Module 7 Assignment: Cash Flow Statement

For this assignment, you will apply the concepts learned in Module 7 to prepare and analyze the cash flow statement using both the direct and indirect methods. You will identify and record cash flows from operating, investing, and financing activities and non-cash investing and financing transactions. You can continue using the accounting simulator from our website, MS Excel, or an inexpensive accounting software if you have access to it.

Assignment Tasks

1. Preparation of Cash Flow Statement Using the Direct Method:
   • Using the data provided, prepare a cash flow statement for the current period using the direct method:
     • Cash Receipts from Customers: $150,000
     • Cash Payments to Suppliers: $70,000
     • Cash Payments to Employees: $50,000
     • Cash Payments for Operating Expenses: $20,000
     • Cash Payments for Interest: $5,000
     • Cash Payments for Income Taxes: $10,000
   • Calculate the net cash provided by operating activities using the direct method.
   • Prepare the journal entries for the above transactions.
2. Preparation of Cash Flow Statement Using the Indirect Method:
   • Using the data provided, prepare a cash flow statement for the current period using the indirect method:
     • Net Income: $30,000
     • Depreciation Expense: $5,000
     • Gain on Sale of Equipment: $3,000
     • Decrease in Accounts Receivable: $2,000
     • Increase in Inventory: $4,000
     • Increase in Accounts Payable: $3,000
     • Decrease in Accrued Expenses: $8,000
   • Calculate the net cash provided by operating activities using the indirect method.
3. Cash Flows from Investing Activities:
   • Record the following investing activities:
     • Purchase of Equipment: $50,000
     • Sale of Investment: $20,000
   • Calculate the net cash used in investing activities.
   • Prepare the journal entries for the above transactions.
4. Cash Flows from Financing Activities:
   • Record the following financing activities:
     • Issuance of Shares: $100,000
     • Repayment of Loan: $40,000
     • Payment of Dividends: $10,000
   • Calculate the net cash provided by financing activities.
   • Prepare the journal entries for the above transactions.
5. Non-Cash Investing and Financing Transactions:
   • Identify and record the following non-cash transactions:
     • Conversion of Debt to Equity: $50,000
     • Acquisition of Equipment through Finance Lease: $30,000
   • Prepare the necessary disclosures for the non-cash transactions in the financial statements.

Submission Instructions

Compile your calculations, journal entries, and analysis into a single document. Submit your document in PDF format via the course submission portal.

Additional Activities

• Discussion Post: Share your experience in the course forum, detailing any challenges you faced during the assignment and how you overcame them. Provide feedback on your classmates’ posts.
• Peer Review: Review at least two of your classmates’ submissions and provide constructive feedback. Focus on the accuracy of the calculations and the clarity of the journal entries.

Due Date: One week after completing this module.

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