96. The following transactions occurred last year at Jackson Inc.
Issuance of common stock
$ 140,000
Dividends paid to the common stockholders
7,000
Depreciation Expense
4,000
Repayment of principal on the company’s own bonds
90,000
Sale of equipment
16,000
Purchase of a building
110,000
Based solely on the above information, the net cash flows from financing activities for the year on the statement cash flows would be:
97. The following transactions occurred last year at Dempsey Inc.
Issuance of common stock
$ 50,000
Dividends paid to common stockholders
3,000
Depreciation Expense
6,000
Repayment of principal on the company’s own bonds
40,000
Sale of equipment
17,000
Purchase of land
120,000
Based solely on the above information, the net cash flows from financing activities for the year on the statement cash flows would be:
98. The Laurel Company reported the following data for last year:
$25,000
20,000
15,000
Based solely on this information, the net cash flows from financing activities on the statement of cash flows would be:
99. Figure 13-1.
Master Company’s net income last year was $88,000 and cash dividends declared and paid to the company
stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:
Increases (Decreases)
Debit balances:
Cash
$( 4,000)
Accounts receivable
$( 11,000)
Inventory
6,000
Prepaid Expenses
0
Long-term investments
50,000
Plant and equipment
35,000
Credit balances:
Accumulated Depreciation
62,000
Accounts payable
1,000
Accrued liabilities
( 5,000)
Taxes payable
10,000
Bonds payable
(60,000)
Common Stock
40,000
Retained Earnings
28,000
Refer to Figure 13-1. The net cash flows from operating activities last year was:
100. Figure 13-1.
Master Company’s net income last year was $88,000 and cash dividends declared and paid to the company
stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:
Increases (Decreases)
Debit balances:
Cash
$( 4,000)
Accounts receivable
$( 11,000)
Inventory
6,000
Prepaid Expenses
0
Long-term investments
50,000
Plant and equipment
35,000
Credit balances:
Accumulated Depreciation
62,000
Accounts payable
1,000
Accrued liabilities
( 5,000)
Taxes payable
10,000
Bonds payable
(60,000)
Common Stock
40,000
Retained Earnings
28,000
Refer to Figure 13-1. The net cash flows from investing activities last year was:
101. Figure 13-1.
Master Company’s net income last year was $88,000 and cash dividends declared and paid to the company
stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:
Increases (Decreases)
Debit balances:
Cash
$( 4,000)
Accounts receivable
$( 11,000)
Inventory
6,000
Prepaid Expenses
0
Long-term investments
50,000
Plant and equipment
35,000
Credit balances:
Accumulated Depreciation
62,000
Accounts payable
1,000
Accrued liabilities
( 5,000)
Taxes payable
10,000
Bonds payable
(60,000)
Common Stock
40,000
Retained Earnings
28,000
Refer to Figure 13-1. The net cash flows from financing activities last year was:
102. Figure 13-2.
Chandler Company’s net income last year was $98,000 and cash dividends declared and paid to the company
stockholders was $13,000. Changes in selected balance sheet accounts for the year appear below:
Increases (Decreases)
Debit balances:
Cash
$( 3,000)
Accounts receivable
1,000
Inventory
( 1,000)
Prepaid Expenses
13,000
Long-term investments
70,000
Plant and equipment
45,000
Credit balances:
Accumulated Depreciation
61,000
Accounts payable
( 11,000)
Accrued liabilities
( 9,000)
Taxes payable
9,000
Bonds payable
(50,000)
Common Stock
40,000
Retained Earnings
85,000
Refer to Figure 13-2. The net cash flows from operating activities to be reported in a statement of cash flows is:
103. Figure 13-2.
Chandler Company’s net income last year was $98,000 and cash dividends declared and paid to the company
stockholders was $13,000. Changes in selected balance sheet accounts for the year appear below:
Increases (Decreases)
Debit balances:
Cash
$( 3,000)
Accounts receivable
1,000
Inventory
( 1,000)
Prepaid Expenses
13,000
Long-term investments
70,000
Plant and equipment
45,000
Credit balances:
Accumulated Depreciation
61,000
Accounts payable
( 11,000)
Accrued liabilities
( 9,000)
Taxes payable
9,000
Bonds payable
(50,000)
Common Stock
40,000
Retained Earnings
85,000
Figure 13-2. The net cash flows from investing activities to be reported in a statement of cash flows is:
