55
51) Maloney Corporation’s balance sheet and income statement appear below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Assets:
Cash and cash equivalents
$
26
$
Accounts receivable
44
Inventory
38
Property, plant and equipment
646
Less accumulated depreciation
273
Total assets
$
481
$
Liabilities and stockholders’ equity:
Accounts payable
$
65
$
Accrued liabilities
22
Income taxes payable
33
Bonds payable
72
Common stock
73
Retained earnings
216
Total liabilities and stockholders’ equity
$
481
$
Cash dividends were $42. The company did not dispose of any property, plant, and equipment
during the year.
Income Statement
Sales
$1,059
Cost of goods sold
698
Gross margin
361
Selling and administrative expense
117
Net operating income
244
Income taxes
73
Net income
$171
Required:
Prepare the operating activities section of the statement of cash flows using the direct method.
57
52) Carson Corporation’s comparative balance sheet and income statement for last year appear
below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Cash
$
20,000
$
15,000
Accounts receivable
27,000
25,000
Inventory
32,000
35,000
Prepaid expenses
8,000
5,000
Long-term investments
36,000
38,000
Property, plant and equipment
108,000
92,000
Less accumulated depreciation
49,000
30,000
Total assets
$
182,000
$
180,000
Accounts payable
$
30,000
$
38,000
Income taxes payable
17,000
35,000
Bonds payable
40,000
32,000
Common stock
45,000
40,000
Retained earnings
50,000
35,000
Total liabilities and stockholders’ equity
$
182,000
$
180,000
Income Statement
Sales
$200,000
Cost of goods sold
100,000
Gross margin
100,000
Selling and administrative expense
52,000
Net operating income
48,000
Gain on sale of investments
2,000
Income before taxes
50,000
Income taxes
20,000
Net income
$30,000
Carson did not dispose of any property, plant, and equipment during the year. It constructs its
statement of cash flows using the direct method.
Required:
Using the direct method, prepare in good form the operating activities section of the statement of
cash flows.
59
53) The changes in each balance sheet account for Carver Corporation during the year just
completed are as follows:
Increase
Decrease
Cash and cash equivalents
$
3,000
Accounts receivable
$
5,000
Inventory
$
6,000
Prepaid expenses
$
3,000
Long-term investments
$
17,000
Property, plant and equipment
$
11,000
Accumulated depreciation
$
9,000
Accounts payable
$
8,000
Accrued liabilities
$
5,000
Bonds Payable
$
12,000
Common Stock
$
3,000
Retained Earnings
$
2,000
Carver Corporation’s income statement for the year just ended shows the following:
Income Statement
Sales
$
350,000
Cost of goods sold
190,000
Gross margin
160,000
Selling and administrative expense
158,000
Net income
$
2,000
The company did not dispose of any property, plant, and equipment, buy any long-term
investments, issue any bonds payable, or repurchase any of its own common stock during the
year. Carver Corporation uses the direct method to construct its statement of cash flows.
Required:
a. Determine the sales adjusted to the cash basis.
b. Determine the cost of goods sold adjusted to the cash basis.
c. Determine the selling and administrative expenses adjusted to a cash basis.
d. Determine the net cash provided by (used in) operating activities.
e. Determine the net cash provided by (used in) investing activities.
f. Determine the net cash provided by (used in) financing activities.
62
54) Carr Corporation’s comparative balance sheet and income statement for last year appear
below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Cash and cash equivalents
$
3,000
$
23,000
Accounts receivable
83,000
71,000
Inventory
39,000
47,000
Prepaid expenses
9,000
15,000
Long-term investments
240,000
200,000
Property, plant and equipment
515,000
480,000
Less accumulated depreciation
320,000
295,000
Total assets
$
569,000
$
541,000
Accounts payable
$
9,000
$
25,000
Accrued liabilities
24,000
17,000
Income taxes payable
49,000
46,000
Bonds payable
160,000
200,000
Common stock
170,000
140,000
Retained earnings
157,000
113,000
Total liabilities and stockholders’ equity
$
569,000
$
541,000
Income Statement
Sales
$850,000
Cost of goods sold
450,000
Gross margin
400,000
Selling and administrative expense
270,000
Net operating income
131,000
Income taxes
39,000
Net income
$91,000
The company declared and paid $47,000 in cash dividends during the year. It did not dispose of
any property, plant, and equipment during the year.
Required:
Construct in good form the operating activities section of the company’s statement of cash flows
for the year using the direct method.
64
55) Digby Corporation’s balance sheet and income statement appear below:
Comparative Balance Sheet
Ending
Balance
Beginning
Balance
Assets:
Cash and cash equivalents
$
34
$
Accounts receivable
76
Inventory
34
Property, plant and equipment
607
Less accumulated depreciation
350
Total assets
$
401
$
Liabilities and stockholders’ equity:
Accounts payable
$
30
$
Bonds payable
265
Common stock
43
Retained earnings
63
)
Total liabilities and stockholders’ equity
$
401
$
Income Statement
Sales
$1,075
Cost of goods sold
654
Gross margin
421
Selling and administrative expense
185
Net operating income
236
Income taxes
71
Net income
$165
Cash dividends were $29. The company did not dispose of any property, plant, and equipment
during the year.
Required:
Prepare the operating activities section of the statement of cash flows in good form using the
direct method.
66
56) Freeport Corporation’s income statement for last year appears below:
Income Statement
Sales
$300,000
Cost of goods sold
200,000
Gross margin
100,000
Selling and administrative expense
60,000
Income before income taxes
40,000
Income taxes
16,000
Net income
$24,000
The beginning and ending balances for last year are available for the following selected accounts
(the company did not dispose of any property, plant, and equipment during the year):
Ending
Balance
Beginning
Balance
Accounts receivable
$
32,000
$
40,000
Inventory
$
60,000
$
50,000
Prepaid expenses
$
12,000
$
8,000
Accumulated depreciation
$
40,000
$
30,000
Accounts payable
$
30,000
$
45,000
Accrued liabilities
$
16,000
$
10,000
Income taxes payable
$
2,000
$
5,000
Required:
Using the direct method, prepare in good form the operating activities section of the statement of
cash flows.