Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-3A (Concluded)
Part 2
Forten Company’s operations provide a positive net cash inflow of $40,900—a
good result. At the same time, the cash balance decreased by $23,700 (32%)
Helping fund these cash outflows is $50,000 cash from issuance of stock.
Moreover, the company took on additional debt (more than 30% increase in
Problem 16-4AA (60 minutes)
FORTEN 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
Prepaid expenses………..…….……...… 1,875 (d) $ 625 1,250
Equipment.…..….…………………………
108,000 (h) 96,375 (g) 46,875 157,500
$485,800 $550,016
Balance sheet—credits
par value, common stock……..........
0(l) 37,500 37,500
Retained earnings……...…....…..….....
120,125 (m) 50,100 (a) 114,975 185,000
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Chapter 16 – Reporting the Statement of Cash Flows
$485,800 $550,016
Statement of cash flows
Operating activities
Net income…………………………………. (a) 114,975
Increase in accts. receivable..…....….. (b) 15,185
Increase in merch. inventory….…..….. (c) 23,856
Payment on long–term note…............ (k) 50,125
Issued common stock for cash…..….. (l) 50,000
Payments of cash dividends……....…. (m) 50,100
Noncash investing and
financing activities
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Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-4AA (Concluded)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Depreciation expense…………………………………………………..20,750
Loss on disposal of equipment………………………..….….……. 5,125
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)
Net cash used in investing activities…………………………………. (18,375)
Net cash used in financing activities…..…….….….…….….…….. (46,225)
Net decrease in cash……………………………………………….…….…. $(23,700)
Cash balance at beginning of 2015………..….….…….….…….….… 73,500
Cash balance at end of 2015…………………….…….….….…….….… $ 49,800
Noncash investing and financing activities
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Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-5AB (40 minutes)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash paid for income taxes…………………………………. (24,250)
Net cash provided by operating activities.….…........ $ 40,900
Cash flows from investing activities
Cash paid on long-term note……………………………….. (50,125)
Cash received from issuing stock (2,500 x $20)........ 50,000
Cash paid for dividends………………………………………. (50,100)
Net cash used in financing activities……….….….…… (46 ,225)
Noncash investing and financing activities
Purchased equipment for $96,375 by signing a $66,375 long-term note payable
and paying $30,000 in cash.
Supporting calculations
(1) Sales – Increase in receivables = $582,500 – ($65,810 – $50,625) = $567,315
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Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-6A (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income………………………………………………….….….……$136,000
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Depreciation expense…………………………………….….…. 54,000
Changes in current assets and current liabilities
Cash flows from investing activities
Cash paid for equipment…………………….….…….….….……. (36,000)
Cash flows from financing activities
Cash received from issuing stock (12,000 x $5).…………….. 60,000
Cash paid for cash dividends……………..….….…….….….…. (89,000)
GOLDEN CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2015
December
31, 2014
Analysis of Changes December
31, 2015
Debit Credit
Balance sheet––debits
Cash………..……..…….....…..…....…....$ 107,000 $ 164,000
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$1,003,000
$1,183,000
Balance sheet––credits
Accum. depreciation—Equip.............$ 104,000 (f) $ 54,000 $ 158,000
Accounts payable………………………… 71,000 (d) 16,000 87,000
Income taxes payable……….…..…...... 25,000 (e) 3,000 28,000
Statement of cash flows
Operating activities
Net income…………………………….…… (a) 136,000
Increase in accounts receivable........ (b) 12,000
Increase in merch. inventory………..... (c) 75,000
Financing activities
Issued common stock for cash…....... (h) 60,000
Paid cash dividends…....…....…....….. ________ (i) 89,000
$481,000
$481,000
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Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-7AA (Concluded)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Depreciation expense…………………………………….….…. 54,000
Changes in current assets and current liabilities
Cash flows from investing activities
Cash paid for equipment…………………….….…….….….……. (36,000)
Cash flows from financing activities
Cash received from issuing stock (12,000 x $5).…………….. 60,000
Cash paid for cash dividends……………..….….…….….….…. (89,000)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers (Note 1)……………...$1,780,000
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Chapter 16 – Reporting the Statement of Cash Flows
Cash paid for inventory (Note 2) …………….…….…...(1,145,000)
Net cash used in financing activities ………………... (29,000)
Net increase in cash……………………………………….…... $ 57,000
Cash balance at December 31, 2014……………….….… 107,000
Cash balance at December 31, 2015…………………..… $164,000
Supporting calculations
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Chapter 16 – Reporting the Statement of Cash Flows
PROBLEM SET B
Problem 16-1B (35 minutes)
SALT LAKE COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2015
Cash flows from operating activities
Net income……………………………………………………..….….….….. $ 20,000
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
Net cash provided by operating activities……..….….…….….. $ 51,960
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Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-2BB (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 for insurance (5)……………………………………………….…(2,560)
Cash payments for utilities (6)……………………………………..….…….….…(1,800)
Supporting calculations
(1) Sales – Increase in receivables = $156,000 – ($3,600 – $3,000) = $155,400
(2) Cost of Decrease in Decrease in
goods sold inventory accounts payable =
$72,000 – ($980 – $860) + ($2,600 – $2,400) = $72,080
(3) Salaries expense – Increase in salaries payable
= $20,000 – ($900- $600) = $19,700
16-912
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