978-0078025754 Chapter 12 Solution Manual Part 2

subject Type Homework Help
subject Pages 9
subject Words 2720
subject Authors John Wild

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Exercise 12-6 (10 minutes)
Cash flows from operating activities
Net income ...............................................................................
$400,000
Adjustments to reconcile net income to operating cash flow
Income statement items not affecting cash
Depreciation ........................................................................
$80,000
Gain on sale of machinery .................................................
(20,000)
Changes in current operating assets and liabilities
Accounts receivable increase ...........................................
(40,000)
Prepaid expense decrease .................................................
12,000
Accounts payable increase ...............................................
6,000
Wages payable decrease ...................................................
(2,000)
36,000
Net cash provided from operating activities ...........................
$436,000
Exercise 12-7 (10 minutes)
Cash flows from investing activities
Cash received from the sale of equipment* ..................................
Cash paid for new truck ...................................................................
(89,000)
Cash received from the sale of land ...............................................
Cash received from the sale of long-term investments ...............
Net cash provided by investing activities ......................................
* Cash received from sale of equipment = Book value - loss = $65,300 - $14,000 = $51,300
Exercise 12-8 (10 minutes)
Cash flows from financing activities
Proceeds from issuance of common stock ...............................................
$ 64,000
Paid cash dividend .......................................................................................
(14,600)
Repaid note payable ....................................................................................
(50,000)
Purchased treasury stock ................................................................
(12,000)
Net cash used by financing activities ........................................................
$(12,600)
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Exercise 12-9 (20 minutes)
PEUGEOT S.A.
Statement of Cash Flows (Indirect Method)
For Year Ended December 31, 2011
Cash flows from operating activities
Net income ........................................................................
€ 784
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
Depreciation and amortization .....................................
3,037
Gains on disposals and other ......................................
(883)
Changes in current operating assets and liabilities
Net change (decrease) in working capital ...................
(1,183)
Net cash from operating activities ................................
€ 1,755
Cash flows from investing activities
Cash from disposal of plant assets & intangibles........
189
Cash paid for plant assets and intangibles ...................
(3,921)
Net cash used in investing activities .............................
(3,732)
Cash flows from financing activities
Cash from purchases of treasury stock ........................
(199)
Cash paid for dividends ..................................................
(290)
Cash paid for other financing activities ........................
(2,282)
Net cash used in financing activities .............................
(2,771)
Net decrease in cash ..........................................................
€ (4,748)
Cash and cash equivalents, Dec 31, 2010 ........................
10,442
Cash and cash equivalents, Dec 31, 2011 ........................
€ 5,694
Exercise 12-10 (15 minutes)
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Exercise 12-11 (Part 1 continued)
(1)
Cost of equipment sold (Given) ....................................................................
$ 48,600
Accumulated depreciation of equipment sold* ............................................
(40,600)
Book value of equipment sold ......................................................................
8,000
Gain on sale of equipment (Given) ...............................................................
2,000
Cash receipt from sale of equipment ............................................................
$ 10,000
Cost of equipment sold .................................................................................
$ 48,600
Plus net increase in the equipment account balance ................................
9,000
Cash paid for new equipment (given) ...........................................................
$ 57,600
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Exercise 12-12B (continued)
Notes
(1)
Sales ...............................................................................................................
$678,000
Less increase in accounts receivable ..........................................................
(14,000)
Cash received from customers .....................................................................
$664,000
(2)
Cost of goods sold .........................................................................................
$411,000
Less decrease in inventory ...........................................................................
(22,700)
Purchases .......................................................................................................
388,300
Plus decrease in accounts payable ..............................................................
5,000
Cash paid for inventory .................................................................................
$393,300
(3)
Other operating expenses .............................................................................
$ 67,000
Plus decrease in wages payable ................................................................
9,000
Less decrease in prepaid expenses .............................................................
(1,000)
Cash paid for other operating expenses ......................................................
$ 75,000
(4)
Income taxes expense ...................................................................................
$ 43,890
Plus decrease in income taxes payable .......................................................
400
Cash paid for income taxes ...........................................................................
$ 44,290
(5)
Cost of equipment sold (Given) ....................................................................
$ 48,600
Accumulated depreciation of equipment sold* ............................................
(40,600)
Book value of equipment sold ......................................................................
8,000
Gain on sale of equipment ............................................................................
2,000
Cash receipt from sale of equipment ............................................................
$ 10,000
Cost of equipment sold .................................................................................
$ 48,600
Plus net increase in the equipment account balance ................................
9,000
Cash paid for new equipment (given) ...........................................................
$ 57,600
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Exercise 12-15B (15 minutes)
Case X:
Sales revenue ...........................................................
$515,000
Accounts receivable, Dec. 31, 2015 ........................
