CMA Study Group

Dear Memebrs,

Please advise on the answer for below: 

Madden Corporation's controller has gathered the following information as a basis for
preparing the Statement of Cash Flows. Net income for the current year was $82,000.
During the year, old equipment with a cost of $60,000 and a net carrying value of
$53,000 was sold for cash at a gain of $10,000. New equipment was purchased for
$100,000. Shown below are selected closing balances for last year and the current year.
Last Year Current Year
Cash $ 39,000 $ 85,000
Accounts receivable net 43,000 37,000
Inventories 93,000 105,000
Equipment 360,000 400,000
Accumulated depreciation - equipment 70,000 83,000
Accounts payable 22,000 19,000
Notes payable 100,000 100,000
Common stock 250,000 250,000
Retained earnings 93,000 175,000
Madden's cash inflow from operating activities for the current year is
a. $63,000.
b. $73,000.
c. $83,000.
d. $93,000.
-------------------------------------------
Harsh Mehta
SAP FI Analyst
Kuwait

-------------------------------------------

hii Harsh Mehta

The trick in this question is depriciation calculation
which it is calculated as follow : the old equipment purhased at 60,000$ the carrying value is 53,000$ that mean the accumalted depriciation is 7,000$ for this equipment which we need substract it from the total accumalted depriciation which was 70,000$ leave  the total accumalted depriciation at the beginig of the year is 63,0000$ and the ending is 83,000$ that is mean the depriciation expenced throughout the year is 20,000$ which we need to add it back to the net income figure, so the final calculation is
net income 82,000$ + change in account recievable 6,000$ - change in inventory (12,000) - change in account payable (3,000) +change in  the accumalted depriciation for the year 20,000$ = 93,000$.
i think this is the correct answer for this question if you find different answer please reply the correct one.


-------------------------------------------
Fadi Amer
Analyst
Palestine Monetary Authority
Ramallah
Palestinian Territory, Occupied
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Original Message:
Sent: 10-10-2012 04:29 AM
From: Harsh Mehta
Subject: Cash flow from operating activities

Dear Memebrs,

Please advise on the answer for below: 

Madden Corporation's controller has gathered the following information as a basis for
preparing the Statement of Cash Flows. Net income for the current year was $82,000.
During the year, old equipment with a cost of $60,000 and a net carrying value of
$53,000 was sold for cash at a gain of $10,000. New equipment was purchased for
$100,000. Shown below are selected closing balances for last year and the current year.
Last Year Current Year
Cash $ 39,000 $ 85,000
Accounts receivable net 43,000 37,000
Inventories 93,000 105,000
Equipment 360,000 400,000
Accumulated depreciation - equipment 70,000 83,000
Accounts payable 22,000 19,000
Notes payable 100,000 100,000
Common stock 250,000 250,000
Retained earnings 93,000 175,000
Madden's cash inflow from operating activities for the current year is
a. $63,000.
b. $73,000.
c. $83,000.
d. $93,000.
-------------------------------------------
Harsh Mehta
SAP FI Analyst
Kuwait

-------------------------------------------

Dear Memebrs,

Please advise on the answer for below: 

Madden Corporation's controller has gathered the following information as a basis for
preparing the Statement of Cash Flows. Net income for the current year was $82,000.
During the year, old equipment with a cost of $60,000 and a net carrying value of
$53,000 was sold for cash at a gain of $10,000. New equipment was purchased for
$100,000. Shown below are selected closing balances for last year and the current year.
Last Year Current Year
Cash $ 39,000 $ 85,000
Accounts receivable net 43,000 37,000
Inventories 93,000 105,000
Equipment 360,000 400,000
Accumulated depreciation - equipment 70,000 83,000
Accounts payable 22,000 19,000
Notes payable 100,000 100,000
Common stock 250,000 250,000
Retained earnings 93,000 175,000
Madden's cash inflow from operating activities, Investing and Financing for the current year is

------------------------------
SALAS MAMMUTTY
Supervisor
Bangalore
India
------------------------------

Original Message:
Sent: 10-11-2012 07:51 AM
From: Fadi Amer
Subject: Cash flow from operating activities



hii Harsh Mehta

The trick in this question is depriciation calculation
which it is calculated as follow : the old equipment purhased at 60,000$ the carrying value is 53,000$ that mean the accumalted depriciation is 7,000$ for this equipment which we need substract it from the total accumalted depriciation which was 70,000$ leave  the total accumalted depriciation at the beginig of the year is 63,0000$ and the ending is 83,000$ that is mean the depriciation expenced throughout the year is 20,000$ which we need to add it back to the net income figure, so the final calculation is
net income 82,000$ + change in account recievable 6,000$ - change in inventory (12,000) - change in account payable (3,000) +change in  the accumalted depriciation for the year 20,000$ = 93,000$.
i think this is the correct answer for this question if you find different answer please reply the correct one.


-------------------------------------------
Fadi Amer
Analyst
Palestine Monetary Authority
Ramallah
Palestinian Territory, Occupied

Original Message:
Sent: 10-10-2012 04:29 AM
From: Harsh Mehta
Subject: Cash flow from operating activities

Dear Memebrs,

Please advise on the answer for below: 

Madden Corporation's controller has gathered the following information as a basis for
preparing the Statement of Cash Flows. Net income for the current year was $82,000.
During the year, old equipment with a cost of $60,000 and a net carrying value of
$53,000 was sold for cash at a gain of $10,000. New equipment was purchased for
$100,000. Shown below are selected closing balances for last year and the current year.
Last Year Current Year
Cash $ 39,000 $ 85,000
Accounts receivable net 43,000 37,000
Inventories 93,000 105,000
Equipment 360,000 400,000
Accumulated depreciation - equipment 70,000 83,000
Accounts payable 22,000 19,000
Notes payable 100,000 100,000
Common stock 250,000 250,000
Retained earnings 93,000 175,000
Madden's cash inflow from operating activities for the current year is
a. $63,000.
b. $73,000.
c. $83,000.
d. $93,000.
-------------------------------------------
Harsh Mehta
SAP FI Analyst
Kuwait

-------------------------------------------

hii Harsh Mehta
sorry i did not take into account the gain for selling the equipment  which it need to substract it from net income because it is not from operating activitirs, that leaves the last answer that i calcualated which it was 93,000$ need to substract the gain (10,000) so the correct answer is 83,000$.
best regards,,


-------------------------------------------
Fadi Amer
Analyst
Palestine Monetary Authority
Ramallah
Palestinian Territory, Occupied
-------------------------------------------






Original Message:
Sent: 10-10-2012 04:29 AM
From: Harsh Mehta
Subject: Cash flow from operating activities

Dear Memebrs,

Please advise on the answer for below: 

Madden Corporation's controller has gathered the following information as a basis for
preparing the Statement of Cash Flows. Net income for the current year was $82,000.
During the year, old equipment with a cost of $60,000 and a net carrying value of
$53,000 was sold for cash at a gain of $10,000. New equipment was purchased for
$100,000. Shown below are selected closing balances for last year and the current year.
Last Year Current Year
Cash $ 39,000 $ 85,000
Accounts receivable net 43,000 37,000
Inventories 93,000 105,000
Equipment 360,000 400,000
Accumulated depreciation - equipment 70,000 83,000
Accounts payable 22,000 19,000
Notes payable 100,000 100,000
Common stock 250,000 250,000
Retained earnings 93,000 175,000
Madden's cash inflow from operating activities for the current year is
a. $63,000.
b. $73,000.
c. $83,000.
d. $93,000.
-------------------------------------------
Harsh Mehta
SAP FI Analyst
Kuwait

-------------------------------------------