Chapter 12 – Statement of Cash Flows
E12–22
Req. 1
Panel A: Changes in Cash Account
Operating
(1) Net Income
20,200 7,000 (3) Inventory
(2) Depreciation Expense
3,000 3,000 (4) Accounts Payable
(6) Income Taxes Payable
1,500 1,000 (5) Wages Payable
Net cash flow provided by operating activities 13,700
Investing
(7) Sale of Equipment
6,000 15,000 (8) Purchased Investment
9,000
Net cash used in investing activities
Financing
(9) Proceeds from stock issuance 6,000 12,000 (10) Payment of dividends
6,000
Net cash used by financing activities
1,300
Net decrease in cash and cash equivalents
Cash (A)
Panel B: Changes in Non-cash Accounts
Beg. bal. 22,000 Beg. bal. 68,000
No change (3) Increase 7,000
End. bal. 22,000 End. bal. 75,000
Beg. bal. 17,000 Beg. bal. 2,500
(4) Decrease 3,000 (5) Decrease 1,000
End. bal. 14,000 End. bal. 1,500
Beg. bal. 3,000 Beg. bal. 114,500
(6) Increase 1,500 Purchases 0 (7) Disposals 21,000
End. bal. 4,500 End. bal. 93,500
(2) Depreciation 3,000
Beg. bal. 100,000 Beg. bal. 16,500
Stock repurchased 0 (9)Stock issued 6,000 (10) Dividends 12,000
(1) Net income 20,200
End. bal. 106,000 End. bal. 24,700
Income Taxes Payable (L)
Equipment (A)
Accounts Receivable (A)
Merchandise Inventory (A)
Accounts Payable (L)
Wages Payable (L)
Contributed Capital (SE)
Retained Earnings (SE)
Chapter 12 – Statement of Cash Flows
PROBLEMS
P12–1.
Req.1
Related Cash
Balance sheet at December 31
Flow Section
2015
2014
Change
Δ in Cash
Cash
$73,250
$63,500
+9,750
10
Net increase in cash
O
Accounts receivable
15,250
21,350
-6,100
3
Add to net income the decrease in A/R
O
Merchandise inventory
23,450
18,000
+5,450
4
Subtract from net income the increase in Inventory
I
Property and equipment
209,250
160,350
+48,900
7
Payment in cash for equipment
O
Less: Accumulated
depreciation
(57,450)
(45,750)
-11,700
2
Add to NI because depreciation expense does not
affect cash
$263,750
$217,450
O
Accounts payable
$16,500
$19,000
-2,500
5
Subtract from net income the decrease in Accounts
Payable
O
Wages payable
2,000
2,700
-700
6
Subtract from net income the decrease in Wages
payable
F
Note payable, long-term
56,300
71,000
-14,700
8
Cash used for repayment of note principal
F
Contributed capital
103,950
65,900
+38,050
9
Issuance of stock for cash
O,F
Retained earnings
85,000
58,850
+26,150
1
Increased for net income amount of $26,800
Decreased for dividends declared & paid $650
$263,750
$217,450
Income statement for 2015
Sales
$205,000
Cost of goods sold
123,500
Depreciation expense
11,700
Other expenses
43,000
Net Income
$26,800
Chapter 12 – Statement of Cash Flows
P12–2.
Req. 1
Related
Cash
Balance sheet at December 31
Flow
Section
2016
2015
Change
Δ in Cash
Cash
$37,000
$29,000
+8,000
10
Net increase in cash
O
Accounts receivable
32,000
28,000
+4,000
3
Subtract from net income the increase in A/R
O
Merchandise inventory
41,000
38,000
+3,000
4
Subtract from net income the increase in Inventory
I
Property and equipment
132,000
111,000
+21,000
7
Payment in cash for equipment
O
Less: Accumulated
depreciation
(41,000)
(36,000)
–5,000
2
Add back to NI because depreciation expense does
not affect cash
$201,000
$170,000
O
Accounts payable
$36,000
$27,000
+9,000
5
Add to net income the increase in Accounts Payable
O
Accrued wage expense
1,200
1,400
–200
6
Subtract from net income the decrease in accrued
wage expense
F
Note payable, long-term
38,000
44,000
–6,000
8
Cash used for repayment of note principal
F
Contributed capital
88,600
72,600
+16,000
9
Issuance of stock for cash
O,F
Retained earnings
37,200
25,000
+12,200
1
Increased for net income amount
$201,000
$170,000
Income statement for 2016
Sales
$120,000
Cost of goods sold
70,000
Other expenses
37,800
Net Income
$12,200
Chapter 12 – Statement of Cash Flows
P12–3.
