Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-3B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
Income statement item not affecting cash
Depreciation expense……………………….….…….….….…….….38,600
Loss on disposal of equipment…………………………….….…... 2,100
Changes in current assets and current liabilities
Decrease in accounts receivable ($80,750 – $77,100)………….. 3,650
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
Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-3B (Continued)
Part 2
Gazelle Corporation’s dividend payments of $53,600 represent 34% of the
$158,100 net income for the year, and 41% of cash inflow provided by
operations of $130,200.
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
Inventory………………………………..….. 250,700 (c) 10,100 240,600
Prepaid expenses………..……..……..… 17,000 (d) 1,900 15,100
Retained earnings…….…....…....…..... 125,500 (m) 53,600 (a) 158,100 230,000
$610,000 $718,500
Statement of cash flows
Operating activities
Net income……………………………..….. (a) 158,100
Decrease in accounts receivable....... (b) 3,650
16-904
Education.
Chapter 16 – Reporting the Statement of Cash Flows
Decrease in merch. inventory............ (c) 10,100
Decrease in prepaid expenses.....…... (d) 1,900
Decrease in accounts payable........... (e) 84,250
Depreciation expense..…….………...... (f) 38,600
Loss on sale of equipment…………..… (g) 2,100
$681,950 $681,950
16-905
Chapter 16 – Reporting the Statement of Cash Flows
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
Income statement items not affecting cash
Depreciation expense……………………….….…….….….…….….38,600
Loss on disposal of equipment…………………………….….…... 2,100
Net cash provided by operating activities………………………….. $130,200
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)
Net cash used in financing activities………..…….….…….….......
(51 ,100)
Net increase in cash……………………………………………….….…….. $ 61,900
Cash balance at beginning of year 2015………………………….......
61 ,550
Cash balance at end of year 2015……………………………………….. $123 ,450
Noncash investing and financing activities
16-906
Chapter 16 – Reporting the Statement of Cash Flows
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
Net cash provided by operating activities.….….…….. $130,200
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 paid for dividends.…..………………………………....
(53,600)
Net cash used in financing activities……………….…...
(51,100)
Net increase in cash………………….….….….…….….…….… $ 61,900
Cash balance at December 31, 2014..….….…….….….....
61,550
Cash balance at December 31, 2015..….….…….….…..... $123,450
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
16-907
Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-6B (35 minutes)
SATU COMPANY
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……………………………………….…. 15,700
Changes in current assets and current liabilities
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)
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
16-908
Chapter 16 – Reporting the Statement of Cash Flows
Balance sheet––debits
$272,080
$352,389
Balance sheet––credits
Accum. depreciation—Equip............. $ 31,000 (f) 15,700 $ 46,700
Retained earnings…….…....…....…..... 32,450
(i) 60,000 (a) 202,767 175,217
$272,080
$352,389
Statement of cash flows
Operating activities
Net income……………………………..….. (a) 202,767
Depreciation expense..…….………...... (f) 15,700
Investing activities
Payment for equipment...…....…........ (g) 30,250
16-909
Chapter 16 – Reporting the Statement of Cash Flows
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
Net cash provided by operating activities……..…….….… $ 57,600
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)
16-910
Chapter 16 – Reporting the Statement of Cash Flows
Problem 16-8BB (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers (Note 1) ..…….......... $756,438
Net cash provided by operating activities .….…....... $57,600
Cash flows from investing activities
Cash paid for equipment ……………………….….…….…. (30,250)
Cash flows from financing activities
Net increase in cash………………………………………………. $30,350
Cash balance at December 31, 2014..….….…….…........ 28,400
Cash balance at December 31, 2015..….….…….…........ $58,750
Supporting calculations
(1) Sales + Decrease in receivables = $750,800 + ($25,860 – $20,222) = $756,438
SERIAL PROBLEM — SP 16
16-911
Chapter 16 – Reporting the Statement of Cash Flows
Serial Problem — SP 16, Business Solutions (45 minutes)
BUSINESS SOLUTIONS
Statement of Cash Flows (Indirect)
For Quarter Ended March 31, 2016
Cash flows from operating activities
Net income……………………………………….…….….…….….…….…$ 18,833
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Depreciation expense–Office Equipment…………….….….….. 400
Depreciation expense–Computer Equipment….……............ 1,250
Changes in current assets and current liabilities
Increase in wages payable ($875 – $500) ……………..….….…... 375
Decrease in unearned computer service revenue…….……... (1 ,500)
Net cash used by operating activities…………………….….….….. $ (515)
Cash flows from investing activities
Net increase in cash……………………………………………….…….….. $ 19,685
Cash balance at December 31, 2015……………………………….…… 48 ,372
Cash balance at March 31, 2016……………………….….…….….…… $ 68 ,057
16-912
Chapter 16 – Reporting the Statement of Cash Flows
Reporting in Action — BTN 16-1
1. Apple uses the indirect method of reporting operating cash flows. We
2. In all three fiscal years, Apple’s cash flows from operating activities
markedly exceed its cash dividends paid, as shown in the table below:
3. In fiscal 2013, the largest item in reconciling the difference between net
income and cash flow from operations was depreciation and amortization
of $6,757 million.
In fiscal 2012, the largest item in reconciling the difference between net
current and non-current liabilities of $4,495 million.
4. In fiscal 2013, the largest cash inflow from investing activities was $104,130
million from proceeds from sales of marketable securities. The largest cash
outflow from investing activities was for purchases of marketable
securities, in the amount of $148,489 million.
5. Answer depends on the financial statement information obtained.
16-913