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12-140
40.
The changes in Northrup Corporation's balance sheet account balances for last year
appear below:
Increases
(Decreases)
Asset and Contra-Asset Accounts:
Cash
$4,000
Accounts receivable
($4,000)
Inventory
($2,000)
Prepaid expenses
$2,000
Long-term investments
$40,000
Property, plant and equipment
$25,000
Accumulated depreciation
$68,000
Liability and Equity Accounts:
Accounts payable
($6,000)
Accrued liabilities
$8,000
Income taxes payable
($8,000)
Bonds payable
($70,000)
Common stock
$10,000
Retained earnings
$63,000
The company's income statement for the year appears below:
Income Statement
Sales
$980,000
Cost of goods sold
540,000
Gross margin
440,000
Selling and administrative expense
310,000
Net operating income
130,000
Income taxes
39,000
Net income
$91,000
The company declared and paid $28,000 in cash dividends during the year. It did not
dispose of any property, plant, and equipment during the year. The company uses the
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direct method to determine the net cash provided by operating activities.
On the statement of cash flows, the income tax expense adjusted to a cash basis would
be:
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41.
Last year, Knox Corporation reported on its income statement sales of $375,000 and cost
of goods sold of $140,000. During the year, the balance in accounts receivable increased
$30,000, the balance in accounts payable decreased $25,000, and the balance in inventory
increased $10,000. The company uses the direct method to determine the net cash
provided by operating activities on its statement of cash flows.
Under the direct method, sales adjusted to a cash basis would be:
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42.
Last year, Knox Corporation reported on its income statement sales of $375,000 and cost
of goods sold of $140,000. During the year, the balance in accounts receivable increased
$30,000, the balance in accounts payable decreased $25,000, and the balance in inventory
increased $10,000. The company uses the direct method to determine the net cash
provided by operating activities on its statement of cash flows.
Under the direct method, cost of goods sold adjusted to a cash basis would be:
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43.
Van Beeber Corporation's comparative balance sheet and income statement for last year
appear below:
Comparative Balance Sheet
Ending Balance
Beginning Balance
Cash
$58,000
$34,000
Accounts receivable
48,000
36,000
Inventory
56,000
67,000
Prepaid expenses
24,000
16,000
Long-term investments
280,000
220,000
Property, plant and equipment
580,000
580,000
Less accumulated depreciation
270,000
235,000
Total assets
$776,000
$718,000
Accounts payable
$32,000
$53,000
Accrued liabilities
38,000
21,000
Income taxes payable
61,000
31,000
Bonds payable
90,000
120,000
Common stock
80,000
60,000
Retained earnings
475,000
433,000
Total liabilities and stockholders’ equity
$776,000
$718,000
Income Statement
Sales
$700,000
Cost of goods sold
360,000
Gross margin
340,000
Selling and administrative expense
210,000
Net operating income
130,000
Income taxes
39,000
Net income
$91,000
The company declared and paid $49,000 in cash dividends during the year. It did not sell
or retire any property, plant, and equipment during the year. The company uses the direct
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method to determine the net cash provided by operating activities.
On the statement of cash flows, the sales adjusted to a cash basis would be:
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44.
Van Beeber Corporation's comparative balance sheet and income statement for last year
appear below:
Comparative Balance Sheet
Ending Balance
Beginning Balance
Cash
$58,000
$34,000
Accounts receivable
48,000
36,000
Inventory
56,000
67,000
Prepaid expenses
24,000
16,000
Long-term investments
280,000
220,000
Property, plant and equipment
580,000
580,000
Less accumulated depreciation
270,000
235,000
Total assets
$776,000
$718,000
Accounts payable
$32,000
$53,000
Accrued liabilities
38,000
21,000
Income taxes payable
61,000
31,000
Bonds payable
90,000
120,000
Common stock
80,000
60,000
Retained earnings
475,000
433,000
Total liabilities and stockholders’ equity
$776,000
$718,000
Income Statement
Sales
$700,000
Cost of goods sold
360,000
Gross margin
340,000
Selling and administrative expense
210,000
Net operating income
130,000
Income taxes
39,000
Net income
$91,000
The company declared and paid $49,000 in cash dividends during the year. It did not sell
or retire any property, plant, and equipment during the year. The company uses the direct
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method to determine the net cash provided by operating activities.
On the statement of cash flows, the cost of goods sold adjusted to a cash basis would be:
45.