104. Figure 13-2.
Chandler Company’s net income last year was $98,000 and cash dividends declared and paid to the company
stockholders was $13,000. Changes in selected balance sheet accounts for the year appear below:
Increases (Decreases)
Debit balances:
Cash
$( 3,000)
Accounts receivable
1,000
Inventory
( 1,000)
Prepaid Expenses
13,000
Long-term investments
70,000
Plant and equipment
45,000
Credit balances:
Accumulated Depreciation
61,000
Accounts payable
( 11,000)
Accrued liabilities
( 9,000)
Taxes payable
9,000
Bonds payable
(50,000)
Common Stock
40,000
Retained Earnings
85,000
Figure 13-2. The net cash flows from financing activities to be reported in a statement of cash flows is:
105. If a gain of $25,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the
total amount reported in the cash flows from investing activities section of the statement of cash flows is:
106. The Prince Company reported net income of $260,000 for the current year. Depreciation recorded on
buildings and equipment amounted to $80,000 for the year. Balances of the current asset and current liability
accounts for 2005 and 2006 are as follows:
2006
2005
Cash
$20,000
$15,000
Accounts receivable
19,000
32,000
Inventories
50,000
65,000
Prepaid Expenses
7,500
5,000
Accounts Payable
12,000
18,000
Income taxes payable
1,600
1,200
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.
107. Using the indirect method, calculate the amount of net cash flows from operating activities from the
following data:
2006
2005
Net Income
$250,000
Accounts receivable
22,000
25,000
Prepaid Expenses
3,000
5,000
Accounts Payable
14,000
15,000
Depreciation Expense
51,000
Amortization Expense (Patent)
4,000
Dividends declared and paid
11,000
Net Income
$250,000
+
Decrease in accounts receivable
3,000
+
Decrease in prepaid expenses
2,000
+
Depreciation expense
51,000
+
Amortization expense
4,000
–
Decrease in accounts payable
(1,000)
Net Operating Cash
$309,000
Operating Cash Flows:
Net Income
$260,000
Add (deduct) adjusting items:
Depreciation Expense
80,000
Decrease in accounts receivable
13,000
Decrease in inventories
15,000
Increase in income taxes payable
400
Increase in prepaid expenses
(2,500)
Decrease in accounts payable
(6,000)
Net cash flows from operating activities:
359,900
108. Use the following information to perform the calculations below, using the indirect method. Show and
clearly label your calculations:
2006
2005
Net Income
$365,000
Accounts receivable
439,000
420,000
Inventory
560,000
516,000
Prepaid Expenses
42,000
48,000
Accounts Payable
146,000
119,000
Depreciation Expense
107,000
Purchase of long-term assets
616,000
Issuance of long-term debt
200,000
Issuance of stock for cash
160,000
Issuance of stock for long-term assets
110,000
Purchase of treasury stock
64,000
Sale of long-term investments at cost
39,000
a. Calculate the amount of the net cash flows from operating activities.
b. Calculate the amount of the net cash flows from investing activities.
c. Calculate the amount of the net cash flows from financing activities.
d. Calculate the net change in cash.
Cash flows from operating activities:
Net Income
$365,000
Depreciation Expense
107,000
Decrease in prepaid expenses
6,000
Increase in accounts payable
27,000
Increase in accounts receivable
(19,000)
Increase in inventory
(44,000)
Net cash flows from operating activities
$442,000
Cash flows from investing activities:
Sale of long-term assets
$ 39,000
Purchase of long-term assets
(616,000)
Net cash flows from investing activities
$(577,000)
Cash flows from financing activities:
Issuance of long-term debt
$200,000
Issuance of stock for cash
160,000
Purchase of treasure stock
(64,000)
Net cash flows from financing activities
$296,000
Net change in cash:
Increase in operating activities
$ 442,000
Decrease in investing activities
(577,000)
Increase in financing activities
296,000
Net Change in Cash
$ 161,000
109. Use the following selected data and additional information to answer the questions that follow:
Balance Sheet Data
2006
2005
Accounts receivable
$36,000
$42,000
Inventories
28,000
25,000
Accounts payable
31,000
35,000
Salaries payable
2,000
1,000
Equipment
60,000
40,000
Accumulated depreciation
12,000
16,000
Bonds payable
50,000
100,000
Common stock
150,000
100,000
Retained earnings
38,000
20,000
Income Statement Data
2006
Net sales
$420,000
Cost of goods sold
300,000
Operating expenses (excluding depreciation expense)
84,000
Net income
30,000
Gain on sale of equipment (included in net income above)
2,000
Additional information:
(a)
Equipment with a cost of $15,000 and a book value of $3,000 was sold for $5,000 during 2006.
