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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
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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
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+
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
