119. The most recent comparative balance sheet of Giacomelli Corporation appears below:
Ending Balance Beginning Balance
Assets:
Current assets:
Cash and cash equivalents $37,000 $29,000
Accounts receivable 20,000 24,000
Inventory 65,000 61,000
Prepaid expenses 5,000 7,000
Total current assets 127,000 121,000
Property, plant, and equipment 424,000 399,000
Less accumulated depreciation 231,000 200,000
Net property, plant, and equipment 193,000 199,000
Total assets $320,000 $320,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $19,000 $17,000
Accrued liabilities 58,000 51,000
Income taxes payable 47,000 42,000
Total current liabilities 124,000 110,000
Bonds payable 77,000 80,000
Total liabilities 201,000 190,000
Stockholders’ equity:
Common stock 31,000 30,000
Retained earnings 88,000 100,000
Total stockholders’ equity 119,000 130,000
Total liabilities and stockholders’ equity $320,000 $320,000
The company uses the indirect method to construct the operating activities section of its
statements of cash flows.
Which of the following is correct regarding the operating activities section of the statement of
cash flows?
120. Manila Corporation’s comparative balance sheet appears below:
Ending
Balance Beginning
Balance
Assets:
Current assets:
Cash and cash equivalents $42,000 $26,000
Accounts receivable* 22,000 26,000
Inventory* 77,000 75,000
Total current assets 141,000 127,000
Property, plant, and equipment* 340,000 315,000
Less accumulated depreciation* 218,000 187,000
Net property, plant, and equipment 122,000 128,000
Total assets $263,000 $255,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable* $13,000 $14,000
Accrued liabilities* 32,000 33,000
Income taxes payable* 63,000 54,000
Total current liabilities 108,000 101,000
Bonds payable* 93,000 94,000
Total liabilities 201,000 195,000
Stockholders’ equity:
Common stock* 28,000 24,000
Retained earnings 34,000 36,000
Total stockholders’ equity 62,000 60,000
Total liabilities and stockholders’ equity $263,000 $255,000
12-144
The company’s net income (loss) for the year was $0 and its cash dividends were $2,000. It did
not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of
its own common stock during the year.
Required:
Compute the change in each balance sheet account denoted with an asterisk (*). Indicate
whether the change in each balance will be recorded in the operating, investing, or financing
activities section of the statement of cash flows. For items recorded in the operating activities
section, also indicate whether the change will be added to or subtracted from net income. For all
other items, indicate whether the change will be added as a cash inflow or subtracted as a cash
outflow. The first entry has been filled in as an example.
12-146
121. The ending and beginning balances of Farmer Corporation’s balance sheet accounts for
the most recent year are listed below:
Ending
Balance Beginning
Balance
Assets & Contra-Assets:
Cash and cash equivalents $40,000 $28,000
Accounts receivable $17,000 $14,000
Inventory $60,000 $62,000
Property, plant, and equipment $406,000 $383,000
Accumulated depreciation $234,000 $205,000
Liabilities and Stockholders’ Equity:
Accounts payable $15,000 $12,000
Accrued liabilities $35,000 $38,000
Income taxes payable $49,000 $42,000
Bonds payable $110,000 $109,000
Common stock $39,000 $36,000
Retained earnings $41,000 $45,000
The company’s net income (loss) for the year was $0 and its cash dividends were $4,000. It did
not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of
its own common stock during the year.
Required:
Compute the change in each balance sheet account in the below table. Indicate whether the
change in each balance will be recorded in the operating, investing, or financing activities section
of the statement of cash flows. For items recorded in the operating activities section, also
indicate whether the change will be added to or subtracted from net income. For all other items,
indicate whether the change will be added as a cash inflow or subtracted as a cash outflow. The
first entry has been filled in as an example.
12-149
122. Belk Corporation’s balance sheet appears below:
Comparative Balance Sheet
Ending Balance Beginning Balance
Assets:
Cash and cash equivalents $27 $29
Accounts receivable 30 26
Inventory 65 61
Property, plant and equipment 500 390
Less accumulated depreciation 178 160
Total assets $444 $346
Liabilities and stockholders’ equity:
Accounts payable $46 $43
Accrued liabilities 23 24
Income taxes payable 46 47
Bonds payable 78 90
Common stock 34 30
Retained earnings 217 112
Total liabilities and stockholders’ equity $444 $346
The net income for the year was $126. Cash dividends were $21. The company did not dispose
of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own
common stock during the year.
Required:
Prepare a statement of cash flows in good form using the indirect method.
12-151
123. Vandy Corporation’s balance sheet and income statement appear below:
Comparative Balance Sheet
Ending Balance Beginning Balance
Assets:
Cash and cash equivalents $31 $29
Accounts receivable 61 73
Inventory 59 61
Property, plant and equipment 684 550
Less accumulated depreciation 349 319
Total assets $486 $394
Liabilities and stockholders’ equity:
Accounts payable $53 $54
Accrued liabilities 20 21
Income taxes payable 52 48
Bonds payable 203 190
Common stock 61 60
Retained earnings 97 21
Total liabilities and stockholders’ equity $486 $394
Income Statement
Sales $807
Cost of goods sold 492
Gross margin 315
Selling and administrative expense 182
Net operating income 133
Gain on sale of equipment 16
Income before taxes 149
Income taxes 45
Net income $104
12-152
The company sold equipment for $18 that was originally purchased for $14 and that had
accumulated depreciation of $12. It paid a cash dividend of $28 during the year and did not retire
any bonds payable or repurchase any of its own common stock.
Required:
Prepare a statement of cash flows for the year using the indirect method.
12-154
124. Alden Corporation’s most recent comparative Balance Sheet is as follows:
Ending Balance Beginning Balance
Assets
Cash $7,000 $12,000
Accounts receivable 11,000 2,000
Inventory 39,000 24,000
Long-term investments 23,000 9,000
Property, plant, and equipment 83,000 100,000
Less accumulated depreciation 66,000 62,000
Total assets $97,000 $85,000
Liabilities and Stockholders’ Equity
Accounts payable $9,000 $28,000
Income taxes payable 1,000 2,000
Bonds payable 16,000 10,000
Common stock 42,000 30,000
Retained earnings 29,000 15,000
Total liabilities and stockholders’ equity $97,000 $85,000
Alden’s net income was $34,000. No equipment was purchased and no long-term investments
were sold. There was a gain of $3,000 when equipment was sold. The accumulated depreciation
on the equipment that was sold was $12,000. Cash dividends of $20,000 were declared and paid
during the year.
Required:
Prepare Alden’s statement of cash flows using the indirect method.
12-156
125. Thunder Corporation’s balance sheet and income statement appear below:
Comparative Balance Sheet
Ending Balance Beginning Balance
Assets:
Cash and cash equivalents $28 $31
Accounts receivable 60 65
Inventory 41 42
Property, plant, and equipment 454 380
Less accumulated depreciation 206 172
Total assets $377 $346
Liabilities and stockholders’ equity:
Accounts payable $43 $45
Bonds payable 190 260
Common stock 41 40
Retained earnings 103 1
Total liabilities and stockholders’ equity $377 $346
Income Statement
Sales $874
Cost of goods sold 533
Gross margin 341
Selling and administrative expense 161
Net operating income 180
Income taxes 54
Net income $126
The company did not dispose of any property, plant, and equipment, issue any bonds payable, or
repurchase any of its own common stock during the year. The company declared and paid a cash
dividend of $24.
Required:
Prepare a statement of cash flows in good form using the indirect method.