INSTRUCTOR: Konstantinos Kanellopoulos, MSc (L.S.E.), M.B.A. FACILITATOR: Dr. Haitham Ahmed Abdelmoneim, YIC.COURSE: MBA-510-50-F13 Accounting AnalysisSEMESTER: I

The Statement of Cash Flows

Exercises & Problems

Konstantinos Kanellopoulos & Haitham Ahmed Abdelmoneim24th October 2013

PART I EXERCISES FROM CHAPTER 14

Exercise 1

E14-12 Classifying cash flow itemsConsider the following transactions:

a. Purchased equipment for $130,000 cash.b. Issued $14 par preferred stock for cash.c. Cash received from sales to customers of $35,000.d. Cash paid to vendors, $17,000.e. Sold building for $19,000 gain for cash.f. Purchased common treasury shares for $28,000.g. Paid a notes payable with 1,250 of the company’s common shares.

Requirement1. Identify the category of the statement of cash flows in which each transaction would be reported.

Exercise 2

E14-19 Computing the cash effect of acquiring assetsMcKnight Exercise Equipment, Inc., reported the following financial statements for 2012:

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Requirement1. Compute the amount of McKnight Exercise’s acquisition of plant assets. McKnight Exercise sold no plant assets.

Exercise 3

E14-22 Identifying and reporting noncash transactions [15 min]Dirtbikes, Inc., identified the following selected transactions that occurred during 2012:

Requirement1. Identify any noncash transactions that occurred during the year and show how they would be reported in the noncash section of the cash flow statement.

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PART II PROBLEM FROM CHAPTER 14

P14-26A Preparing the statement of cash flows—indirect method, evaluating cash flows, and measuring free cash flows [35–45 min]The comparative balance sheet of Jackson Educational Supply at December 31, 2012, reported the following:

Requirements1. Prepare the statement of cash flows of Jackson Educational Supply for the year ended December 31, 2012. Use the indirect method to report cash flows from operating activities.

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