Exercise 12-11 (Part 1 continued)
(1) Cost of equipment sold (Given)……………………………………………………….….. $ 48,600
Accumulated depreciation of equipment sold*………..……….….…..…..…..…. (40 ,600 )
Book value of equipment sold…………………………………………………..…….….. 8,000
Gain on sale of equipment (Given)……………………………………………….….….. 2 ,000
Equipment Accumulated Depreciation, Equipment
Bal.,
6/30/2014
115,000 Bal., 6/30/2014 9,000
(2) Carrying value of notes retired…………………………………………………..……….. $ 30,000
Cash payment to retire notes………………………………………………………………. $ 30,000
(3)
Retained Earnings
Bal., 6/30/2014 24,100
Part 2
Cash flow on total assets ratio = Operating cash flows / Average total assets
Interpretation: A 49.6% result on the cash flow on total assets ratio is
Exercise 12-12B (40 minutes)
Part 1
IKIBAN, INC.
Statement of Cash Flows (Direct Method)
For Year Ended June 30, 2015
Cash flows from operating activities
Cash received from customers (Note 1)…........ $664,000
Cash paid for inventory (Note 2)………………..…. (393,300)
Net cash used in investing activities…............. (47,600)
Cash flows from financing activities
Cash received from stock issuance…..….…...... 60,000
Cash paid to retire notes (Note 6)…………………. (30,000)
Cash paid for dividends (Note 7)…..….….…..….. (90,310)
(See notes on next page)
Financial and Managerial Accounting, 6th Edition
Exercise 12-12B (continued)
Notes
(1) Sales…………………………………………………………………………………..…….…….… $678,000
Less increase in accounts receivable………..………..……………….……..…..….. (14 ,000 )
Cash paid for inventory………………………………………………………………….…... $393 ,300
(3) Other operating expenses…………………………………………………………………… $ 67,000
Plus decrease in wages payable………..………..……….…….…..…..…..…..…..… 9,000
Less decrease in prepaid expenses………………..……………….…………...…..… (1 ,000)
Cash paid for other operating expenses………………………………………………. $ 75 ,000
(4) Income taxes expense……………………………………………………………………..…. $ 43,890
Plus decrease in income taxes payable…………………………………………….…. 400
Cash paid for income taxes……………….………..……………….…..…..…..…..…... $ 44 ,290
Equipment Accumulated Depreciation, Equipment
Bal.,
6/30/2014
115,000 Bal., 6/30/2014 9,000
(6) Carrying value of notes retired…………………………………………………..……….. $ 30,000
Cash payment to retire notes………………………………………………………………. $ 30,000
(7)
Retained Earnings
Exercise 12-13A (30 minutes)
SCORETECK CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2015
December
31, 2014
Analysis of Changes December
31, 2015
Debit Credit
Balance sheet—debit bal. accounts
Inventory……….…….…………….……..… 250,000 (g) $ 20,000 230,000
Plant assets.……..…….…….…………….. 600,000
(d) 70,000 670,000
$1,050,000
$1,150,000
Balance sheet—credit bal. accounts
Accum. depreciation—Plant assets…. $ 100,000 (c) 70,000 $ 170,000
Accounts payable………….…….……….. 150,000 (h) 10,000 140,000
Statement of cash flows
Operating activities
Depreciation expense..……..…….…….. (c) 70,000
Investing activities
Payment for plant assets..…….……….. (d) 70,000
Financing activities
Financial and Managerial Accounting, 6th Edition
Exercise 12-14B (15 minutes)
Statement of Cash Flows Noncash
Operating
Activities
Investing
Activities
Financing
Activities
Investing &
Financing
Activities
Not Reported
on Statement
or in Notes
period
e. Accepted six-month note
receivable in exchange for
plant assets
X
f. Recorded depreciation
expense
X
g. Paid cash to acquire
treasury stock X
Exercise 12-15B (15 minutes)
Case X: Sales revenue……………..……………………..….….….…. $515,000
Accounts receivable, Dec. 31, 2015……………..….…$ 27,200
Accounts receivable, Dec. 31, 2016……………..….… (33,600)
Less increase in accounts receivable………..…..…. (6,400)
Cash received from customers…………………………. $508,600
Case Z: Cost of goods sold………….……………..…………..….… $525,000
Inventory, Dec. 31, 2016…………………………………....$130,400
Inventory, Dec. 31, 2015………………………………….... (158,600)
Less decrease in merch. inventory….….…..….….... (28,200)
Exercise 12-16B (20 minutes)
Cash flows from operating activities
Receipts from customers (see note a)………………..….….….….….….$1,797,500
Payments for inventory (see note b)………………..……….….….…..….(1,028,500)
Note a: Sales – Increase in receivables
$1,828,000 – $30,500 = $1,797,500
Financial and Managerial Accounting, 6th Edition
Exercise 12-17B (20 minutes)
FERRON COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Receipts from customers…………….………………….….. $ 495,000
Receipts of interest…….………………………………………. 3,500
Payments for inventory………………………..….….….….. (254,500)
Payments for salaries………..……………………..….…..… (76,500)
Cash flows from financing activities
Payment to retire long-term notes payable…..…...... (100,000)
Receipt from borrowing on six-month note….......... 35,000
Payment of cash dividends………..……………..……..…. (10,000)
Note No. ___
Noncash investing and financing activities
(1) Issued common stock to retire $185,500 of bonds payable.
(2) Purchased land financed with a $105,250 long-term note payable.
forwarded, distributed, or posted on a website, in whole or part.
Exercise 12-18B (40 minutes)
1.
THOMAS CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers………..………………………..$5,000,000
Cash received from dividends…………………………………… 208,400
Cash paid for inventory……………………………………………..(2,590,000)
Cash flows from investing activities
Cash paid for purchases of machinery…….…………………(2,236,000)
Cash paid for purchases of long-term investments.......(1,260,000)
Cash flows from financing activities
Cash received from issuing stock..…………………………… 1,540,000
Cash received from borrowing……….………………..………..3,600,000
Cash paid for note payable………………………..……….…….. (386,000)
Cash paid for dividends…………………………..…….…………. (500,000)
Cash paid for treasury stock purchases……..…...…........ (218,000)
2.
a. (i) Financing section reported the largest cash inflow of $4,036,000.
(ii) Investing section reported the largest cash outflow of $2,566,000.
c. Proceeds for issuing notes are larger at $3,600,000 than for issuing stock
equity at $1,540,000 (see financing section).
Financial and Managerial Accounting, 6th Edition
PROBLEM SET A
Problem 12-1A (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2015
Cash flows from operating activities
Net income…………….…………………..……………………….…..….… $ 6,000
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
Increase in inventory……………..……………..…………………… (440)
Decrease in accounts payable……………..….…..….….….…. (200)
Increase in salaries payable………….……………..….….….…. 180
Increase in utilities payable…………………………………….…. 60
Problem 12-2AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2015
Cash flows from operating activities
Cash receipts from customers (1)……………….…………….….…..….….…..$ 97,400
Cash payments to suppliers (2)…………….……………….……….…..….….…(42,640) )
Cash payments for salaries (3)……………..…………………….….….….….….(17,820) )
Cash payments for interest…………..……………….………………..….….….… (3,600) )
Net cash provided by operating activities…………..…………………………….$ 17,780
Supporting calculations
(1) Sales + Decrease in receivables = $97,200 + ($5,800 – $5,600) = $97,400
(2) Cost of Increase in Decrease in
goods sold inventory accts payable =
$42,000 + ($1,980 – $1,540) + ($4,600 – $4,400) = $42,640
++