Accounting Text and Cases Chapter 11 Problems

Chapter 11
THE STATEMENT OF CASH FLOWS

Problems

Problem 11-1

|2003 sales |$8,743,000 |
|Less: Change in accounts receivable | (70,000) |
|Cash generated from sales during 2003 |$8,673,000 |

Problem 11-2

a. Issuance of a 12-month note in return for $2 million cash is a financing source of cash. Use of $2 million cash to purchase equipment is an investment use of cash.

b. Cash proceeds from the issuance of common stock is a financing source of cash. The use of cash to retire mortgage bonds is a financing use of cash.

c. No cash effect.

d. No cash effect.

e. Cash proceeds from the sale of machinery is an investment source of cash.

The above responses assume the direct method is used to present its cash flow of statement.

Problem 11-3

|Kids’n Caboodle |
|Statement of Cash Flows |
|Cash received from customers |$155,000 |
|Cash used in operations | (146,900) |
|Cash from operations | $8,100 |
| | |
|Equipment | (10,500) |
|Cash used for investments | (10,500) |
| | |
|Loan | 21,000 |
|Cash from financing | 21,000