1. Determining Net Cash Flow from Financing Activities Hebert Company reported t
ID: 2472379 • Letter: 1
Question
1. Determining Net Cash Flow from Financing Activities Hebert Company reported the following information for 2013: Required: Compute net cash flow from financing activities. Use a minus sign to indicate negative cash flows (outflows).
2. Rollins Inc. is considering expanding its operations into different regions of the country; however, this expansion will require significant cash flow as well as additional financing. Rollins reported the following information for 2013: cash provided by operating activities, $387,200; cash provided by investing activities, $108,700; average debt maturing over the next 5 years, $345,500; capital expenditures, $261,430; cash dividends, $40,000. Required: Compute free cash flow and the cash flow adequacy ratio. (Note: Round ratio to two decimal places.) Free cash flow $ Cash flow adequacy ratio Comment on Rollins' ability to expand its operations. The input in the box below will not be graded, but may be reviewed and considered by your instructor.
3.
Reporting Net Cash Flow from Operating Activities
The following information is available for Cornelius Inc.:
Required:
1. Prepare the net cash flows from operating activities using the indirect method. Use a minus sign to indicate any decreases in cash or cash flows.
Cornelius Inc.
Net Cash Flows from Operating Activities
Using Indirect Method
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operating activities:
$
Net cash provided by operating activities
$
1. The calculation of net cash flow from operating activities requires adjustments to net income for noncash items, gains or losses, and changes in current assets and liabilities.
Start with net income and consider any noncash items as well as gains or losses. Next, analyze the changes in the balance sheet accounts to determine their effect on cash. (Remember to restate the fundamental accounting equation in terms of changes, separate the cash and noncash assets, and isolate the change in cash.)
Finally, total to determine the net cash flow for operating assets.
2. Conceptual Connection: Explain why Cornelius was able to report net cash flow from operating activities that was higher than net income.
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
2. Consider the effect of non-cash activities. In addition, consider the changes in the balance sheet accounts as well as the business activities that cause this observed change.
3. Conceptual Connection: What could the difference between net income and cash flow from operating activities signal to financial statement users?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Preparing the Statement of Cash Flows
Additional Information:
Net income for 2013 was $58,400.
Cash dividends of $25,000 were declared and paid during 2013.
During 2013, Beckwith issued $50,000 of notes payable and repaid $35,000 principal relating to notes payable.
Common stock was issued for $50,000 cash.
Depreciation expense was $18,650, and there were no disposals of equipment.
Required:
1. Prepare a statement of cash flows (indirect method) for Beckwith Products for 2013. Use a minus sign to indicate any decreases in cash or cash outflows.
Beckwith Products Company
Statement of Cash Flows
For the Year Ended December 31, 2013
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operating activities:
$
Net cash provided by operating activities
$
Cash flows from investing activities:
$
Net cash used for investing activities
Cash flows from financing activities:
$
Net cash provided by financing activities
$
Cash, 1/1/2013
Cash, 12/31/2013
$
Hide Feedback
Partially Correct
Check My Work Feedback
1. Use proper form with company name, statement title, and date. Complete three sections for cash flows; operating, investing and financing.
For operating activities, start with net income and consider any noncash items as well as gains or losses. Next, analyze the changes in the balance sheet accounts to determine their effect on cash. (Remember to restate the fundamental accounting equation in terms of changes, separate the cash and noncash assets, and isolate the change in cash.)
Finally, total to determine the net cash flow for operating assets.
For investing activities, analyze the balance sheet changes and additional information for items that may be classified as an investing activity. Make T-accounts for any changes and determine if there was an associated inflow or outflow of cash for each account affected.
For financing activities, analyze the balance sheet changes and additional information for items that may be classified as a financing activity. Make T-accounts for any changes and determine if there was an associated inflow or outflow of cash for each account affected.
Learning Objective 4, Learning Objective 5, Learning Objective 6, and Learning Objective 7.
2. Compute the following cash-based performance measures:
Free cash flow
Cash flow adequacy (Note: Assume that the average amount of debt maturing over the next 5 years is $85,000.)
Round ratio to two decimal places. Enter negative values as negative numbers.
3. Conceptual Connection: What can you conclude by examining the patterns in Beckwith's cash flows?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Selected Income Statement Information Amount Net income $52,000 Depreciation expense 11,300Explanation / Answer
3.
Cornelius Inc
Net cashflow from operating activity
Using Indirect Method
4. Beckwith Products Company
Cash flows from operating activities: Net Income 52,000 Adjustments to reconcile net income to net cash flow from operating activities: Depritiation -11,300 Increase Accounts receivable -6,150 Decrease Inventory 5,975 Accounts Payable 8,700 Net cash provided by operating activities 49,225Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.