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Problem 12-5AA (Concluded)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ...................................................................................
$136,000
Adjustments to reconcile net income to net
cash provided by operating activities
Increase in accounts receivable ($83,000 - $71,000) ...........
(12,000)
Increase in inventory ($601,000 - $526,000) ...........................
(75,000)
Increase in accounts payable ($87,000 - $71,000) ................
16,000
Increase in taxes payable ($28,000 - $25,000) .......................
3,000
Depreciation expense .............................................................
54,000
Net cash provided by operating activities .............................
$122,000
Cash flows from investing activities
Cash paid for equipment ...........................................................
(36,000)
Cash flows from financing activities
Cash received from issuing stock (12,000 x $5) .....................
60,000
Cash paid for cash dividends ...................................................
(89,000)
Net cash used in financing activities ......................................
(29,000)
Net increase in cash......................................................................
$ 57,000
Cash balance at beginning of 2013 ............................................
107,000
Cash balance at end of 2013 .......................................................
$164,000
Problem 12-6AB (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Cash received from customers (Note 1) .................
$1,780,000
Cash paid for merchandise (Note 2) ......................
(1,145,000)
Cash paid for other operating expenses ..............
(494,000)
Cash paid for income taxes (Note 3) ......................
(19,000)
Net cash provided by operating activities ............
$122,000
Cash flows from investing activities
Cash paid for equipment .........................................
(36,000)
Cash flows from financing activities
Cash from issuing stock (12,000 x $5) ....................
60,000
Cash paid for cash dividends ................................
(89,000)
Net cash used in financing activities ....................
(29,000)
Net increase in cash ...................................................
$ 57,000
Cash balance at December 31, 2012 .........................
107,000
Cash balance at December 31, 2013 .........................
$164,000
Supporting calculations
(1) Sales - Increase in receivables = $1,792,000 - ($83,000 - $71,000) = $1,780,000
(2) Cost of Increase in Increase in
+
-
Problem 12-7A (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ...............................................................................
$ 6,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense ........................................................
$12,000
Decrease in accounts receivable ......................................
200
Increase in merchandise inventory ................................
(440
)
Decrease in accounts payable ..........................................
(200
)
Increase in salaries payable ..............................................
180
Increase in utilities payable ...............................................
60
Increase in prepaid rent .....................................................
(40
)
Decrease in prepaid insurance .........................................
20
11,780
Net cash provided by operating activities ............................
$17,780
Financial & Managerial Accounting, 5th Edition
700
Problem 12-8AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2013
Cash flows from operating activities
Cash receipts from customers (1) .........................................................
$ 97,400
Cash payments to suppliers (2) .............................................................
(42,640)
)
Cash payments for salaries (3) ..............................................................
(17,820)
)
Cash payments for rent (4) ................................................................
(9,040)
)
Cash payments for insurance (5) ...........................................................
(3,780)
)
Cash payments for utilities (6) ...............................................................
(2,740)
)
Cash payments for interest ................................................................
(3,600)
)
Net cash provided by operating activities ...............................................
$ 17,780
Supporting calculations
(1) Sales + Decrease in receivables = $97,200 + ($5,800 - $5,600) = $97,400
(2) Cost of Increase in Decrease in
goods sold inventory accts payable =
+
+
PROBLEM SET B
Problem 12-1B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ..........................................................................................
$158,100
Adjustments to reconcile net income to net
cash provided by operating activities
Decrease in accounts receivable ($80,750 - $77,100) ................
3,650
Decrease in inventory ($250,700 - $240,600) ........................
10,100
Decrease in prepaid expenses ($17,000 - $15,100) ....................
1,900
Decrease in accounts payable ($102,000 - $17,750) ..................
(84,250)
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)
Cash flows from financing activities
Cash borrowed on short-term note ...............................................
5,000
Cash paid on long-term note ...........................................................
(47,500)
Cash received from issuing stock (3,000 x $15) ............................
45,000
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, 2012 ................................................
61,550
Cash balance at December 31, 2013 ................................................
$123,450
Noncash investing and financing activities
Financial & Managerial Accounting, 5th Edition
702
Problem 12-1B (Continued)
Part 2
Gazelle Corporation's dividend payments of $53,600 represent 34% of the
Companies usually pay dividends that are substantially less than net income.
The analysis of cash flows for this company indicates no reason to question
Problem 12-2BA (60 minutes)
GAZELLE CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2013
December
31, 2012
Analysis of Changes
December
31, 2013
Debit
Credit
Balance sheet--debits
Cash ..........................................................
$ 61,550
$123,450
Accounts receivable ..............................
80,750
(b)
$ 3,650
77,100
Merchandise inventory ..........................
250,700
(c)
10,100
240,600
Prepaid expenses ...................................
17,000
(d)
1,900
15,100
Equipment ...............................................
200,000
(h)
$113,250
(g)
51,000
262,250
$610,000
$718,500
Balance sheet--credits
Accum. depreciation—Equip. ..............
$ 95,000
(g)
22,850
(f)
38,600
$110,750
Accounts payable ...................................
102,000
(e)
84,250
17,750
Short-term notes payable ......................
10,000
(j)
5,000
15,000
Long-term notes payable ......................
77,500
(k)
47,500
(i)
70,000
100,000
Common stock, $5 par value ................
200,000
(l)
15,000
215,000
Paid-in capital in excess of
par value, common stock ...................
0
(l)
30,000
30,000
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
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
Investing activities
Receipt from sale of equipment ...........
(g)
26,050
Payment to purchase equipment ........
