Ex. 13.1 a.
b.
Ex. 13.2
a. 280$
(30)
…
SOLUTIONS TO EXERCISES
Cash from operations …………………………………………………………
…
Expenditures for property and equipment …………………………………
…
The operating activities section generally includes the cash provided by and used for
those transactions that are normal, ongoing operations and that included in the
Wallace Company’s cash increased significantly during the year, going from $75,000 to
$255,000. Operations were strong, providing $275,000 of positive cash flow. Based on
information presented makes substantive interpretation of the overall cash picture
highly speculative, it is clear that the company has a much larger cash balance at the end
than at the beginning of the year and that the increase is tied directly to its success in
generating cash from its ongoing, normal operations.
Note: All dollar figures in the following calculations are in thousands.
(
2
)
Ex. 13.3 a. $125,000
The increase in accounts receivable represents credit sales which were not collected
in 2015. In the indirect method calculation, this item is a decrease in the amount of
b.
Purchases of marketable securities ………………………………………
Proceeds from sales of marketable securities ($140,000 book
795,000$
27,000
822,000$
(635,000)
(19,000)
Cash received from customers ………………………………
…
Interest and dividends received ……………………………
…
Ex. 13.7 WYOMING OUTFITTERS, INC.
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities:
Cash provided by operating activities ……………………
Cash paid to suppliers and employees ………………………
Interest paid …………………………………………………
…
…
e.
Ex. 13.9 a.
b.
f.
g.
Dividends are a financing activity, not an operating activity. Therefore,
discontinuing dividends has no direct effect upon the net cash flow from
Added to net income. Depreciation is a noncash expense. Although it reduces the
Added to net income. In a statement of cash flows, the insurance proceeds from a
tornado are classified as an investing activity, not an operating activity.
However, this extraordinary loss reduced the amount of net income reported in
the income statement. Therefore, this nonoperating loss is added back to net
income as a step in determining the net cash flows from operating activities.
income tax expense of the current year. Therefore, cash outlays exceeded the
expenses shown in the income statement, and net cash flow from operating
activities is smaller than net income.
Added to net income. A reduction in prepaid expenses indicates that the amounts
expiring (and, therefore, being recognized as expense) exceed cash outlays for
these items during the period. Net income measured on the accrual basis is
lower than net cash flow.
Omitted from the computation. Declarations and payments of dividends do not
enter into the determination of either net income or net cash flows from
operating activities. Therefore, these transactions do not cause a difference
between these figures. Dividends paid are reported in the financing activities
section as a disbursement.
shown in the direct method of computing net cash flow from operating activities.
However, this cash inflow does not appear separately when the indirect method
is used.
Hill Education.
$ 385,000
Add: Depreciation expense ………………………………
…
$135,000
Amortization of intangible assets …………………
…
40,000
Nonoperating loss on sale of investments ……. 35,000
Decrease in accounts receivable …………………
…
45,000
Decrease in inventory ……………………………… 72,000
Ex. 13.10 FREEMAN MACHINERY, INC.
Net income …………………………………………………
…
Partial Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities:
…
Ex. 13.12
1.
2.
3.
13.
14.
15.
Operating activity
Financing activity
Operating activity
Investing activity
Not included in the statement of cash flows. Transfers between cash equivalents and other
forms of cash are not regarded as cash receipts or cash payments.
Operating activity
Hill Education.
Ex. 13.13 a.
$156,000
b.
Cash provided by investing activities:
Sale of equipment
The amount of gain or loss is reflected in the cash receipts figure. For example,
equipment that was sold for $156,000 at a $34,000 loss had a book value (cost,
less accumulated depreciation) at the time of sale of $190,000:
Sale of land
160,000
Ex. 13.14 a.
$420,000
52,000
Sale of treasury stock
Cash
Sale of bonds
Hill Education.
Ex. 13.15
a.
b.
c.
From financing activities: repurchase of (common) treasury stock and payment
of dividends to stockholders.
Net earnings for 2012 (year ending February 3, 2013) were $4,535 million,
compared with $6,975 million cash provided by operations. The primary cause
income taxes payable, and deferred income taxes.
The major uses of cash, other than operations, are as follows:
Negative cash flows from investing and financing activities do not necessarily
lead to a negative interpretation of a company’s cash position. In Home Depot’s
Education.
25 Minutes, Easy
a.
Cash flows from investin
g
activities:
Purchases of marketable securities (75,000)$
Proceeds from sales of marketable securities
(
1
)
132,000
PROBLEM 13.2
A
HAMPTON, INC.
For the Year Ended December 31, 2015
Partial Statement of Cash Flows
HAMPTON, INC.