Statement of Cash Flows ♦ 629
3. Refer to YeeHaw Corporation. Given the Statement of Cash Flows for YeeHaw Corporation and
the following information provided, compute the ending balances for each account listed below.
Accounts receivable had a beginning balance of $100,000
Merchandise inventory had a beginning balance of $150,000
Prepaid Rent had a beginning balance of $3,000
Accounts Payable had a beginning balance of $60,000
Income Taxes Payable had a beginning balance of $7,000
4. Refer to YeeHaw Corporation. Given the Statement of Cash Flows for YeeHaw Corp, answer the
following questions:
(a)
What is the total amount of cash flows from income statement items and from current items on the
balance sheet?
(b)
What is the total amount of cash flows from long-term liability and stockholders’ equity
transactions?
(c)
What is the total amount of cash flows from activities involving assets used in productions?
(d)
Which of the three sections of the statement of cash flows provided the greatest amount of cash
inflows? In general is this section important? Why?
Net Cash Flows from Operating Activities
Net Cash Flows from Financing Activities
Net Cash Flows from Investing Activities
630 ♦ Chapter 13
5. Using the indirect method, prepare the statement of cash flows for Flagstaff Sporting Goods, Inc.
from the following information.
Flagstaff Sporting Goods, Inc.
Income Statement
For the Year Ended December 31, 2007
Net Sales
Sales
$2,291,000
Sales Returns and Allowances
42,500
Net Sales
$2,248,500
Cost of Goods Sold
1,575,900
Gross Margin
$ 672,600
Operating Expenses
Advertising Expense
$ 30,800
Depreciation Expense
34,000
Digital Service Provider Expense
2,400
Insurance Expense
15,500
Salaries and Wages Expense
135,300
Supplies Expense
23,800
Utilities Expense
18,600
Total Operating Expenses
260,400
Income from Operations
$ 412,200
Other Revenues and Expenses
Interest Expense
$(38,300)
Interest Income
15,200
Loss on Sale of Furniture & Fixtures
(10,200)
Total Other Revenues and Expenses
(33,300)
Income before Income Taxes
$ 378,900
Income Tax Expense
30,600
Net Income
$ 348,300
Earnings per Share ($348,300/50,000)
$ 6.97
Flagstaff Sporting Goods, Inc.
Statement Of Retained Earnings
For the Year Ended December 31, 2007
Retained Earnings, January 1, 2004
$232,400
Net Income
$348,300
Subtotal
$580,700
Less Dividends
(33,500)
Retained Earnings, December 31, 2004
$547,200
Statement of Cash Flows ♦ 631
Flagstaff Sporting Goods, Inc.
Balance Sheet
December 31,2007
Assets
Current Assets
Cash
$ 75,000
Short-term Investments
144,500
Notes Receivable
50,100
Accounts Receivable
175,000
Interest Receivable
6,600
Merchandise Inventory
92,000
Prepaid Insurance
5,100
Supplies
2,700
Total Current Assets
$551,000
Investments
Long-term Investment in Stock
150,000
Property, Plant and Equipment
Land
$ 80,000
Building
Less Accumulated Depreciation
253,300
Furniture & Fixtures
Less Accumulated Depreciation
282,700
Total Property, Plant and Equipment
616,000
Intangible Assets
Trademark
35,000
Total Assets
$1,352,000
Liabilities
Current Liabilities
Accounts Payable
$ 37,200
Notes Payable
9,200
Income Taxes Payable
30,600
Interest Payable
12,000
Current Portion of Mortgage Payable
39,270
Salaries and Wages Payable
6,400
Unearned Revenue
1,700
Total Current Liabilities
$ 136,370
Long-term Liabilities
Mortgage Payable
353,430
Total Liabilities
$ 489,800
Stockholders’ Equity
Contributed Capital
Common Stock, $3 par value
$150,000
Paid-in Capital in Excess of Par Value
165,000
Total Contributed Capital
$315,000
Retained Earnings
547,200
Total Stockholders’ Equity
862,200
Total Liabilities and Stockholders’ Equity
$1,352,000
632 ♦ Chapter 13
Additional information for the Statement of Cash Flows:
(a)
Account balances for current assets and current liabilities* at December 31, 2006 (i.e., beginning
balances for 2007) were:
Cash
$ 16,470
Short-term Investments
144,500
Accounts Receivable (net)
178,000
Interest Receivable
4,200
Merchandise Inventory
85,000
Prepaid Insurance
3,500
Supplies
4,100
Accounts Payable
35,400
Income Taxes Payable
44,000
Interest Payable
13,000
Salaries & Wages Payable
9,200
Unearned Revenue
1,700
*Hint: Transactions affecting Notes Receivable, Notes Payable and the Current Portion of
Mortgage Payable should be included with Investing or Financing Activities as appropriate.