(b)
Common stock was issued to retire bonds payable during 2006.
(c)
Dividends declared and paid during 2006 were $12,000.
1. Prepare the operating activities section of a statement of cash flows for 2006 using the indirect method.
2. Prepare the investing activities section of a statement of cash flows for 2006.
3. Prepare the financing activities section of a statement of cash flows for 2006.
Net income
$30,000
Add (deduct) adjusting items:
Depreciation
8,000
Decrease in accounts receivable
6,000
Increase in salaries payable
1,000
Gain on sale equipment
(2,000)
Increase in inventories
(3,000)
Decrease in accounts payable
(4,000)
Net cash provided from operating activities
$36,000
Decrease in accounts receivable ($42,000 – $36,000)
$ 6,000
Increase in salaries payable ($2,000 – $1,000)
$ 1,000
Gain on sale of equipment ($5,000 – $3,000)
$ 2,000
Increase in inventories ($28,000 – $25,000)
$ 3,000
Decrease in accounts payable ($35,000 – $31,000)
$ 4,000
Depreciation ($15,000-$3,000+$12,000-$16,000)
$8,000
Purchase of equipment
(35,000)
110. Bradley Company’s net income last year was $77,000. Changes in the company’s balance sheet accounts
for the year appear below:
Increases
(Decreases)
Debit balances:
Cash
$ 12,000
Accounts receivable
(16,000)
Inventory
18,000
Prepaid expenses
7,000
Long-term investments
20,000
Plant and equipment
70,000
Credit balances:
Accumulated depreciation
32,000
Accounts payable
26,000
Accrued liabilities
( 4,000)
Taxes payable
7,000
Bonds payable
(20,000)
Common stock
30,000
Retained earnings
40,000
The company declared and paid cash dividends of $37,000 last year.
Required:
a. Construct in good form the operating activities section of the company’s statement of cash flows for the year. (Use the indirect method.)
b. Construct in good form the investing activities section of the company’s statement of cash flows for the year.
c. Construct in good form the financing activities section of the company’s statement of cash flows for the year.
Operating activities:
Net income
$ 77,000
Add (deduct) adjusting items:
Depreciation expense
32,000
Decrease in accounts receivable
16,000
Increase in inventory
(18,000)
Increase in prepaid expenses
( 7,000)
Increase in accounts payable
26,000
Decrease in accrued liabilities
( 4,000)
Increase in taxes payable
7,000
Net cash flows from operating activities
$129,000
Increase in long-term investments
$(20,000)
Increase in plant & equipment
(70,000)
Net cash flows from investing activities
$(90,000)
Decrease in bonds payable
$(20,000)
Increase in common stock
30,000
Cash dividends
(37,000)
Net cash flows from financing activities
$(27,000)
111. Baskin Company’s net income last year was $98,000. Changes in the company’s balance sheet accounts for
the year appear below:
Increases
(Decreases)
Debit balances:
Cash
$ 24,000
Accounts receivable
15,000
Inventory
(18,000)
Prepaid expenses
( 6,000)
Long-term investments
10,000
Plant and equipment
40,000
Credit balances:
Accumulated depreciation
32,000
Accounts payable
(14,000)
Accrued liabilities
11,000
Taxes payable
4,000
Bonds payable
(40,000)
Common stock
10,000
Retained earnings
62,000
The company declared and paid cash dividends of $36,000 last year.
Required:
a. Construct in good form the operating activities section of the company’s statement of cash flows for the year. (Use the indirect method.)
b. Construct in good form the investing activities section of the company’s statement of cash flows for the year.
c. Construct in good form the financing activities section of the company’s statement of cash flows for the year.