(h)
43,250
Financing activities
Borrowed on short-term note ...............
(j)
5,000
Payment on long-term note ..................
(k)
47,500
Issued common stock for cash ...........
(l)
45,000
Payments of cash dividends ................
(m)
53,600
Noncash investing and financing
activities
Purchase of equip. financed
by long-term note payable .........
(i)
70,000
(h)
70,000
$681,950
$681,950
Financial & Managerial Accounting, 5th Edition
704
Problem 12-2BA (Concluded)
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ..........................................................................................
$158,100
Adjustments to reconcile net income to net
cash provided by operating activities
Decrease in accounts receivable ($80,750 - $77,100) ................
3,650
Decrease in inventory ($250,700 - $240,600) ........................
10,100
Decrease in prepaid expenses ($17,000 - $15,100) ....................
1,900
Decrease in accounts payable ($102,000 - $17,750) ..................
(84,250)
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)
Cash flows from financing activities
Cash borrowed on short-term note ...............................................
5,000
Cash paid on long-term note ...........................................................
(47,500)
Cash received from issuing stock (3,000 x $15) ............................
45,000
Cash paid for dividends ................................................................
(53,600)
Net cash used in financing activities .............................................
(51,100)
Net increase in cash.............................................................................
$ 61,900
Cash balance at beginning of year 2013 ..........................................
61,550
Cash balance at end of year 2013 .....................................................
$123,450
Problem 12-3BB (40 minutes)
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Cash received from customers (Note 1) .....................
$1,188,650
Cash paid for merchandise (Note 2) ...........................
(669,150)
Cash paid for other expenses (Note 3) .......................
(360,950)
Cash paid for income taxes ........................................
(28,350)
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 flows from financing activities
Cash borrowed on short-term note ............................
5,000
Cash paid on long-term note ......................................
(47,500)
Cash received from issuing stock (3,000 x $15) .........
45,000
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, 2012 .............................
61,550
Cash balance at December 31, 2013 .............................
$123,450
Noncash investing and financing activities
Supporting calculations
Financial & Managerial Accounting, 5th Edition
706
Problem 12-4B (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ...............................................................................
$202,767
Adjustments to reconcile net income to net
cash provided by operating activities
Decrease in accounts receivable ($25,860 - $20,222) .......
5,638
Increase in inventory ($165,667 - $140,320) ........................
(25,347)
Decrease in accounts payable ($157,530 - $20,372) .........
(137,158)
Decrease in taxes payable ($6,100 - $2,100) ......................
(4,000)
Depreciation expense ..........................................................
15,700
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)
Net cash provided by financing activities .........................
3,000
Net increase in cash ..................................................................
$ 30,350
Cash balance at December 31, 2012 ......................................
28,400
Cash balance at December 31, 2013 ......................................
$ 58,750
Problem 12-5BA (50 minutes)
SATU COMPANY
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2013
December
31, 2012
Analysis of Changes
December
31, 2013
Debit
Credit
Balance sheet--debits
Cash ..........................................................
$ 28,400
$ 58,750
Accounts receivable ..............................
25,860
(b)
$ 5,638
20,222
Merchandise inventory ..........................
140,320
(c)
$ 25,347
165,667
Equipment ...............................................
77,500
(g)
30,250
107,750
$272,080
$352,389
Balance sheet--credits
Accum. depreciation—Equip. ..............
$ 31,000
(f)
15,700
$ 46,700
Accounts payable ...................................
157,530
(d)
137,158
20,372
Income taxes payable ............................
6,100
(e)
4,000
2,100
Common stock, $5 par value ................
25,000
(h)
15,000
40,000
Paid-in capital in excess of
par value, common stock ...................
20,000
(h)
48,000
68,000
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
Decrease in accounts receivable ........
(b)
5,638
Increase in merch. inventory ................
(c)
25,347
Decrease in accounts payable .............
(d)
137,158
Decrease in income taxes payable ......
(e)
4,000
Depreciation expense ............................
(f)
15,700
Investing activities
Payment for equipment .........................
(g)
30,250
Financing activities
Issued common stock for cash ...........
(h)
63,000
Paid cash dividends ...............................
________
(i)
60,000
$543,860
$543,860
Financial & Managerial Accounting, 5th Edition
708
Problem 12-5BA (concluded)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ...............................................................................
$202,767
Adjustments to reconcile net income to net
cash provided by operating activities
Decrease in accounts receivable ($25,860 - $20,222) .......
5,638
Increase in inventory ($165,667 - $140,320) ........................
(25,347)
Decrease in accounts payable ($157,530 - $20,372) .........
(137,158)
Decrease in taxes payable ($6,100 - $2,100) ......................
(4,000)
Depreciation expense ..........................................................
15,700
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)
Net cash provided by financing activities .........................
3,000
Net increase in cash ..................................................................
$ 30,350
Cash balance at beginning of 2013 ........................................
28,400
Cash balance at end of 2013 ...................................................
$ 58,750
Problem 12-6BB (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Cash received from customers (Note 1) ..................
$756,438
Cash paid for merchandise (Note 2) ........................
(431,705)
Cash paid for other operating expenses .................
(173,933)
Cash paid for income taxes (Note 3) ........................
(93,200)
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 cash dividends ...................................
(60,000)
Net cash provided by financing activities ...............
3,000
Net increase in cash ......................................................
$30,350
Cash balance at December 31, 2012 ............................
28,400
Cash balance at December 31, 2013 ............................
$58,750
Supporting calculations