(b)
During the year, the following investing and financing transactions occurred and were properly
recorded:
Received a payment of $5,000 on the note receivable.
Paid $38,000 on a note payable.
Constructed a building for $180,000 financed by issuing shares common stock.
Purchased long-term investment in stock for $150,000.
Furniture & Fixtures that cost $27,000 (accumulated depreciation of $8,000) was sold for a loss of
$10,200.
Purchased new furniture & fixtures for $40,000.
Paid $39,270 on mortgage payable.
Issued shares of common stock for $20,000.
Paid cash dividends of $33,500.
Constructed a small addition to the building for $45,000 cash.
Statement of Cash Flows ♦ 633
Flagstaff Sporting Goods, Inc.
Statement of Cash Flows
634 ♦ Chapter 13
Statement of Cash Flows ♦ 635
6. Using the direct method, prepare the statement of cash flows for Flagstaff Sporting Goods, Inc.
from the following information.
Flagstaff Sporting Goods, Inc.
Income Statement
For the Year Ended December 31, 2007
Net Sales
Sales
$2,291,000
Sales Returns and Allowances
42,500
Net Sales
$2,248,500
Cost of Goods Sold
1,575,900
Gross Margin
$ 672,600
Operating Expenses
Advertising Expense
$ 30,800
Depreciation Expense
34,000
Digital Service Provider Expense
2,400
Insurance Expense
15,500
Salaries and Wages Expense
135,300
Supplies Expense
23,800
Utilities Expense
18,600
Total Operating Expenses
260,400
Income from Operations
$ 412,200
Other Revenues and Expenses
Interest Expense
$(38,300)
Interest Income
15,200
Loss on Sale of Furniture & Fixtures
(10,200)
Total Other Revenues and Expenses
(33,300)
Income before Income Taxes
$ 378,900
Income Tax Expense
30,600
Net Income
$ 348,300
Earnings per Share ($348,300/50,000)
$ 6.97
Flagstaff Sporting Goods, Inc.
Statement Of Retained Earnings
For the Year Ended December 31, 2007
Retained Earnings, January 1, 2004
$232,400
Net Income
$348,300
Subtotal
$580,700
Less Dividends
(33,500)
Retained Earnings, December 31, 2004
$547,200
636 ♦ Chapter 13
Flagstaff Sporting Goods, Inc.
Balance Sheet
December 31,2007
Assets
Current Assets
Cash
$ 75,000
Short-term Investments
144,500
Notes Receivable
50,100
Accounts Receivable
175,000
Interest Receivable
6,600
Merchandise Inventory
92,000
Prepaid Insurance
5,100
Supplies
2,700
Total Current Assets
$551,000
Investments
Long-term Investment in Stock
150,000
Property, Plant and Equipment
Land
$ 80,000
Building
Less Accumulated Depreciation
253,300
Furniture & Fixtures
Less Accumulated Depreciation
282,700
Total Property, Plant and Equipment
616,000
Intangible Assets
Trademark
35,000
Total Assets
$1,352,000
Liabilities
Current Liabilities
Accounts Payable
$ 37,200
Notes Payable
9,200
Income Taxes Payable
30,600
Interest Payable
12,000
Current Portion of Mortgage Payable
39,270
Salaries and Wages Payable
6,400
Unearned Revenue
1,700
Total Current Liabilities
$ 136,370
Long-term Liabilities
Mortgage Payable
353,430
Total Liabilities
$ 489,800
Stockholders’ Equity
Contributed Capital
Common Stock, $3 par value
$150,000
Paid-in Capital in Excess of Par Value
165,000
Total Contributed Capital
$315,000
Retained Earnings
547,200
Total Stockholders’ Equity
862,200
Total Liabilities and Stockholders’ Equity
$1,352,000
Statement of Cash Flows ♦ 637
Additional information for the Statement of Cash Flows:
(a)
Account balances for current assets and current liabilities* at December 31, 2006 (i.e., beginning
balances for 2007) were:
Cash
$ 16,470
Short-term Investments
144,500
Accounts Receivable (net)
178,000
Interest Receivable
4,200
Merchandise Inventory
85,000
Prepaid Insurance
3,500
Supplies
4,100
Accounts Payable
35,400
Income Taxes Payable
44,000
Interest Payable
13,000
Salaries & Wages Payable
9,200
Unearned Revenue
1,700
*Hint: Transactions affecting Notes Receivable, Notes Payable and the Current Portion of
Mortgage Payable should be included with Investing or Financing Activities as appropriate.
