Chapter 16 – Reporting the Statement of Cash Flows
Exercise 16-12B (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)
Cash paid for operating expenses (Note 3)...... (75,000)
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)
16-903
Chapter 16 – Reporting the Statement of Cash Flows
Exercise 16-12B (continued)
Purchases………………………………………………………………….………….……….…. 388,300
Plus decrease in accounts payable……………………………………………………... 5 ,000
Cash paid for inventory………………………………………………………………….…… $393 ,300
(3) Other operating expenses…………………………………………………………………… $ 67,000
Cash paid for income taxes….……..…….…….……..…….……..…......…....…....... $ 44 ,290
(5) 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…………………………………………………….….………... 2 ,000
Equipment Accumulated Depreciation, Equipment
Bal.,
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
Bal., 6/30/2014 24,100
Dividends
90,310 Net income 99,510
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Chapter 16 – Reporting the Statement of Cash Flows
Exercise 16-13A (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
Cash……………….………..……………..…. $ 80,000 $ 60,000
Accounts receivable……………………... 120,000 (f) $ 70,000 190,000
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
Notes payable………….………..……….… 370,000 (e) 20,000 390,000
Statement of cash flows
Operating activities
Net income…………..……………..………. (a) 100,000
Increase in accounts receivable........ (f) 70,000
Financing activities
Paid cash dividends……..…..………..… (b) 80,000
Issued note payable……..…..………..... (e) 20,000
_______
$440,000
$440,000
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Chapter 16 – Reporting the Statement of Cash Flows
Exercise 16-14B (15 minutes)
Statement of Cash Flows Noncash
Operating
Activities
Investing
Activities
Financing
Activities
Investing &
Financing
Activities
Not Reported
on Statement
or in Notes
a. Retired long-term notes
payable by issuing stock
X
b. Paid cash toward accounts
X
was declared in a prior
period
e. Accepted six-month note
receivable in exchange for
plant assets
X
f. Recorded depreciation
expense
X
payable
j. Paid cash to purchase a
patent X
Exercise 16-15B (15 minutes)
Case X: Sales revenue…………………………………….…….……... $515,000
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Chapter 16 – Reporting the Statement of Cash Flows
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 16-16B (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
16-907
Chapter 16 – Reporting the Statement of Cash Flows
Exercise 16-17B (20 minutes)
FERRON COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Receipts from customers………………………….…….….. $ 495,000
Payments for salaries………………………………….……... (76,500)
Payments for other expenses……………………….…….. (20,000)
Net cash provided by operating activities…..….……. $147,500
Payment to retire long-term notes payable.….…...... (100,000)
Receipt from borrowing on six-month note............. 35,000
Payment of cash dividends……………………………..….. (10,000)
Net cash used in financing activities…..….…….….…. (75,000)
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.
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Chapter 16 – Reporting the Statement of Cash Flows
Exercise 16-18B (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 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 received from sale of land………………………………... 220,000
Cash received from sale of machinery……...……..…..…… 710,000
Net cash used in investing activities…..…….…..…..……... (2,566,000)
Cash flows from financing activities
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.
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Chapter 16 – Reporting the Statement of Cash Flows
PROBLEM SET A
Problem 16-1A (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
Depreciation expense…………………………………………………$12,000
Increase in utilities payable…………………………….….……... 60
Increase in prepaid rent…………………………..….…….….…… (40)
Decrease in prepaid insurance…….….…….….…….…….….. 20 11,780
Net cash provided by operating activities……..….…….….….. $17,780
Problem 16-2AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2015
Cash flows from operating activities
Cash receipts from customers (1)…………………………..….…….…….…….$ 97,400
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Chapter 16 – Reporting the Statement of Cash Flows
Cash payments for insurance (5)………………………………………………..…(3,780) )
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 =
16-911
++
Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-3A (50 minutes)
Part 1
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income…………………………………………….….…….…….….….$114,975
Adjustments to reconcile net income to net
cash provided by operating activities:
Income statement items not affecting cash
Net cash provided by operating activities………………….…….… $ 40,900
Cash flows from investing activities
Cash received from sale of equipment…….….…….….…….…….11,625
Cash paid for equipment……………………….…….…….….…….…. (30,000)
Cash paid for dividends……………………………………………….…. (50,100)
Net cash used in financing activities…….….…….…….….…….… (46,225)
Net decrease in cash……………………………………………..….……... $(23,700)
Cash balance at December 31, 2014………………………………..….. 73,500
Cash balance at December 31, 2015………………………………..….. $ 49,800
16-912