$ 27,200
Accounts receivable, Dec. 31, 2016 ........................
(33,600)
Less increase in accounts receivable ....................
(6,400)
Cash received from customers ...............................
$508,600
Case Y:
Rent expense ............................................................
$139,800
Rent payable, Dec. 31, 2015 ................................
$ 7,800
Rent payable, Dec. 31, 2016 ................................
(6,200)
Plus decrease in rent payable ................................
1,600
Cash paid for rent .....................................................
$141,400
Case Z:
Cost of goods sold ...................................................
$525,000
Inventory, Dec. 31, 2016 ................................
$130,400
Inventory, Dec. 31, 2015 ................................
(158,600)
Less decrease in merch. inventory ........................
(28,200)
Cost of goods purchased ................................
496,800
Accounts payable, Dec. 31, 2016 ............................
82,000
Accounts payable, Dec. 31, 2015 ............................
(66,700)
Less increase in accounts payable ........................
(15,300)
Cash paid for inventory ................................
$481,500
Exercise 12-16B (20 minutes)
Cash flows from operating activities
Receipts from customers (see note a) ............................................
$1,797,500
Payments for inventory (see note b) ...............................................
(1,028,500)
Payments for salaries (see note c) ..................................................
(249,035)
Payments for rent ............................................................................
(49,600)
Payments for utilities ......................................................................
(18,125)
Net cash provided by operating activities .......................................
$ 452,240
Note a: Sales Increase in receivables
$1,828,000 - $30,500 = $1,797,500
Note b: Cost of goods sold + Increase in inventory + Decrease in accounts payable
$991,000 + $25,000 + $12,500 = $1,028,500
Note c: Salaries expense + Decrease in salaries payable
$245,535 + $3,500 = $249,035
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Exercise 12-18B (40 minutes)
1.
THOMAS CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers ........................................
$5,000,000
Cash received from dividends .........................................
208,400
Cash paid for inventory ....................................................
(2,590,000)
Cash paid for wages .........................................................
(550,000)
Cash paid for rent ..............................................................
(320,000)
Cash paid for interest .......................................................
(218,000)
Cash paid for taxes ...........................................................
(450,000)
Net cash provided by operating activities ......................
$1,080,400
Cash flows from investing activities
Cash paid for purchases of machinery ...........................
(2,236,000)
Cash paid for purchases of long-term investments ......
(1,260,000)
Cash received from sale of land ......................................
220,000
Cash received from sale of machinery ............................
710,000
Net cash used in investing activities ...............................
(2,566,000)
Cash flows from financing activities
Cash received from issuing stock ................................
1,540,000
Cash received from borrowing ........................................
3,600,000
Cash paid for note payable ..............................................
(386,000)
Cash paid for dividends ....................................................
(500,000)
Cash paid for treasury stock purchases. ........................
(218,000)
Net cash provided by financing activities .......................
4,036,000
Net increase in cash............................................................
$2,550,400
Beginning balance of cash .................................................
333,000
Ending balance of cash ......................................................
$2,883,400
2.
a. (i) Financing section reported the largest cash inflow of $4,036,000.
(ii) Investing section reported the largest cash outflow of $2,566,000.
b. The largest individual item among the investing cash outflows is the purchase
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PROBLEM SET A
Problem 12-1A (35 minutes)
LANSING COMPANY
Cash Flows from Operating ActivitiesIndirect Method
For Year Ended December 31, 2015
Cash flows from operating activities
Net income ...............................................................................
$ 6,000
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
Depreciation expense ........................................................
$12,000
Changes in current operating assets and liabilities
Decrease in accounts receivable ......................................
200
Increase in 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
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Problem 12-3A (50 minutes)
Part 1
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income ..........................................................................................
$114,975
Adjustments to reconcile net income to net
cash provided by operating activities:
Income statement items not affecting cash
Depreciation expense ................................................................
20,750
Loss on disposal of equipment ..................................................
5,125
Changes in current assets and current liabilities
Increase in accounts receivable ($65,810 - $50,625) .................
(15,185)
Increase in inventory ($275,656 - $251,800) ................................
(23,856)
Decrease in prepaid expenses ($1,875 - $1,250) ........................
625
Decrease in accounts payable ($114,675 - $53,141) ..................
(61,534)
Net cash provided by operating activities ................................
$ 40,900
Cash flows from investing activities
Cash received from sale of equipment .........................................
11,625
Cash paid for equipment ................................................................
(30,000)
Net cash used in investing activities .............................................
(18,375)
Cash flows from financing activities
Cash borrowed on short-term note ...............................................
4,000
Cash paid on long-term note ...........................................................
(50,125)
Cash received from issuing stock (2,500 x $20) ............................
50,000
Cash paid for dividends ................................................................
(50,100)
Net cash used in financing activities .............................................
(46,225)
Net decrease in cash ...........................................................................
$(23,700)
Cash balance at December 31, 2014 .................................................
73,500
Cash balance at December 31, 2015 .................................................
$ 49,800
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Problem 12-3A (Concluded)
Part 2
Forten Company's operations provide a positive net cash inflow of $40,900a
good result. At the same time, the cash balance decreased by $23,700 (32%)
during the year. Two major cash outflows are the retirement of debt ($50,125)

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