Hbr – Cash Flow Stattement – Chemalite.

bills FLows Part 1 Exercises Classification of immediate payment Flows For each event listed below, select the appropriate socio-economic class which describes the effect of the event on a statement of notes flows a. Cash provided/used by operating activities. b. Cash provided/used by investing activities. c. Cash provided/used by financing activities. d. Not a cash flow. C/A 1. Payment on long-term debt (company pays INTEREST only) think about this how this could be both related to debt because financing and operating because its part of trading operations C 2. Issuance of bonds at a premium A3. Collection of accounts receivable D4.Cash dividends declared its not a cash flow D 5. Issuance of shares to acquire land (exchange of shares for land) no cash exchanges here B6. Sale of merchantable securities (long-term) A7. Payment of employees wages C8. Issuance of common shares for cash A/? 9. Payment of income taxes payable could be disposition of property, etc. then this will fall beneath investing B10. Purchase of equipment B11. Purchase of common shares in another company B12. Sale of real estate held as a long-term investment proceeding Transaction Journal Entry Impact on earnings Impact on cash flows Cash flow classification Adjustment? Issue 1,000 shares for $10,000 Dr. cash (BS) 10K Cr. Common shares 10K No INFLOW of 10k Financing No reconciliation required item included in CFF Purchase inventories for $2,000 on account (i. e. not for cash) Dr. muniment (BS)CR. Accounts payable (BS) No No impact run (no CASH FLOW) Earnings $0CFO $0 Pay off $2,000 for inventories purchased above Dr. AP (BS) 2kCr. Cash (BS) 2k No OUTFLOW of 2k Operating Earnings $0Adjustment Change in non-cash working capital $-2kCFO $-2k Sell $1,000 worth of inventory for $4,000, on account (i. e. not for cash) Dr. /r 4000Cr. tax revenue 4000Dr. Cost of Goods Sold 1000Cr. Inventory 1000 Yes no Operating (no cash flow) Earnings $3000AdjustmentChange in non-cash wc $-3000CF O $0 Collect $4,000 relating to sale above Dr. cash 4kCr. Ar 4k no INFLOW of 4k Operating Earnings 0AdjustmentChange in non-cash wc 4kCFO 4k Purchase truck (PPE) for $3,000 cash Dr. PPE 3kCr. Cash 3K No Outflow of 3k Investing Included in CFI no reconciliation needed Record depreciation of truck for the period ($500) Dr. Depreciation expense 500Cr. Acc. Dep. (BS) 500 Yes-500 no Operating Earnings -500AdjustmentDepreciation +500CFO 0Introduction to Cash Flow construction The Controller of Schmidt Tooling Corporation has provided you with the following information Schmidt Tooling Corporation Income Statement For the Year terminate December 31, 2010 Net Sales 620,000 Operating expenses 410,000 210,000 Income from operations Other revenues and expenses Gain on sale of equipment 30,000 Interest expense 8,000 22,000 Income before income taxes 232,000 Income taxes 92,800 Net income 139,200 Schmidt Tooling CorporationComparative Account Information Relating to Op erations For the Year Ended December 31, 2010 2010 2009 Accounts receivable 56,000 40,000 Prepaid insurance 5,000 6,000 Accounts payable 59,000 47,000 Interest payable 600 1,500 Income taxes payable 4,200 6,000 Unearned revenue 20,000 14,000 Instructions Prepare a statement of cash flows (for the companys operating activities only) for the year ended December 31, 2010 using the indirect format.