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
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 to suppliers (2)………………………………………………….(72,080)
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 =
(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 16-3B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income………………………………………………………………….$158,100
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement item not affecting cash
Cash flows from investing activities
Cash received from sale of equipment……………………………..26,050
)
Noncash investing and financing activities
Problem 16-3B (Continued)
Part 2
Gazelle Corporation’s dividend payments of $53,600 represent 34% of the
Further analysis reveals that investing activities used a modest $17,200
Companies usually pay dividends that are substantially less than net
Problem 16-4BA (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
Statement of cash flows
Operating activities
Net income………………………………….. (a) 158,100
Noncash investing and financing
activities
Problem 16-4BA (Concluded)
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income………………………………………………………………….$158,100
Adjustments to reconcile net income to net
cash provided by operating activities
Cash flows from investing activities
Cash flows from financing activities
Cash borrowed on short-term note…………………………………. 5,000
Noncash investing and financing activities
Problem 16-5BB (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 flows from financing activities
Cash borrowed on short-term note……………………… 5,000
Noncash investing and financing activities
Supporting calculations
(2) Cost of Decrease in Decrease in
–
+
Problem 16-6B (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income………………………………………………………….. $202,767
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Cash flows from investing activities
Cash paid for equipment………………………………………. (30,250)
Cash flows from financing activities
Problem 16-7BA (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
Balance sheet–credits
Accum. depreciation—Equip………….. $ 31,000 (f) 15,700 $ 46,700
Statement of cash flows
Operating activities
Net income………………………………….. (a) 202,767
Problem 16-7BA (concluded)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income………………………………………………………….. $202,767
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Cash flows from investing activities
Cash paid for equipment………………………………………. (30,250)
Cash flows from financing activities