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Prepaid Expense Amortization Spreadsheet

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					Exercise 14 - 8 Cash Flows from Operations (Direct Method)

Sales revenue
 + Beginning accounts receivable
 - Ending accounts receivable
   Total cash receipts

Cost of goods sold
+ Ending inventory
 - Beginning inventory
Purchases
 + Beginning accounts payable
 - Ending accounts payable
Cash paid to suppliers for inventory

Wages expense
+ Beginning wages payable
- Ending wages payable
Cash paid to employees

Utilities expense (no adjustments required)

Rent expense (no adjustments required)

Insurance expense
 + Ending prepaid insurance
 - Beginning prepaid insurance
Cash paid for insurance
   Total cash payments
Net cash flows provided by operations

The following spreadsheet may be helpful in explaining the adjustments:

Sales Revenue                                     Cash collected from customers
Cost of Goods Sold                                Cash paid for inventory

Wages Expense                                     Cash paid for wages
Utilities Expense                                 Cash paid for utilities
Rent Expense                                      Cash paid for rent
Insurance Expense                                 Cash paid for insurance

Net Income                                        Cash from operating activities
Exercise 14 - 10 Cash Flows Provided by Operations (Direct Method)
Cash flows from operating activities:
Cash receipts from:
   Customers
Cash payments for:
   Inventory
   Operating expenses
   Interest expense
Net cash flows provided by operating activities
Sales revenue
 + Beginning accounts receivable
 - Ending accounts receivable
   Cash collected from customers
Cost of goods sold
+ Ending inventory
 - Beginning inventory
Purchases
 + Beginning accounts payable
 - Ending accounts payable
Cash paid for inventory
Sales revenue
Cost of goods sold
Gross margin
Less expenses
Net income
Expenses
Less noncash items:
   Depreciation
   Amortization
   Cash expenses
   Less interest expense
Cash operating expenses
The following spreadsheet may be helpful in explaining the adjustments:
Sales Revenue                                        Cash collected from customers
Cost of Goods Sold                                   Cash paid for inventory

Depreciation Expense                                 Cash paid for depreciation
Amortization Expense                                 Cash paid for goodwill
Interest Expense                                     Cash paid for interest
Other Expenses                                       Cash paid for other expenses
Net Income                                           Cash from operating activities
Exercise 14 - 11 Cash Flows Provided by Operations (Indirect Method)

Cash flows from operating activities:
   Net income
Add (deduct) adjustments to cash basis:
   Depreciation
   Amortization
   Decrease in accounts receivable
   Increase in inventory
   Decrease in accounts payable
Net cash flows by operating activities

The following spreadsheet may be helpful in explaining the adjustments:
Sales Revenue                                      Cash collected from customers
Cost of Goods Sold                                 Cash paid for inventory

Depreciation Expense                               Cash paid for depreciation
Amortization Expense                               Cash paid for goodwill
Interest Expense                                   Cash paid for interest
Other Expenses                                     Cash paid for other expenses
Net Income                                         Cash from operating activities
Problem 14 - 9 Statement of Cash Flows (Indirect Method)

                                 JEM Company
                           Statement of Cash Flows
                               (Indirect Method)
                    For the Year Ended December 31, 2006

Cash flows from operating activities:
   Net income

Add (deduct) adjustments to cash basis:
  Depreciation
  Increase in accounts receivable
  Decrease in inventory
  Increase in accounts payable
  Gain on sale of equipment
   Net cash flows provided by operating activities

Cash flows from investing activities:
   Cash receipts from sale of equipment
   Cash payments for purchase of equipment
   Net cash flows used in investing activities

Cash flows from financing activities:
   Cash receipts from borrowing (long-term note payable)
   Cash payments for dividends
   Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

				
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