Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 23

Prepare and Analyze a Statement of Cash Flows; Involves Preparation of a Worksheet
Purcells, Inc., sells a single product (Pulsa) exclusively through newspaper advertising. The comparative income statements and balance sheets are for the past two years.

Additional Information
The following information regarding the company's operations in 2015 is available from the company's accounting records:
1. Early in the year the company declared and paid a $4,000 cash dividend.
2. During the year marketable securities costing $15,000 were sold for $11,000 cash, resulting in a $4,000 nonoperating loss.
3. The company purchased plant assets for $20,000, paying $8,000 in cash and issuing a note payable for the $12,000 balance.
4. During the year the company repaid a $10,000 note payable, but incurred an additional $12,000 in long-term debt as described in 3, above.
5. The owners invested $35,000 cash in the business as a condition of the new loans described in paragraphs 3 and 4, above.
Instructions
a. Prepare a worksheet for a statement of cash flows, following the example shown in Exhibit 13-7.
b. Prepare a formal statement of cash flows for 2011, including a supplementary schedule of noncash investing and financing activities. (Use the format illustrated in Exhibit 13-8. Cash provided by operating activities is to be presented by the indirect method. )
c. Explain how Purcells, Inc., achieved positive cash flows from operating activities, despite incurring a net loss for the year.
EXHIBIT 13-7
Worksheet for a Statement of Cash Flows

EXHIBIT 13-8
Auto Supply Co. Statement of Cash Flows