreciation expense 50
Cash flows from investing activities:
Cash flows from financing activities:
Issuance of note payable 50
Exercise 2132
BALANCE SHEET ACCOUNTS
Cash (Statement of Cash Flows)
______________________________________________________
86
Operating Activities:
From customers (1) 1,954 1,523 (2) To suppliers
Accounts Receivable Prepaid Insurance
______________________ ______________________
46 4
________ ________
(1) 46 (4) 4
Inventory Buildings and Equipment
______________________ ______________________
Accumulated Depreciation Accounts Payable
______________________ ______________________
2156 Intermediate Accounting, 8/e
Exercise 2132 (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)
______________________
103
________
Exercise 2132 (concluded)
RED, INC.
Statement of Cash Flows
For year ended December 31, 2016 ($ in millions)
Cash flows from operating activities:
Cash inflows:
From customers $1,954
Cash outflows:
Cash flows from investing activities:
Purchase of equipment (230)
Cash flows from financing activities:
Issuance of note payable 50
Net decrease in cash (86)
2158 Intermediate Accounting, 8/e
CPA / CMA REVIEW QUESTIONS
CPA Exam Questions
1. b. The two gains are not cash flows. Proceeds from the sale of equipment are
4. a. Dividends paid to stockholders are considered cash flows relating to
5. d. Dividends paid is not a component of cash flow from investing; it is a
6. a. Cash flows from operations using the indirect method are computed by
taking net income plus noncash expenses (e.g., depreciation) less gains from
8. b. U.S. GAAP requires that interest received and interest payments be reported
CMA Exam Questions
1. d. A statement of cash flows should report as operating activities all
transactions and other events not classified as investing or financing
2. a. Investing activities include the lending of money and the collecting of those
loans, and the acquisition, sale, or other disposal of securities that are not
cash equivalents and of productive assets that are expected to generate
3. c. Net operating cash flow may be determined by adjusting net income.
Depreciation is an expense not directly affecting cash flows that should be
2160 Intermediate Accounting, 8/e
PROBLEMS
Problem 211
Classifications
+ I Investing activity (cash inflow)
Transactions
Example + I 1. Sale of land.
+ F 2. Issuance of common stock for cash.

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