Format of a Statement of Cash Flows
The accounting staff of Harris Company has assembled the following information for the year ended December 31, 2011:
Cash sales | $ 800,000 |
Credit sales | 2,500,000 |
Collections on accounts receivable | 2,200,000 |
Cash transferred from the money market fund to the general bank account | 250,000 |
Interest and dividends received | 100,000 |
Purchases (all on account) | 1,800,000 |
Payments on accounts payable to merchandise suppliers | 1,500,000 |
Cash payments for operating expenses | 1,050,000 |
Interest paid | 180,000 |
Income taxes paid | 95,000 |
Loans made to borrowers | 500,000 |
Collections on loans (excluding receipts of interest) | 260,000 |
Cash paid to acquire plant assets | 3,100,000 |
Book value of plant assets sold | 660,000 |
Loss on sales of plant assets | 80,000 |
Proceeds from issuing bonds payable | 2,500,000 |
Dividends paid | 120,000 |
Cash and cash equivalents, Jan, 1 | 489,000 |
Prepare a statement of cash flows in the format illustrated in Exhibit 13–1. Place brackets around amounts representing cash outflows. Use the direct method of reporting cash flows from operating activities.
Some of the items above will be listed in your statement without change. However, you will have to combine certain given information to compute the amounts of (1) collections from customers, (2) cash paid to suppliers and employees, and (3) proceeds from sales of plant assets. (Hint: Not every item listed is used in preparing a statement of cash flows.)
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