Type of
Activity
Cash Inflow
or Outflow Transaction
F CI 1. Issuance of common stock
F CI 2. Issuance of bonds
I CO 3. Investment in bonds
I CI 4. Collection of a note receivable
O CI 5. Sale of inventory
F CO 6. Repayment of note payable
F CO 7. Payment of a cash dividend
Alpha Technologies
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash Flows from Operating Activities
Net income $ 80,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation expense 20,000
Loss on sale of land 7,000
Increase in accounts receivable (60,000)
Cash Flows from Investing Activities
Problem 11-1C
Problem 11-2C
Cash received from sale of land 3,000
Cash Flows from Financing Activities
Issuance of common stock 250,000
Net increase (decrease) in cash (40,000)
Security Solutions
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash Flows from Operating Activities
Net income $55,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation expense 25,000
Increase in accounts receivable (5,000)
Decrease in inventory 10,000
Problem 11-3C
Communication Accessories
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash Flows from Operating Activities
Net income $212,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation expense 38,000
Gain on sale of land (4,000)
Decrease in accounts receivable 12,000
Decrease in inventory 17,000
Cash Flows from Investing Activities
Purchase investment in stock (95,000)
Cash Flows from Financing Activities
Payment of cash dividends (200,000)
Net cash flows from financing activities (200,000)
Net increase (decrease) in cash (5,000)
Note: Noncash Activities
Purchase equipment issuing a note payable $80,000
Problem 11-4C
($ in millions) Net Income ÷
Average
Total Assets =
Return
on Assets
($ in millions)
Operating
Cash Flow ÷
Average
Total Assets =
Cash Return
on Assets
($ in millions)
Operating
Cash Flow ÷ Sales =
Cash Flow
to Sales
($ in millions) Sales ÷
Average
Total Assets =
Asset
Turnover
Problem 11-5C
1.
Company B has a higher return on assets (14.4%) compared to Company A (10.1%).
2.
Company B also has a higher cash return on assets (20.9%) compared to Company A
(8.1%).
3.
Security Solutions
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash Flows from Operating Activities
Cash received from customers $955,000
Cash paid to suppliers (632,000)
Revenues $960,000
− Increase in accounts receivable 5,000
Cost of goods sold $650,000
− Decrease in inventory (10,000)
− Increase in accounts payable (8,000)
Operating expenses $210,000
+ Increase in prepaid rent 4,000
+ Decrease in operating expenses payable 6,000
Income tax expense $20,000
+ Decrease in income tax payable 3,000
Company B has a much higher cash flow to sales ratio, while Company A has a higher
asset turnover. It appears that Company B has a business strategy, similar to Apple, to
Problem 11-6C
Communication Accessories
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash Flows from Operating Activities
Cash received from customers $2,812,000
Cash paid to suppliers (1,901,000)
Cash paid for operating expenses (577,000)
Cash paid for interest (17,000)
Cash Flows from Investing Activities
Purchase investment in stock (95,000)
Cash Flows from Financing Activities
Payment of cash dividends (200,000)
Net cash flows from financing activities (200,000)
Net increase (decrease) in cash (5,000)
Note: Noncash Activities
Revenues $2,800,00
0
+ Decrease in accounts receivable 12,000
Problem 11-7C
0
Cost of goods sold $1,900,00
0
− Decrease in inventory (17,000)
+ Decrease in accounts payable 18,000
0
Operating expenses $575,000
+ Increase in prepaid rent 2,000
Interest expense $16,000
+ Decrease in interest payable 1,000
Income tax expense $63,000
− Increase in income tax payable (2,000)
Audio Systems
Income Statement
For the Year Ended December 31, 2015
Revenues $84,00
0
Expenses:
Operating expenses $26,000
Depreciation expense 7,000
Income tax expense 6,000
Problem 11-8C
Revenues $84,000
+ Decrease in accounts receivable 9,000
Operating expenses $26,000
− Increase in accounts payable (4,000)
Income tax expense $6,000
+ Decrease in income tax payable 6,000