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158. The following selected account balances are taken from a merchandising company's
records:
Dec. 31 Dec. 31, For the
2012 2013 Year 2013
Merchandise inventory $ 15,600 $ 21,200
Accounts payable 32,400 27,400
Salaries payable 4,400 3,000
Accounts receivable 42,000 36,000
Total assets 234,000 286,000
Sales $312,000
Cost of goods sold 165,600
Salaries expense 48,000
(a) Calculate the cash payments made during 2013 for merchandise. Assume all of the
company's accounts payable balances result from merchandise purchases.
(b) Calculate the cash receipts from customer sales during 2013.
(c) Calculate the cash payments for salaries during 2013.
159. Use the following calendar-year information to prepare David Company's statement of
cash flows using the direct method.
Cash paid to purchase machinery………………………… $ 124,000
Cash paid for merchandise inventory…………………….. 220,000
Cash paid for operating expenses………………………… 280,000
Cash paid for interest……………………………………... 4,000
Cash received for interest………………………………… 10,000
Cash proceeds from sale of land………………………….. 100,000
Cash balance at beginning of year……………………….. 15,000
Cash balance at end of year………………………………. 77,000
Cash borrowed on a short-term note……………………… 25,000
Cash dividends paid………………………………………. 24,000
Cash received from stock issuance……………………….. 57,000
Cash collections from customers…………………………. 522,000
160. For each of the following separate cases, use the information provided to calculate the
missing cash inflow or cash outflow using the direct method.
(a) Accounts receivable balances:
Beginning of year ……………………… $ 60,000
End of year …………………………….. 57,000
Sales revenue (all on credit) …………….. 375,000
Cash received from customers $______
(b) Accounts payable balances:
Beginning of year ………………………. $ 42,000
End of year……………………………… 45,000
Merchandise inventory balances:
Beginning of year ……………………… 50,000
End of year …………………………….. 47,500
Cost of goods sold……………………….. 250,000
Cash paid for merchandise inventory……. $______
(c) Interest payable balances:
Beginning of year ……………………... $ 7,500
End of year ……………………………. 9,200
Interest expense ………………………… 35,000
Cash paid for interest …………………… $______
161. Use the following information about the calendar-year cash flows of MacArthur
Company to prepare a statement of cash flows (direct method) and a schedule of noncash
investing and financing activities.
Cash and cash equivalents, beginning-year balance $ 18,000
Cash and cash equivalents, year-end balance 78,750
Cash payments for merchandise inventory 75,750
Cash paid for store equipment 15,750
Cash borrowed on three-month note payable 22,500
Cash dividends paid 12,000
Cash paid for salaries 39,000
Cash payments for other operating expenses 48,000
Building purchased and financed by long-term note payable 78,000
Cash received from customers 220,500
Cash interest received 8,250
162. For each of the following independent cases, use the information provided to calculate
the missing cash inflow or cash outflow using the direct method.
(a.) Interest payable, beginning-year……………………... $ 4,200
Interest expense………………………………………. 26,700
Interest payable, year-end……………………………. 3,000
Cash paid for interest………………………………… $
(b.) Prepaid insurance, beginning-year…………………… $ 7,000
Insurance expense…………………………………….. 16,800
Prepaid insurance, year-end…………………………... 3,400
Cash paid for insurance……………………………….. $
(c.) Interest receivable, beginning-year…………………… $ 800
Interest revenue……………………………………….. 12,600
Interest receivable, year-end………………………….. 1,200
Cash received for interest…………………………….. $
(d.) Accounts payable, beginning-year……………………. $ 60,000
Cost of goods sold…………………………………….. 244,000
Merchandise inventory, beginning-year………………. 35,000
Merchandise inventory, year-end……………………… 40,500
Accounts payable, year-end…………………………… 64,800
Cash paid for merchandise…………………………….. $
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163. Aster Company’s 2013 income statement and changes in selected balance sheet accounts
are given below. Calculate the company's net cash provided or used by operating activities
using the direct method.
Aster Company
Income Statement
For Year Ended December 31, 2013
Sales $248,000
Cost of goods sold 116,000
Gross profit $132,000
Operating expenses:
Wages and salaries expense $44,000
Rent expense 16,000
Depreciation expense 30,000
Amortization expense 12,000
Other expenses 18,000 120,000
Income from operations $ 12,000
Gain on sale of equipment 26,000
Income before taxes $ 38,000
Income tax expense 13,300
Net Income $ 24,700
The company also experienced the following during 2013:
Increase in accounts receivable $ 4,000
Increase in accounts payable (all accounts
payable transactions are for inventory) 16,000
Increase in income taxes payable 300
Decrease in prepaid expenses 10,000
Decrease in merchandise inventory 14,000
Decrease in long-term notes payable 20,000
16-88
164. Based on the information in the following income statement and balance sheet for
Montego Bay Corporation, determine the cash flows from operating activities using the direct
method.
Montego Bay Corporation
Income Statement
For Year Ended December 31, 2013
Sales $504,000
16-89
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
Montego Bay Corporation
Balance Sheets
At December 31
2013 2012
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
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
165. A company reported net income of $112,000, operating cash flows of $57,000, total cash
flows of $97,000, and average total assets of $962,000. Calculate its cash flow on total assets
ratio.
166. Mansell reported net income of $233.4 million, net cash provided by operating activities
of $131.4 million, total cash flows of $187.7 million, and average total assets of $2,040.8
million at the end of the year. Calculate the cash flow on total assets ratio for Mansell.
167. Hancock reported assets of $13,362 million at January 1 and $13,369 million as of
December 31 of the current year. Hancock’s net cash flows from operations were $2,204
million. Calculate the cash flow on total assets ratio for Hancock.
168. A company reported operating cash flows in Year 1 of $23,400 and $26,220 in Year 2.
Its average total assets in Year 1 were $262,000 and $285,000 in Year 2. Calculate the cash
flow on total assets ratio for both years. Comment on the results.
169. 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.
170. A company reported average total assets of $496,000 in Year 1 and $604,000 in Year 2.
Its net operating cash flow in Year 1 was $41,150 and $55,500 in Year 2. Calculate its cash
flow on total assets ratio for both years. Comment on the results.
171. 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.
16-94
172. 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.
Crockett 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
