SOLUTIONS TO SET B EXERCISES
21B–1.
Increase in Inventory
Subtract from Cash Flow from Operations
Decrease in Accounts Payable
Subtract from Cash Flow from Operations
21B-2.
Cash Flows from Operating Activities:
Net Income
$17,300
Add(Deduct) Items to Convert Net Income from Accrual Basis to Cash
Basis:
Depreciation Expense
3,600
Increase in Accounts Receivable
(2,400)
Decrease in Prepaid Insurance
66
Increase in Accounts Payable
600
Increase in Salaries Payable
1,250
Net Cash Provided by Operating Activities
$20,416
EXERCISES (CONTINUED)
21B-3
Cash Flows from Operating Activities:
Cash Received from Customers
$8,460
Cash Paid for Inventory
(4,020)
Cash Paid for Salaries
(2,040)
Cash Paid for Insurance
(690)
Cash Paid for Other Expenses
(1,000)
Net Cash Provided by Operating Activities
$ 710
21B-4.
a.
1.
OA
b.
2.
IA
c.
2.
IA
d.
3.
FA
e.
1.
OA
f.
4.
NC
Copyright © 2016 Pearson Education, Inc.
21-9
SOLUTIONS TO SET A PROBLEMS
PROBLEM 21A-1
DENT COMPANY
STATEMENT OF CASH FLOWS—INDIRECT METHOD
FOR THE YEAR ENDED DECEMBER 31, 2014
Cash Flows from Operating Activities
Net Income
$3
1
5
0
00
Add (Deduct) Items to Convert Net Income from Accrual
Basis to Cash Basis:
Depreciation Expense
7
0
0
0
00
Increase in Accounts Receivable
(1
3
0
0
00)
Increase in Merchandise Inventory
(1
0
0
00)
Decrease in Prepaid Rent
1
0
0
00
Increase in Short-Term Notes Payable
1
8
0
0
00
Decrease in Accounts Payable
(6
5
0
00)
Net Cash Flows from Operating Activities
$10
0
0
0
00
Cash Flows From Investing Activities
Purchase of Plant Asset
($7
3
0
0
00)
Net Cash Used by Investing Activities
($7
3
0
0
00)
Cash Flows From Financing Activities
Retirement of Bonds Payable
($4
0
0
0
00)
Issuance of Common Stock
4
0
0
0
00
Payment of Dividends
(1
4
0
0
00)
Net Cash Used by Financing Activities
(1
4
0
0
00)
Net Increase in Cash
$1
3
0
0
00
Beginning Balance of Cash
2
4
0
0
00
Ending Balance of Cash
$3
7
0
0
00
PROBLEM 21A-2
DENT COMPANY
STATEMENT OF CASH FLOWS—DIRECT METHOD
FOR THE YEAR ENDED DECEMBER 31, 2014
Cash Flows from Operating Activities
Cash Received from Customers
$94
9
0
0
00
Cash paid for inventory
$(68
2
5
0
00)
Cash paid for salaries
(6
4
0
0
00)
Cash paid for rent
(7
1
0
0
00)
Cash paid for miscellaneous expenses
(3
1
5
0
00)
Total cash paid for operating activities
(84
9
0
0
00)
Net Cash Flows from Operating Activities
$10
0
0
0
00
Cash Flows From Investing Activities
Purchase of Plant Asset
($7
3
0
0
00)
Net Cash Used by Investing Activities
($7
3
0
0
00)
Cash Flows From Financing Activities
Retirement of Bonds Payable
($4
0
0
0
00)
Issuance of Common Stock
4
0
0
0
00
Payment of Dividends
(1
4
0
0
00)
Net Cash Used by Financing Activities
(1
4
0
0
00)
Net Increase in Cash
$1
3
0
0
00
Beginning Balance of Cash
2
4
0
0
00
Ending Balance of Cash
$3
7
0
0
00
Copyright © 2016 Pearson Education, Inc.
21–11
SOLUTIONS TO SET B PROBLEMS
PROBLEM 21B-1
CYGAN COMPANY
STATEMENT OF CASH FLOWS-INDIRECT METHOD
FOR THE YEAR ENDED DECEMBER 31, 2014
Cash Flows from Operating Activities
Net Income
$3
5
5
0
00
Add (Deduct) Items to Convert Net Income from
Accrual Basis to Cash Basis:
Depreciation Expense
6
6
0
0
00
Increase in Accounts Receivable
(1
2
0
0
00)
Increase in Merchandise Inventory
(3
0
0
00)
Decrease in Prepaid Rent
1
5
0
00
Increase in Short-Term Notes Payable
1
4
0
0
00
Decrease in Accounts Payable
(5
0
0
00)
Net Cash Flows from Operating Activities
$9
7
0
0
00
Cash Flows From Investing Activities
Purchase of Plant Asset
($7
4
0
0
00)
Net Cash Used by Investing Activities
(7
4
0
0
00)
Cash Flows From Financing Activities
Retirement of Bonds Payable
($18
0
0
0
00)
Issuance of Common Stock
18
0
0
0
00
Payment of Dividends
(1
2
0
0
00)
Net Cash Used by Financing Activities
(1
2
0
0
00)
Net Increase in Cash
1
1
0
0
00
Beginning Balance of Cash
2
4
0
0
00
Ending Balance of Cash
$3
5
0
0
00
PROBLEM 21B-2
CYGAN COMPANY
STATEMENT OF CASH FLOWS-DIRECT METHOD
FOR THE YEAR ENDED DECEMBER 31, 2014
Cash Flows from Operating Activities
Cash Received from Customers
$95
7
0
0
00
Cash paid for Inventory
($68
3
0
0
00)
Cash paid for Salaries
(6
9
0
0
00)
Cash paid for Rent
(7
4
5
0
00)
Cash paid for Miscellaneous Expenses
(3
3
5
0
00)
Total cash paid for operating activities
(86
0
0
0
00)
Net Cash Flows from Operating Activities
$9
7
0
0
00
Cash Flows From Investing Activities
Purchase of Plant Asset
($7
4
0
0
00)
Net Cash Used by Investing Activities
(7
4
0
0
00)
Cash Flows From Financing Activities
Retirement of Bonds Payable
($18
0
0
0
00)
Issuance of Common Stock
18
0
0
0
00
Payment of Dividends
(1
2
0
0
00)
Net Cash Used by Financing Activities
(1
2
0
0
00)
Net Increase in Cash
1
1
0
0
00
Beginning Balance of Cash
2
4
0
0
00
Ending Balance of Cash
$3
5
0
0
00
FINANCIAL REPORT PROBLEM SOLUTION—2013 Kellogg’s Annual Report
Net cash provided by operating activities in 2013
$1,807 million