(b)
During the year, the following investing and financing transactions occurred and were properly
recorded:
Received a payment of $5,000 on the note receivable.
Paid $38,000 on a note payable.
Constructed a building for $180,000 financed by issuing shares common stock.
Purchased long-term investment in stock for $150,000.
Furniture & Fixtures that cost $27,000 (accumulated depreciation of $8,000) was sold for a loss of
$10,200.
Purchased new furniture & fixtures for $40,000.
Paid $39,270 on mortgage payable.
Issued shares of common stock for $20,000.
Paid cash dividends of $33,500.
Constructed a small addition to the building for $45,000 cash.
638 ♦ Chapter 13
Flagstaff Sporting Goods, Inc.
Statement of Cash Flows
Statement of Cash Flows ♦ 639
640 ♦ Chapter 13
7. Using the direct method, prepare the cash flows from operating activities portion of the statement
of cash flows for Avon Dry Goods, Inc. from the following information.
Avon Dry Goods, Inc.
Income Statement
For the Year Ended December 31, 2007
Net Sales
Sales
$1,111,000
Sales Returns and Allowances
32,500
Net Sales
$1,078,500
Cost of Goods Sold
575,900
Gross Margin
$ 502,600
Operating Expenses
Advertising Expense
$ 30,800
Depreciation Expense
34,000
Digital Service Provider Expense
2,400
Insurance Expense
15,500
Salaries and Wages Expense
135,300
Supplies Expense
23,800
Utilities Expense
18,600
Total Operating Expenses
260,400
Income from Operations
$ 242,200
Other Revenues and Expenses
Interest Expense
$(16,300)
Interest Income
8,200
Loss on Sale of Furniture & Fixtures
(5,200)
Total Other Revenues and Expenses
(13,300)
Income before Income Taxes
$ 228,900
Income Tax Expense
18,600
Net Income
$ 210,300
Earnings per Share ($210,300/50,000)
$ 4.21
Avon Dry Goods, Inc.
Statement Of Retained Earnings
For the Year Ended December 31, 2007
Retained Earnings, January 1, 2004
$132,400
Net Income
$210,300
Subtotal
$342,700
Less Dividends
(13,500)
Retained Earnings, December 31, 2004
$329,200
Statement of Cash Flows ♦ 641
Additional information for the Statement of Cash Flows:
(a)
Changes in the account balances for current assets and current liabilities* at December 31, 2006 (i.e.,
beginning balances for 2007) were:
Cash
increased $ 58,530
Short-term Investments
no change in the balance
Accounts Receivable (net)
decreased $3,000
Interest Receivable
increased $2,400
Merchandise Inventory
increased $7,000
Prepaid Insurance
increased $1,600
Supplies
decreased $1,400
Accounts Payable
increased $1,800
Income Taxes Payable
increased $13,400
Interest Payable
decreased $1,000
Salaries & Wages Payable
decreased $2,800
Unearned Revenue
no change in the balance
(b)
During the year, the following investing and financing transactions occurred and were properly
recorded:
Received a payment of $5,000 on the note receivable.
Paid $38,000 on a note payable.
Constructed a building for $180,000 financed by issuing shares common stock.
Purchased long-term investment in stock for $150,000.
Furniture & Fixtures that cost $27,000 (accumulated depreciation of $8,000) was sold for a loss of
$10,200.
Purchased new furniture & fixtures for $40,000.
Paid $39,270 on mortgage payable.
Issued shares of common stock for $20,000.
Paid cash dividends of $13,500.
Constructed a small addition to the building for $45,000 cash.
642 ♦ Chapter 13
Avon Dry Goods, Inc.
Cash Flows from Operating Activities
For the Year Ended December 31, 2007
Statement of Cash Flows ♦ 643
644 ♦ Chapter 13
Pam’s Plants’ Financial Information
Pam’s Plants, Inc.
