Concept explainers
Statement of cash flows
Data for San Mateo Health Care for January are provided in Problems 3-1, 3-2, and 3-3.
Instructions
Prepare a statement of cash flows for January.
Concept Introduction:
Cash Flow statement:
The Cash flow statement shows the movement of cash during a particular period. The Cash flows are categorized into three categories as follows:
- Cash flows from operating activities
- Cash Flows from investing activities
- Cash flows from financing activities
(Note: Cash flows from operating activities can be prepared using direct or indirect method)
To Prepare:
The Cash Flow Statement
Answer to Problem 3.4.1P
The Cash Flow Statement is as follows:
Statement of Cash Flows-Direct Method | ||
Cash flow from Operating activities: | ||
Collection from Customers | $ 246,000 | |
Payments to Suppliers | $(116,000) | |
Payments to Employees | $ (51,000) | |
Payment of Income tax | $ (7,500) | |
Interest Expense | $ (2,500) | |
Dividend Revenue | $ 7,000 | |
Net Cash Provided by Operating activities | $ 76,000 | |
Cash flow from Investing activities: | ||
Cash Payment for Acquisition of Plant Assets | $(102,000) | |
Cash Receipts from Sale of Land | $ 29,000 | |
Net Cash Used by Investing activities | $(73,000) | |
Cash flow from Financing activities: | ||
Cash Receipts from Issuance of Common Stock | $ 38,000 | |
Payment of Long Term notes payable | $ (10,000) | |
Payment of Dividends | $ (9,000) | |
Net Cash Provided by Financing activities | $ 19,000 | |
Net Cash Flows | $ 22,000 | |
Add: Beginning Cash Balance | $ 21,000 | |
Ending Cash Balance | $ 43,000 |
The Cash Flow Statement is prepared as follows:
Statement of Cash Flows-Direct Method | ||
Cash flow from Operating activities: | ||
Collection from Customers (233000+13000) | $ 246,000 | |
Payments to Suppliers (104000+12000) | $(116,000) | |
Payments to Employees (48000+3000) | $ (51,000) | |
Payment of Income tax | $ (7,500) | |
Interest Expense | $ (2,500) | |
Dividend Revenue | $ 7,000 | |
Net Cash Provided by Operating activities | $ 76,000 | |
Cash flow from Investing activities: | ||
Cash Payment for Acquisition of Plant Assets | $(102,000) | |
Cash Receipts from Sale of Land | $ 29,000 | |
Net Cash Used by Investing activities | $(73,000) | |
Cash flow from Financing activities: | ||
Cash Receipts from Issuance of Common Stock | $ 38,000 | |
Payment of Long Term notes payable | $ (10,000) | |
Payment of Dividends | $ (9,000) | |
Net Cash Provided by Financing activities | $ 19,000 | |
Net Cash Flows | $ 22,000 | |
Add: Beginning Cash Balance | $ 21,000 | |
Ending Cash Balance | $ 43,000 |
Explanation of Solution
The Cash Flow Statement is prepared as follows:
Statement of Cash Flows-Direct Method | ||
Cash flow from Operating activities: | ||
Collection from Customers (233000+13000) | $ 246,000 | |
Payments to Suppliers (104000+12000) | $(116,000) | |
Payments to Employees (48000+3000) | $ (51,000) | |
Payment of Income tax | $ (7,500) | |
Interest Expense | $ (2,500) | |
Dividend Revenue | $ 7,000 | |
Net Cash Provided by Operating activities | $ 76,000 | |
Cash flow from Investing activities: | ||
Cash Payment for Acquisition of Plant Assets | $(102,000) | |
Cash Receipts from Sale of Land | $ 29,000 | |
Net Cash Used by Investing activities | $(73,000) | |
Cash flow from Financing activities: | ||
Cash Receipts from Issuance of Common Stock | $ 38,000 | |
Payment of Long Term notes payable | $ (10,000) | |
Payment of Dividends | $ (9,000) | |
Net Cash Provided by Financing activities | $ 19,000 | |
Net Cash Flows | $ 22,000 | |
Add: Beginning Cash Balance | $ 21,000 | |
Ending Cash Balance | $ 43,000 |
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