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BRIEF EXERCISES BE11.1 Indicate statement presentation of selected transactions The Lid for the year ended 30 June 2018. For each it should be Issued unsecured notes for S100000 cash ( Purchased land for $75000 cash Sold land costing $10000 for $10000 cash d) Declared and paid a $25000 cash dividend BE11.2 Identity financing activity transactions. The following account is a summary of the cash account of Kiny Fisheries My tu Cash (summary form 2015 Payments for goods Balans, 1 Jan 8000 Payments for operating expenses Receipts from customers 264000 Interested Dividends received 6000 Taxes paid Proceeds from sale of equipment 36000 Dividends aid Proceeds from of debentures 200 000 Balance 31 Dec 512000 2019 Balance 1 an 116000 E 11 What amount of net cash provided (used) by financing activities should be reponde statement of cash flows? BE11.3 Calculate receipts from customers LOO Cheong's Chinese Herbs Lid has accounts receivable of $14000 at 1 July 301 and 34000 30 June 2019. Sales revenues were $600 000 for 2019. Bad debts written off directly accounts receivable were 2000 in 2019. What is the amount of cash receipts from in 2017 BE11.4 Calculate cash payments for operating expenses-direct method. LOS Pele's Pies Lid reports operating expenses of $216.000 excluding depreciation expense S1800 for 2018. During the year prepaid expenses decreased 57930 and more expen payable increased 55280. Calculate the cash payments for operating expenses is 2018 BE11. Calculate net cash provided by operating activities - Indirect method. Rotorua Rides Lid's profit for the year is $200 000. The comparative statement of finan position shows these changes in non-cash current asset account Accounts receivable de los SRD 000, Prepaid expenses increase $12000, and Inventories increase $30.000 Recik cash provided by operating activities to profit BE11.6 Determine cash received from sale of equipment. The Taccounts for equipment and the related accumulated depreciation for Liam Pay Lux end of 2018 are shown here. Equipment 2018 Opal Acousins Accumulated depreciation 20 900 Obo 5000 Dan 225000 Disposis 62 400 Clos bal 287200 33000 254400 287200 Disposals Closbal 2019 2019 Opbell 254400 730 Treporting, and decision making In addition, Lau Py Lid's statement of profit or loss reported again on the sale of equipment of $4500. What amount was reported on the statement of cash flows as 'cash flow from sale of equipment'? BE11.7 Answer questions related to the phases of product life cycle. LO4 (a) Why is cash from operations likely to be lower than reported profit during the growth phase? (b) Why is cash from investing often positive during the late maturity phase and during the decline phase? (c) Why is cash from financing often positive during introductory and growth phases? EXERCISES E11.1 Classify transactions by type of activity, LO2 Wilderness Equipment Lad had these transactions during 2018: (a) Purchased a machine for 537 500, giving a long-term note in exchange. (b) Issued ordinary shares for $62 500 in cash. (c) Collected S20000 of accounts receivable. (d) Declared and paid a cash dividend of 531 250 (e) Sold a long-term investment with a cost of S18 750 for $18750 cash ( Convertible notes with a carrying amount of $250 000 were converted to ordinary shares at $250 000. (g) Paid 522 500 on accounts payable Required (a) Analyse the above transactions and indicate whether each transaction resulted in a cash flow from operating activities, investing activities or financing activities, or was a non-cash invest ing and financing activity. (b) What are the differences between operating investing and financing activities? $11.2 Prepare the operating activities section - Indirect method. Madonna Lid reported profit of $200 000 for 2018. Madonna Lid also reported depreciation accounts payable, and a 55000 increase in prepaid expenses Required LOS expense of 535 000 and a loss of 55000 on the sale of equipment. The statement of financial position is an increase in accounts receivable of SISOO for the year, an S8000 increase in The information in the following table is from the statement of cash flows for an entity at our different points in time (A. B. Cand Di. Negative values are presented in parentheses LOS e pay dividends (d) meet obligations 11.14 Free cash flow provides an indication of a company's ability (a) generate profit (b) generate cash to pay dividends (c) generate cash to expand investment 11.16 Which of the following provides a useful comparison with the profit margia? (a) Capital expenditure ratio (b) Cash return on sales ratio. (c) Cash debt coverage (d) Current cash debt coverage LOS QUESTIONS 11.1 What questions about cash are answered by the statement of cash flow me 11.2 Distinguish among the three activities reported in the statement of cash flows. 11.3 Why is it important to disclose certain non-cash transactions? How should they be disclosed? (b) What effect does each phase have on the amounts reported in a statement of cash flows? 11.5 Contrast the advantages and disadvantages of the direct and indirect methods of reporting on cash 11.6 Cameron's Cars reported sales of $2 million for 2018. Accounts receivable increased $200 000 and accounts payable increased $400 000. Calculate cash receipts from customers, assuming that 11.7 The managing director of Fancy Fashion Pty Lid is puzzled. During the last year, the entity experi- enced a loss for the period of $800 000, yet its cash increased 5300000 during the same period of time. Explain to the managing director how this could occur 11.8 Identify five items that form part of the reconciliation of profit and net cash provided by operating 11.9 During 2018. Pencils and More Lid purchased equipment but paid for it with the issue of 2 million SI ordinary shares. Indicate how the transaction would be reported in a statement of cash flows, if at all 11.10 Give an example of a cash-based ratio to measure these characteristics of an entity (a) liquidity (b) solvency (e) profitability CHAPTER 11 Statement of cash flows 729 Aequired e acces calculate the amount that should be reported in the actress El. Compare two entities by using cash-based ratios. LOS Plesed here is information for two entities in the shipping in and ang Kang Jang Ltd Lid $220 000 5240000 50 000 100 000 200 000 250 000 200000 200000 400000 800000 Sales Cash provided by operations Average current liabilities Average total liabilities Prote Required Using the cash tused ratios presented in this chapter, compare the (a) liquidity. (b) solvency and c) profitability of the two entities, and discuss their meaning E11.11 Calculate cash provided by operating activities - direct method. The 2019 accounting records of Home and Away Travels Lad reveal the following transaction LOG and events 4200 - Payment of interest $ 21000 Collection of accounts receivable $ 200.000 Cash 84000 Payment of salaries and wages 95200 Recent of dividend revenue 19 600 Depreciation expense 22000 Payment of income tax OP 22400 Proceeds from sale of aircraft 1136800 - Profit 53 200 Purchase of equipment for 30800 Payment of accounts payable for Loss on sale of aircraft inventory OP 140000 Payment of dividends 19600 Payment for land et 100 000 Payment of operating expenses 28000 Required > Prepare the cash flows from the operating activities section of the statement of cash flows the direct method. (Not all of the items will be used.) E11.12 Prepare the operating activities section of the statement of cash flows - Indirect method. LOO The current section of Opotiki Lad statement of financial position at 30 June 2019 is presented helow 2019 $99.000 39000 $105000 120000 161 000 27000 $29000 Current assets Cash Accounts receivable Inventory Prepaid expenses Tot current Current Accounts payable Accrued expenses payable Total current abilities Other information Profit for the year ended 30 June 2019 was $153000 2. Depreciation expense was $19000 som $ 85000 15000 $100.000 $ Required Prepare the net cash provided by the operating activities section of Opotiki's statement forms for the year ending 30 June 2019 using the indirect method 4 portas decision making