Problem 12-2BB (35 minutes)
SALT LAKE COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2015
Cash flows from operating activities
Cash receipts from customers (1)…………………………….….…….….….…$ 155,400
Cash payments to suppliers (2)……………………………….…….….…….…..(72,080)
Cash payments for salaries (3)…………….……………………….….….….…..(19,700)
Net cash provided by operating activities………….……………….….….….….$ 51,960
Supporting calculations
(1) Sales – Increase in receivables = $156,000 – ($3,600 – $3,000) = $155,400
(3) Salaries expense – Increase in salaries payable
(4) Rent expense – Decrease in prepaid rent
(5) Insurance expense – Decrease in prepaid insurance
(6) Utilities expense – Increase in utilities payable
Problem 12-3B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Loss on disposal of equipment……………………………….….… 2,100
Changes in current assets and current liabilities
Decrease in accounts receivable ($80,750 – $77,100)………….. 3,650
Decrease in inventory ($250,700 – $240,600)………………….10,100
Decrease in prepaid expenses ($17,000 – $15,100)…………….. 1,900
Cash flows from financing activities
Cash borrowed on short–term note……..….…..….…….….….….. 5,000
Cash paid on long–term note…………………………….….…….…...(47,500)
Cash received from issuing stock (3,000 x $15)…………………...45,000
Cash paid for dividends………………….……………….……………… (53 ,600 )
Cash balance at December 31, 2015………………….………………… $123 ,450
Noncash investing and financing activities
Financial and Managerial Accounting, 6th Edition
Problem 12-3B (Continued)
Part 2
Gazelle Corporation’s dividend payments of $53,600 represent 34% of the
$61,900 increase in the company’s cash balance for the year, a 101% increase.
Companies usually pay dividends that are substantially less than net income.
Problem 12-4BA (60 minutes)
GAZELLE CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2015
December
31, 2014
Analysis of Changes December
31, 2015Debit Credit
Balance sheet–-debits
Cash……..……………..…....…....…….... $ 61,550 $123,450
Accounts receivable…………....…....… 80,750 (b) $ 3,650 77,100
Balance sheet–-credits
Accum. depreciation—Equip............. $ 95,000 (g) 22,850 (f) 38,600 $110,750
Accounts payable………………………... 102,000 (e) 84,250 17,750
Short–term notes payable.................. 10,000 (j) 5,000 15,000
Long–term notes payable……….....….. 77,500 (k) 47,500 (i) 70,000 100,000
Statement of cash flows
Operating activities
Net income…………………………………. (a) 158,100
Decrease in accounts receivable....... (b) 3,650
Decrease in merch. inventory............ (c) 10,100
Payment to purchase equipment....... (h) 43,250
Financing activities
Borrowed on short–term note…………. (j) 5,000
Payment on long–term note…............ (k) 47,500
$681,950 $681,950
Financial and Managerial Accounting, 6th Edition
Problem 12-4BA (Concluded)
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Loss on disposal of equipment……………………………….….… 2,100
Changes in current assets and current liabilities
Decrease in accounts receivable ($80,750 – $77,100)………….. 3,650
Decrease in inventory ($250,700 – $240,600)………………….10,100
Cash flows from financing activities
Cash borrowed on short–term note……..….…..….…….….….….. 5,000
Cash paid on long–term note…………………………….….…….…...(47,500)
Cash received from issuing stock (3,000 x $15)…………………...45,000
Problem 12-5BB (40 minutes)
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers (Note 1)….….….…......$1,188,650
Cash paid for inventory (Note 2)………….………………... (669,150)
Cash flows from investing activities
Cash received from sale of equipment…..….….….….. 26,050
Cash paid for equipment………..……………….….….……. (43,250)
Net cash used in investing activities……….….…........ (17,200)
Cash flows from financing activities
Cash borrowed on short-term note…………..…..….….. 5,000
Cash paid on long-term note………….….……..….….….. (47,500)
Noncash investing and financing activities
Purchased equipment for $113,250 by signing a $70,000 long-term note payable
and paying $43,250 in cash.
Supporting calculations
(1) Sales + Decrease in receivables = $1,185,000 + ($80,750 – $77,100) = $1,188,650
(3) Other expenses – Decrease in prepaid expenses = $362,850 – ($17,000 – $15,100)
= $360,950
Financial and Managerial Accounting, 6th Edition
Problem 12-6B (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Changes in current assets and current liabilities
Decrease in accounts receivable ($25,860 – $20,222)..... 5,638
Increase in inventory ($165,667 – $140,320)…………….…. (25,347)
Cash flows from investing activities
Cash paid for equipment……………………………….……….. (30,250)
Cash flows from financing activities
Cash received from issuing stock (3,000 x $21)…………… 63,000
Cash paid for dividends………………….…………….….….… (60,000)
Problem 12-7BA (50 minutes)
SATU COMPANY
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–-debits
Cash……..……………..…....…....…….... $ 28,400 $ 58,750
Problem 12-7BA (concluded)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Depreciation expense………………….……………..……... 15,700
Changes in current assets and current liabilities
Decrease in accounts receivable ($25,860 – $20,222)... 5,638
Cash flows from investing activities
Cash paid for equipment……………………………….……….. (30,250)
Cash flows from financing activities
Cash received from issuing stock (3,000 x $21)…………… 63,000
Cash paid for dividends………………….…………….….….… (60,000)
Net cash provided by financing activities………............. 3,000
Cash balance at end of 2015……………………….………..…... $ 58,750
Problem 12-8BB (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash paid for income taxes (Note 3) …….….….….….. (93,200)
Net cash provided by operating activities …..…....... $57,600
Cash flows from investing activities
Cash paid for equipment ……….……………..….….….…. (30,250)
Net cash provided by financing activities …............ 3,000
Net increase in cash…………………………..………………….. $30,350
Cash balance at December 31, 2015…..…….….…......... $58,750
Supporting calculations
(1) Sales + Decrease in receivables = $750,800 + ($25,860 – $20,222) = $756,438
(3) Income taxes expense + Decrease in income taxes payable
Financial and Managerial Accounting, 6th Edition