Van Beeber Corporation's comparative balance sheet and income statement for last year
appear below:
Comparative Balance Sheet
Ending Balance
Beginning Balance
Cash
$58,000
$34,000
Accounts receivable
48,000
36,000
Inventory
56,000
67,000
Prepaid expenses
24,000
16,000
Long-term investments
280,000
220,000
Property, plant and equipment
580,000
580,000
Less accumulated depreciation
270,000
235,000
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method to determine the net cash provided by operating activities.
On the statement of cash flows, the selling and administrative expense adjusted to a cash
basis would be:
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46.
Van Beeber Corporation's comparative balance sheet and income statement for last year
appear below:
Comparative Balance Sheet
Ending Balance
Beginning Balance
Cash
$58,000
$34,000
Accounts receivable
48,000
36,000
Inventory
56,000
67,000
Prepaid expenses
24,000
16,000
Long-term investments
280,000
220,000
Property, plant and equipment
580,000
580,000
Less accumulated depreciation
270,000
235,000
Total assets
$776,000
$718,000
Accounts payable
$32,000
$53,000
Accrued liabilities
38,000
21,000
Income taxes payable
61,000
31,000
Bonds payable
90,000
120,000
Common stock
80,000
60,000
Retained earnings
475,000
433,000
Total liabilities and stockholders’ equity
$776,000
$718,000
Income Statement
Sales
$700,000
Cost of goods sold
360,000
Gross margin
340,000
Selling and administrative expense
210,000
Net operating income
130,000
Income taxes
39,000
Net income
$91,000
The company declared and paid $49,000 in cash dividends during the year. It did not sell
or retire any property, plant, and equipment during the year. The company uses the direct
method to determine the net cash provided by operating activities.
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On the statement of cash flows, the income tax expense adjusted to a cash basis would
be:
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47.
Hayward Corporation had net sales of $610,000 and cost of goods sold of $360,000 for the
just completed year. Shown below are the beginning and ending balances for the year of
various accounts:
Ending
Beginning
Cash
$42,000
$31,000
Accounts receivable
$87,000
$72,000
Inventory
$96,000
$83,000
Accounts payable
$23,000
$29,000
The company prepares its statement of cash flows using the direct method.
On its statement of cash flows, what amount should Howard show for its net sales
adjusted to a cash basis (i.e., cash received from sales)?
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48.
Hayward Corporation had net sales of $610,000 and cost of goods sold of $360,000 for the
just completed year. Shown below are the beginning and ending balances for the year of
various accounts:
Ending
Beginning
Cash
$42,000
$31,000
Accounts receivable
$87,000
$72,000
Inventory
$96,000
$83,000
Accounts payable
$23,000
$29,000
The company prepares its statement of cash flows using the direct method.
On its statement of cash flows, what amount should Howard show for its cost of goods
sold adjusted to a cash basis (i.e., cash paid to suppliers)?
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Essay Questions
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49.
Comparative balance sheets and the income statements for Ellis Corporation are
presented below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Assets
Current
assets:
Cash
$45,000
$30,000
Accounts
receivable
38,000
40,000
Inventory
67,000
60,000
Total current
assets
150,000
130,000
Long-term
investments
162,000
200,000
Property,
plant and
equipment
278,000
150,000
Less
accumulated
depreciation
52,000
50,000
Total assets
$538,000
$430,000
Liabilities
and
stockholders'
equity
Current
liabilities:
Accounts
payable
$36,000
$40,000
Accrued
liabilities
24,000
30,000
Income
15,000
20,000
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taxes payable
Total current
liabilities
75,000
90,000
Bonds
payable
120,000
30,000
Total
liabilities
195,000
120,000
Stockholders'
equity:
Common
stock
295,000
270,000
Retained
earnings
48,000
40,000
Total
stockholders'
equity
343,000
310,000
Total
liabilities and
stockholders'
equity
$538,000
$430,000
Income Statement
Sales
$150,000
Costs of
goods sold
76,500
Gross margin
73,500
Selling and
administrative
expense
16,000
Net operating
income
57,500
Loss on sale
of investment
2,500
Income
55,000
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before taxes
Income taxes
22,000
Net income
$33,000
The following additional information is available for the year:
* During the year, the company sold long-term investments for $35,500 that had been
purchased for $38,000.
* The company did not sell any property, plant, and equipment during the year or
repurchase any of its own common stock.
* All sales were on credit.
* The company paid a cash dividend of $25,000.
* The company paid cash to retire $15,000 of bonds payable.
Required:
a. Using the indirect method, determine the net cash provided by operating activities.
b. Using the direct method, determine the net cash provided by operating activities.
c. Using the net cash provided by operating activities amount from either part a or b,
prepare a statement of cash flows.
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