To:Auditors of 12th National Bank
From:Accountant for 12th National Bank
I have researched the issue of how to report the notes flows from transactions involving handicraft securities, investment securities, and customer loans on the comp whatevers 2010 statement of bills flows. correspond to the FAS 102, par. 8, hard cash receipts and payments from sales and purchases of securities in a job account be report as operating cash flows. However, according to FAS 95, par. 16 and 17, receipts from collections of loans and sales of securities are reported as investing cash inflows, while disbursements for loans and payments to acquire securities are reported as investing cash outflows. Furthermore, according to FAS 104, par. 7a, banks may report the net cash flows for loans made to customers and principal collections of loans.
establish on these accounting standards, I plan to report the cash flows of 12th National Bank pertaining to trading securities, securities visible(prenominal) for sale, and loans to customers, on with net income and the related gains and losses on the banks 2010 statement of cash flows as follows:
authorise Cash Flow from Operating Activities
Net Income 75,800
Adjustments for differences between income
flows and cash flows from operating activities:
Add:Loss on sale of securities available for sale 5,100
Less:Net cash outflow due to growing in trading
securities (35,600)
Gain on sale of trading securities (6,700)
Unrealized holding gain on trading securities (1,200)
Cash Flows From Investing Activities
Proceeds from sale of securities available for sale 53,600
Payments for purchase of securities available for sale (39,400)
Net increase in customer loans (27,500)
Please contact me if you have any questions.
Kevin Dauzy
References
Financial Accounting Standards Board (Feb. 1989) FAS 102 Statement of Cash Flows. Retrieved from hypertext transfer protocol://72.3.243.42/pdf/fas102.pdf
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