VALLEY VIEW UNIVERSITY-TECHIMAN CAMPUS

INTERMEDIATE ACCOUNTING I

NAME: ERIC AMANKWAA SENIOR

STUDENT’S ID: 220DAT0200254

1. Purchase of treasury stock is reported as cash outflow in financing activity section.

2. Purchase of available for sale investment is reported as cash outflow in investing activity

section.

3. Sale of equipment at a loss will affect two sections – operating activities section and

investing activities section. The loss on sale of equipment will be added back to the net

operating income in the operating activities section and the total proceeds realized from

the sale of equipment will be reported as cash inflow in investing activities section

because of the fact that the company uses indirect method.

4. Increase in accounts payable is added to net income in the operating activities section to

convert accrual based net income to net cash provided by operating activities.

5. The retirement of bonds is a financing activity which results in cash outflow. Reported as

cash outflow in financing activities section.

6. The issuance of bonds is a cash inflow activity. It is also a financing activity and reported

as cash inflow in financing activities section.

7. Decrease in accounts payable is deducted from net income in the operating activities

section to convert accrual based net income to net cash provided by operating activities.
 8. Increase in inventory is deducted from net income in operating activities section.

9. Loan from bank by signing a note is a financing activity. It is reported as inflow of cash

in financing activity section of the statement of cash flow.

10. Increase in accounts receivable is deducted from net income in operating activities

section.

Particulars Amount

Cash flows from operating activities:

Cash receipts from customers 99

Less
Cash paid to suppliers 22
:

Less
Cash paid to employees 18
:

Cash generated from operations 59

Less
Interest paid 4
:

Less
Income taxes paid 8
:

Net cash from operating activities (A) 47

 Cash flows from investing activities:

Purchase of property, plant, and

(50)
equipment (Lease)

Add: Proceeds from the sale of equipment 0

Net cash used in investing activities (B) (50)

Cash flows from financing activities:

Proceeds from issuance of common stock 313

Add: Proceeds from issuance of long-term debt 363

Less Principal payments under capital lease

50
: obligation

Less
Dividends paid 4
:

Net cash used in financing activities (C) 622

Net increase in cash and cash equivalents

572
((D) = (B) + (C))

2. RECONCILLIATION NET CASH INCOME AND NET CASH FLOW

FROM OPERATING ACTIVITIES

Particulars Amount

Net income (A) 10

 Adjustments to reconcile net income to net
cash provided by operating activities:

Depreciation and amortization 24

Add: Provision for losses on accounts receivable 0

Less
Gain of securities 12
:

Add: Gain on sale of fixed assets 3

Increase in interest and income taxes

Add: 11
payable

Add: Increase in deferred taxes 8

Add: Increase in other liabilities 4

Total adjustments (B) 38

Net cash provided by operating activities

48
((C) = (A) + (B))