• In 2009, Apple had approximately 34,300 full-time equivalent employees and an additional 2,500 full-time
equivalent temporary employees and contractors.
• Annual sales in fiscal year 2009 were $36.5 billion.
• The company, incorporated January 3, 1977, as “Apple Computer, Inc.”
• In 2007, the company dropped “Computer” from its corporate name following the announcement of its new
iPhone smartphone and Apple TV digital video system
• The company surpassed $10 billion in quarterly revenue for the first time in January, 2009.
• The cash flow statement provides useful information about a business; however, an investor would want to
examine the other financial statements before making an investment.
2. Income statement, balance sheet, statement of retained earnings.
4. Purchasing land, purchasing a computer system.
6. Selling common stock, issuing bonds payable.
8. No, maturity date must be within three months from date acquired.
Discussion Questions
CHAPTER 24
THE STATEMENT OF CASH FLOWS
Chapter Opener: Thinking Critically
Students’ responses will vary. Companies track and report cash flows so that they can meet their operating
expenses and pay debts on time. Preparing a statement of cash flows helps managers forecast cash needs.
Understanding the sources of cash can help companies identify segments of the operation that are solvent and
those that are not.
Fast Facts
Managerial Implications: Thinking Critically
EXERCISE 24.1
1. The 2,000 gain should be subtracted from net income in the operating section of the cash flow
2. The loss of $13,000 is added to net income in the operating section of the cash flow
EXERCISE 24.2
Cash Flows from Operating Activities
Net income for year 55 5 0 0 00
EXERCISE 24.3
Cash Flows from Operating Activities
Net income for year 50 0 0 0 00
Adjustments to reconcile net income to cash
used in operating activities:
Depreciation 12 0 0 0 00
Tampa Company
Statement of Cash Flows
Peter, Inc.
Statement of Cash Flows
Year Ended December 31, 2013
Year Ended December 31, 2013
EXERCISE 24.4
Cash Flows from Operating Activities
Net income for year 60 0 0 0 00
Adjustments to reconcile net income to cash
EXERCISE 24.5
Cash Flows from Operating Activities
Net income for year 115 0 0 0 00
Adjustments to reconcile net income to cash
used in operating activities:
Depreciation 15 0 0 0 00
Stonebrook, Inc.
Statement of Cash Flows
Year Ended December 31, 2013
Ocean Inc.
Statement of Cash Flows
Year Ended December 31, 2013
EXERCISE 24.6
Cash flows from investing activities
Note Receivable from company president (75,000)
EXERCISE 24.7
Cash flows from investing activities
EXERCISE 24.8
Cash flows from financing activities
EXERCISE 24.9
Cash flows from financing activities
Purchase of treasury stock (60,000)
PROBLEM 24.1A
Cash Flows from Operating Activities
Net income for year 80 0 0 0 00
Adjustments:
Net cash used in investing activities (5000000)
Cash Flows from Financing Activities
Proceeds from issuance of bonds payable 50 0 0 0 00
Proceeds from issuance of common stock 10 0 0 0 00
Net cash provided from financing activities 60 0 0 0 00
Cole, Inc.
Statement of Cash Flows
Year Ended December 31, 2013
PROBLEM 24.2A
Cash Flows from Operating Activities
Net income for year 60 0 0 0 00
Adjustments:
Increase in payroll taxes payable 1 0 0 00
Decrease in income tax payable (1 0 0 0 00)
Total adjustments (4 6 0 0 00)
Net cash provided by operating activities 55 4 0 0 00
Cash Flows from Investing Activities
Addition to building (6000000)
Year Ended December 31, 2013
The Candy Company
Statement of Cash Flows
PROBLEM 24.3A
Cash Flows from Operating Activities
Total adjustments (9 2 0 0 00)
Net cash provided by operating activities 46 0 0 0 00
Cash Flows from Investing Activities
Purchase of property, plant, and equipment (20 0 0 0 00)
Net cash used in investing activities (2000000)
Jackson Corporation
Statement of Cash Flows
Year Ended December 31, 2013
PROBLEM 24.4A
Cash Flows from Operating Activities
Net income for year 73 5 7 5 00
Adjustments:
Net cash provided by operating activities 43 6 2 5 00
Cash Flows from Investing Activities
Purchase of land (30 0 0 0) 00
Proceeds from sale of equipment 20 0 0 0 00
Proceeds from sale of bond investment 20 0 0 0 00
(3) Cash paid for interest was $18,500.
Cash increased by 119.5 percent from 2012 to 2013.
Short Company
Statement of Cash Flows
Year Ended December 31, 2013
Analyze:
PROBLEM 24.1B
Cash Flows from Operating Activities
Net loss (25 0 0 0 00)
Adjustments:
Net cash used in investing activities (10 0 0 0 00)
Cash Flows from Financing Activities
Proceeds from issuance of common stock 25 0 0 0 00
Paid cash dividends to common stockholders (10 0 0 0 00)
Net cash provided from financing activities 15 0 0 0 00
Auto Corporation
Statement of Cash Flows
Year Ended December 31, 2013
PROBLEM 24.2B
Cash Flows from Operating Activities
Increase in payroll taxes payable 1 0 0 00
Decrease in income tax payable (1 0 0 0 00)
Total adjustments (56 9 0 0 00)
Net cash provided by operating activities 310000
Cash Flows from Investing Activities
Cash, December 31, 2013 97 1 0 0 00
Financing and Investing Activities Not Affecting Cash Flow:
A mortgage of $125,000 was obtained to pay for construction of a building in 2013.
(Note to Instructor : From the data reported you cannot determine cash
amounts paid for interest or income taxes during the year.)
Year Ended December 31, 2013
Music, Inc.
Statement of Cash Flows
PROBLEM 24.3B
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Proceeds from sale of land 35 0 0 0 00
Purchase of equipment (25 0 0 0 00)
Net cash provided by investing activities 10 0 0 0 00
Cash Flows from Financing Activities
Gulf Corporation
Statement of Cash Flows
Year Ended December 31, 2013
PROBLEM 24.4B
Cash Flows from Operating Activities
Net cash provided by operating activities 111 2 6 0 00
Cash Flows from Investing Activities
Proceeds from sale of equipment 27 0 0 0 00
Purchase of equipment (20 0 0 0 00)
Net cash provided by Investing activities 700000
Cash Flows from Financing Activities
Notes: During 2013, cash payments for income taxes were $57,140 and
cash payments for interest were $12,000.
Beach Products, Inc.
Statement of Cash Flows
Year Ended December 31, 2013
CRITICAL THINKING PROBLEM 24.1
Current Assets
Building 250 0 0 0 00
Less Accumulated Depreciation—Building (5 0 0 0 00)
Net Book Value—Building 245 0 0 0 00
Equipment 50 0 0 0 00
Assets
Preds Company
Balance Sheet
December 31, 2013
CRITICAL THINKING PROBLEM 24.2
2. Included as an operating activity.
4. Included as an operating activity.
6. Included as an investing activity.
8. Included as a operating activity.
10. Included as an investing activity.
12. Not included as an issuance of stock dividend has no effect on cash.