Week 7

Saturday, April 22 (12:01 a.m.) to Friday, April 28 (11:59 p.m.)

Topics to research and review:

 The Cash Flow Statement o Chapters 50-52 o Capital Expenditures o Stock Buybacks

Summary of Assignments, Due Dates, and Points

 Bi-Weekly Assignment 4 o Due by 11:59 pm on Friday, April 28. o Submit your file in Word in the correct Dropbox. o 25 points

 Discussion 4 o Original comment on the topic must be posted by 11:59 pm on Tuesday, April 25. Replies to a

minimum of two other students’ original posts or to other students’ replies must be posted by 11:59 pm on Friday, April 28.

o 25 points

 Research Project Part 6 o Due by 11:59 pm on Friday, April 28. o 5 points

Bi-Weekly Assignment 4

 Read Chapters 50 through 52.

 Answer the following questions. On your file put the question first (by number and in bold) and then answer the question in full.

Reese Company is a young and growing company. You have been retained to advise Reese in the

preparation of their Statement of Cash Flows (indirect method). For the fiscal year ended December 31,

2024, you have obtained the following information concerning certain events and transactions of Reese.

1. Depreciation expense of $350,000 was included in the Income Statement. 2. A gain of $6,000 was realized on the sale of machinery. It originally cost $75,000, of which

$30,000 was undepreciated on the date of sale. 3. On July 1, 2024, building and land were purchased for $700,000. Reese gave in payment

$75,000 in cash, $200,000 market price of its unissued common stock, and signed a $425,000 mortgage note payable.

4. The amount of reported earnings for the fiscal year was $700,000, which included a deduction for a loss of $110,000.

REQUIRED: Determine if each of the transactions should be classified as an operating, investing, or

financing activity on the Statement of Cash Flows. Also, identify the amount of each cash flow and whether

it was an inflow or outflow. The event or transaction may have multiple classifications!

Discussion 4 Requirement

 Address the following question:

During the semester you have examined the financial statements and various ratios. Discuss the following:

 In your opinion, which one financial statement provides the most valuable information for investment decisions? Why?

 If you had to choose only two ratios, which would provide the most relevant information for an investor? Why?

Research Project Part 6:

 Using the Cash Flow Statement and Notes for your company, answer the questions below:

1. From the Investing Activities section, what amount was spent on capital expenditures?

2. From the Financing Activities section, did the company buy back any of its own stock?

3. How would you describe your companies’ trend in liquidity?

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