Operating activities:
Net income
$ 98,000
Add (deduct) adjusting items:
Depreciation expense
32,000
Increase in accounts receivable
(15,000)
Decrease in inventory
18,000
Decrease in prepaid expenses
6,000
Decrease in accounts payable
(14,000)
Increase in accrued liabilities
11,000
Increase in taxes payable
4,000
Net cash flows from operating activities
$140,000
Investing activities:
Increase in long-term investments
$(10,000)
Increase in plant & equipment
(40,000)
Net cash flows from investing activities
$(50,000)
Financing activities:
Decrease in bonds payable
$(40,000)
Increase in common stock
10,000
Cash dividends
(36,000)
112. Black Company’s net income last year was $84,000. Changes in the company’s balance sheet accounts for
the year appear below:
Increases
(Decreases)
Debit balances:
Cash
$(12,000)
Accounts receivable
13,000
Inventory
(15,000)
Prepaid expenses
( 9,000)
Long-term investments
20,000
Plant and equipment
60,000
Credit balances:
Accumulated depreciation
26,000
Accounts payable
(15,000)
Accrued liabilities
( 8,000)
Taxes payable
19,000
Bonds payable
(30,000)
Common stock
40,000
Retained earnings
25,000
The company declared and paid cash dividends of $59,000 last year.
Required:
a. Construct in good form the operating activities section of the company’s statement of cash flows for the year. (Use the indirect method.)
b. Construct in good form the investing activities section of the company’s statement of cash flows for the year.
c. Construct in good form the financing activities section of the company’s statement of cash flows for the year.
Operating activities
Net income
$ 84,000
Add (deduct) adjusting items:
Depreciation expense
26,000
Increase in accounts receivable
(13,000)
Decrease in inventory
15,000
Decrease in prepaid expenses
9,000
Decrease in accounts payable
(15,000)
Decrease in accrued liabilities
( 8,000)
Increase in taxes payable
19,000
Net cash flows from operating activities
$117,000
Investing activities:
Increase in long-term investments
$(20,000)
Increase in plant & equipment
(60,000)
Net cash flows from investing activities
$(80,000)
Financing activities:
Decrease in bonds payable
$(30,000)
Increase in common stock
40,000
Cash dividends
(59,000)
Net cash flows from financing activities
$(49,000)
113. Playtown Company’s income statement for last year appears below:
Playtown Company
Income Statement
Sales
$100,000
Less cost of goods sold
60,000
Gross margin
40,000
Less operating expenses
25,000
Income before income taxes
15,000
Less income taxes
6,000
Net income
$ 9,000
The beginning and ending balances for last year are available for the following selected accounts:
Ending balance
Beginning balance
Accounts receivable
$ 15,000
$ 10,000
Inventory
29,000
25,000
Prepaid expenses
6,000
9,000
Accumulated depreciation
(35,000)
(30,000)
Accounts payable
27,000
20,000
Accrued liabilities
3,000
5,000
Income taxes payable
4,000
1,000
Required:
Using the direct method, prepare in good form, the operating activities section of the statement of cash flows.
Sales revenue
$100,000
Adjustments to a cash basis:
Increase in accounts receivable
-5,000
$95,000
Cost of goods sold
$ 60,000
Adjustments to a cash basis:
Increase in inventory
+4,000
Increase in accounts payable
-7,000
(57,000)
Operating expenses
$ 25,000
Adjustments to a cash basis:
Decrease in prepaid expenses
-3,000
Decrease in accrued liabilities
+ 2,000
Depreciation expense
-5,000
(19,000)
Income tax expense
$ 6,000
Adjustments to a cash basis:
Net cash flows from operating activities
$16,000
114. Freeport Company’s income statement for last year appears below:
Income Statement
Sales
$300,000
Less cost of goods sold
200,000
Gross margin
100,000
Less operating expenses
60,000
Income before income taxes
40,000
Less income taxes
16,000
Net income
$ 24,000
The beginning and ending balances for last year are available for the following accounts:
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.
Sales revenue
$300,000
Adjustments to a cash basis:
Decrease in accounts receivable
+8,000
$308,000
Cost of goods sold
200,000
Adjustments to a cash basis:
Increase in inventory
+10,000
Decrease in accounts payable
+15,000
(225,000)
Operating expenses
60,000
Adjustments to a cash basis:
Increase in prepaid expenses
+4,000
Increase in accrued liabilities
-6,000
Depreciation charges
-10,000
(48,000)
Income tax expense
16,000
Adjustments to a cash basis:
Decrease in income taxes payable
+3,000
(19,000)
Net cash flows from operating activities
$ 16,000