Req.1
Related Cash
Balance sheet at December 31
Flow Section
2015
2014
Change
Δ in Cash
Cash
$73,250
$63,500
+9,750
10
Net increase in cash
O
Accounts receivable
15,250
21,350
-6,100
3
Add to net income the decrease in A/R
O
Merchandise inventory
23,450
18,000
+5,450
4
Subtract from net income the increase in Inventory
I
Property and equipment
209,250
160,350
+48,900
7
Payment in cash for equipment
O
Less: Accumulated
depreciation
(57,450)
(45,750)
-11,700
2
Add to NI because depreciation expense does not
affect cash
$263,750
$217,450
O
Accounts payable
$16,500
$19,000
-2,500
5
Subtract from net income the decrease in Accounts
Payable
O
Wages payable
2,000
2,700
-700
6
Subtract from net income the decrease in Wages
payable
F
Note payable, long-term
56,300
71,000
-14,700
8
Cash used for repayment of note principal
F
Contributed capital
103,950
65,900
+38,050
9
Issuance of stock for cash
O,F
Retained earnings
85,000
58,850
+26,150
1
Increased for net income amount of $26,800
Decreased for dividends declared & paid $650
$263,750
$217,450
Income statement for 2015
Sales
$205,000
Cost of goods sold
123,500
Depreciation expense
11,700
Other expenses
43,000
Net Income
$26,800
Chapter 12 – Statement of Cash Flows
P12–4.
Req. 1
OMEGA COMPANY
Cash Flows from Operating Activities
Direct Method
Cash flows from operating activities:
Cash receipts from customers ……………………………………………………….
$22,780
Cash payments to suppliers …………………………………………………………..
(10,512
)
Cash payments for salaries …………………………………………………………..
(4,055
)
Cash payments for rent…………………………………………………………………
(3,205
)
Cash payments for insurance ………………………………………………………..
(1,113
)
Cash payments for utilities ……………………………………………………….……
(850
)
Cash payments for bond interest ……………………………………………………
(450
)
Net cash provided by operating activities …………………………………..
$2,595
Req. 2
OMEGA COMPANY
Cash Flows from Operating Activities
Indirect Method
Cash flows from operating activities:
Net loss …………………………………………………………………
$ (220
)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation expense …………………………………………….
$2,000
Loss on sale of investments …………………………………….
650
Decrease in accounts receivable ……………………………..
180
Increase in merchandise inventory …………………………..
(85
)
Increase in accounts payable ………………………………….
73
Increase in salaries payable ……………………………………
15
Decrease in rent payable ………………………………………..
(6
)
Decrease in prepaid rent…………………………………………
1
Increase in prepaid insurance ………………………………….
(13
)
Total adjustments …………………………………………………
2,815
Net cash provided by operating activities ………………
$2,595
Chapter 12 – Statement of Cash Flows
P12–5. (continued)
XS Supply Company
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities:
Net income
$12,200
1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
$ 12,000
2
Gain on sale of equipment
(1,000)
10
Increase in accounts receivable
(7,000)
3
Increase in merchandise inventory
(3,000)
4
Increase in accounts payable
9,000
5
Decrease in wages payable
(200)
6
9,800
Net cash provided by operating activities
22,000
Cash flows from investing activities:
Cash payments to purchase equipment
(31,000)
7
Cash received from sale of equipment
4,000
Net cash used by investing activities
(27,000)
Cash flows from financing activities:
Cash payments on long-term note
(6,000)
8
Cash receipts from issuing stock
16,000
9
Net cash provided by financing activities
10,000
Net increase in cash during the year
5,000
10
Cash balance, January 1, 2014
29,000
Cash balance, December 31, 2014
$34,000
Req. 2
There was an increase in cash for XS Supply Company this year of $5,000. Operating
activities provided a positive cash flow of $22,000. This inflow of cash from operating
activities, combined with the $4,000 proceeds from sale of equipment and the stock
issuance for $16,000 cash, allowed the company to invest $31,000 in new equipment
and pay down a long-term note by $6,000.
Chapter 12 – Statement of Cash Flows
Panel B: Changes in Non-cash Accounts
Beg. bal. 28,000 Beg. bal. 36,000
Decrease 2,000 (4) Increase 3,000
End. bal. 26,000 End. bal. 39,000
Beg. bal. 21,000 Beg. bal. 1,000
(6) Increase 6,000 (7) Increase 500
End. bal. 27,000 End. bal. 1,500
Beg. bal. 72,000 Beg. bal. 48,000
(8) Purchases 12,000 (2) Depreciation 4,000 (12) Payments 6,000 Borrowings 0
End. bal. 80,000 End. bal. 42,000
Beg. bal. 60,000 Beg. bal. 24,000
Stock repurchased 0 (13) Stock issued 18,500 (14) Dividends 2,000 (1) Net income 7,000
End. bal. 78,500 End. bal. 29,000
Retained Earnings (SE)
Accounts Receivable (A)
Inventory (A)
Accounts Payable (L)
Wages Payable (L)
Fixed Assets-net (A)
Note Payable Long–Term (L)
Common Stock (SE)
