12-162
198.
Selected income statement and balance sheet account information for Quinlen Company
is provided below. Calculate the company’s net cash provided or used by operating
activities using the indirect method.
Income statement data for 2017:
Net income
31,300
Depreciation expense
17,950
Loss on sale of machinery
3,175
The company also experienced the following during 2017:
$11,000
8,600
13,250
2,700
Cash flows from operations:
Net Income
Depreciation expense
Loss on sale of machinery
3,175
12-164
199.
Based on the information in the following income statement and balance sheet for
Monterey Corporation, determine the cash flows from operating activities using the direct
method.
Monterey Corporation
Income Statement
For Year Ended December 31, 2017
Sales
$504,000
Cost of goods sold
327,600
Depreciation
42,000
Other operating expenses
125,500
(495,100)
Other gains (losses):
Gain on sale of equipment
7,200
Income before taxes
16,100
Income tax expense
(4,800)
Net income
$11,300
Monterey Corporation
Balance Sheets
At December 31
Assets:
2017
2016
Cash
$64,650
$55,800
Accounts receivable
21,000
29,000
Inventory
58,000
52,100
Equipment
240,000
222,000
Accumulated depreciation
(106,000)
(96,000)
Total assets
$277,650
$262,900
Liabilities:
Accounts payable
$28,400
$23,700
Income taxes payable
1,050
1,200
Total liabilities
$29,450
$24,900
12-165
Equity:
Common stock
$106,000
$106,000
Paid-in Capital in Excess of
Par
18,000
18,000
Retained earnings
124,200
114,000
Total equity
$248,200
$238,000
Total liabilities and equity
$277,650
$262,900
Cash flows from operations:
Cash received from customers
(a)
Cash paid for merchandise
(328,800)
(b)
Cash paid for operating
expenses
Cash paid for income taxes
(c)
Net cash provided by
Decrease in accounts receivable
Cash collected from customers
Cost of goods sold
Increase in merchandise inventory
200.
A company reported net income of $132,000, operating cash flows of $87,000, total cash
flows of $112,000, and average total assets of $1,053,000. Calculate its cash flow on total
assets ratio.
201.
Keita Co. reported net income of $213.4 million, net cash provided by operating activities
of $151.3 million, total cash flows of $187.7 million, and average total assets of $2,314.8
million at the end of the year. Calculate the cash flow on total assets ratio for Keita.
202.
Faster Freight Co. reported net cash provided by operating activities of $142.7 million and
average total assets of $1,762.5 million at the end of the year. Calculate the cash flow on
total assets ratio for Faster Freight.
203.
Babson reported assets of $13,362 million at January 1 and $13,369 million as of
December 31 of the current year. Babson’s net cash flows from operations were $2,204
million. Calculate the cash flow on total assets ratio for Babson.
204.
A company reported operating cash flows in Year 1 of $33,100 and $26,220 in Year 2. Its
average total assets in Year 1 were $262,000 and $313,000 in Year 2. Calculate the cash
flow on total assets ratio for both years. Comment on the results.
205.
A corporation reported average total assets in Year 1 of $397,350 and $440,800 in Year 2.
Its net operating cash flow for Year 1 was $35,667 and $35,790 for Year 2. Calculate the
cash flow on total assets ratio for both years. Comment on the results.
206.
A company reported average total assets of $501,000 in Year 1 and $611,000 in Year 2. Its
net operating cash flow in Year 1 was $41,500 and $55,250 in Year 2. Calculate its cash
flow on total assets ratio for both years. Comment on the results.
12-171
207.
A company reported net income of $318,000, operating cash flows of $218,000, total cash
flows of $184,000, and average total assets of $898,000. Calculate its cash flow on total
assets ratio.
208.
Use the following income statement and information about changes in noncash current
assets and liabilities to (1) prepare only the cash flows from operating activities section of
the statement of cash flows using the indirect method and (2) compute the company’s
cash flow on total assets ratio for the year assuming that average total assets are
$525,250.
Davey Company
Income Statement
For Year Ended December 31
Sales
$880,000
Cost of goods sold
487,000
Gross profit
$393,000
Operating expenses:
Salaries expense
$144,000
Rent expense
76,000
Depreciation expense
45,000
Amortization expense
22,000
Utilities expenses
12,000
299,000
Income from operations
$94,000
Loss on sale of equipment
14,000
Income before taxes
$80,000
Income tax expense
28,500
Net Income
$51,500
Changes in current asset and current liability accounts for the year that relate to
operations follow.
Increase in accounts receivable
$32,000
Increase in accounts payable (all
accounts payable transactions are for
inventory)
13,500
Decrease in prepaid expenses
9,200
Decrease in merchandise inventory
14,000
Decrease in long-term notes payable
20,000
Davey Company
Net income
Depreciation expense
12-173
209.
Use the following financial statements and additional information to (1) prepare a
statement of cash flows for the year ended December 31, 2017 using the indirect method,
and (2) compute the company’s cash flow on total assets ratio for 2017.
Derby Company
Balance Sheets
At December 31
2017
2016
Assets:
Cash
$85,600
$65,200
Accounts receivable, net
72,850
56,750
Merchandise inventory
157,750
144,850
Prepaid expenses
6,080
12,680
Equipment
280,600
245,600
Accumulated depreciation-
Equipment
(80,600)
(97,600)
Total assets
$522,280
$427,480
Liabilities:
Accounts payable
$52,850
$45,450
Income taxes payable
15,240
12,240
Notes payable (long term)
59,200
79,200
Total liabilities
$127,290
$136,890
Equity:
Common stock
200,000
150,000
Amortization expense
Loss on sale of
Net cash provided by
operating activities
12-174
Paid-in capital in excess of
par
53,000
40,000
Retained earnings
141,990
100,590
Total equity
$394,990
$290,590
Total liabilities and equity
$522,280
$427,480
Derby Company
Income Statement
For Year Ended December 31, 2015
Sales
$488,000
Cost of goods sold
$212,540
Depreciation expense
43,000
Other operating expenses
106,260
Interest expense
6,400
(368,200)
Other gains (losses):
Gain on sale of equipment
4,700
Income before taxes
124,500
Income taxes expense
41,100
Net income
$83,400
Additional Information:
a. A $20,000 note payable is retired at its carrying value in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid.
c. New equipment is acquired for $120,000 cash.
d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of
$4,700.
e. Prepaid expenses relate to Other Expenses on the income statement.
f. All purchases and sales of merchandise inventory are on credit.