Income Statement
For the Year Ended December 31, 2007
Net Sales
Sales
$791,000
Sales Returns and Allowances
12,500
Net Sales
$778,500
Cost of Goods Sold
375,900
Gross Margin
$402,600
Operating Expenses
Advertising Expense
$10,800
Depreciation Expense
24,000
Insurance Expense
15,500
Salaries and Wages Expense
35,300
Supplies Expense
23,800
Utilities Expense
8,600
Total Operating Expenses
118,000
Income from Operations
$284,600
Other Revenues and Expenses
Gain on Sale of Tools
$ 9,200
Interest Expense
(8,300)
Interest Income
5,200
Total Other Revenues and Expenses
6,100
Income before Income Taxes
$290,700
Income Tax Expense
9,600
Net Income
$281,100
Earnings per Share ($281,100/175,000)
$ 1.61
Statement of Cash Flows ♦ 645
Pam’s Plants, Inc.
Balance Sheet
December 31, 2007
Assets
Current Assets
Cash
$ 35,000
Short-term Investments
89,000
Notes Receivable
5,100
Accounts Receivable
125,000
Interest Receivable
3,600
Merchandise Inventory
92,000
Prepaid Insurance
3,600
Supplies
7,700
Total Current Assets
$361,000
Investments
Long-term Investment in Stock
150,000
Property, Plant and Equipment
Land
$80,000
Tools
Less Accumulated Depreciation
93,300
Trucks
Less Accumulated Depreciation
90,400
Total Property, Plant and Equipment
263,700
Intangible Assets
Goodwill
100,000
Total Assets
$874,700
Liabilities
Current Liabilities
Accounts Payable
$25,200
Notes Payable
9,800
Income Taxes Payable
9,600
Interest Payable
2,000
Current Portion of Mortgage Payable
9,270
Salaries and Wages Payable
6,400
Unearned Revenue
1,700
Total Current Liabilities
$ 63,970
Long-term Liabilities
Mortgage Payable
83,430
Total Liabilities
$147,400
Stockholders’ Equity
Contributed Capital
Common Stock, $1 par value
$175,000
Paid-in Capital in Excess of Par Value
158,700
Total Contributed Capital
$333,700
Retained Earnings
393,600
Total Stockholders’ Equity
727,300
Total Liabilities and Stockholders’ Equity
$874,700
646 ♦ Chapter 13
Additional Information for the Statement of Cash Flows:
(a)
Beginning balances Account balances for current assets and current liabilities* were:
Cash
$ 1,770
Short-term Investments
89,000
Accounts Receivable (net)
145,000
Interest Receivable
3,000
Merchandise Inventory
98,000
Prepaid Insurance
3,500
Supplies
4,100
Accounts Payable
35,400
Income Taxes Payable
4,400
Interest Payable
1,000
Salaries & Wages Payable
9,200
Unearned Revenue
1,700
*Hint: Transactions affecting Notes Receivable, Notes Payable and the Current Portion of
Mortgage Payable should be included with Investing or Financing Activities as appropriate.
(b)
During the year, the following investing and financing transactions occurred and were properly
recorded:
Received a payment of $5,000 on the note receivable.
Paid $58,000 on a note payable.
Purchased truck by issuing $75,000 of common stock.
Purchased long-term investment in stock for $150,000.
Tools costing $27,000 (accumulated depreciation of $8,000) were sold for a gain of $9,200.
Purchased new Tools $120,000.
Paid $9,270 on mortgage payable.
Issued shares of common stock for $30,000.
Paid cash dividends of $3,500.
Statement of Cash Flows ♦ 647
8. Refer to Pam’s Plants’ Financial Information.
(a)
Using the information for Pam’s Plants, provide the following journal entries.
Received a payment of $5,000 on the note receivable.
Paid $58,000 on a note payable.
Purchased truck by issuing $75,000 of common stock (1,000 shares issued)
Tools costing $27,000 (accumulated depreciation of $8,000) were sold for a gain of $9,200.
Paid cash dividends of $3,500.
(b)
For purposes of the statement of cash flows, does it matter how many shares of stock were issued for
the following transaction? Why or why not?
Issued shares of common stock for $30,000
Cash
Note Receivable
Note Payable
Cash
Truck
Common Stock
Additional Paid-in Capital
Cash
Accumulated Depreciation
Gain on sale
Tools
Retained Earnings
Cash
648 ♦ Chapter 13
9. Refer to Pam’s Plants’ Financial Information. Using the indirect method, prepare the statement of
cash flows for Pam’s Plants from the following information.
Pam’s Plants, Inc.
Statement of Cash Flows