Problem 12-4AA (60 minutes)
FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2015
December
31, 2014
Analysis of Changes
December
31, 2015
Debit
Credit
Balance sheet—debits
Cash ………………………………………………….
$ 49,800
Accounts receivable ……………………..….
(b)
$15,185
65,810
Inventory ……………………………………….….
(c)
23,856
275,656
Prepaid expenses …………………………..
(d)
$ 625
1,250
Equipment …………………………………….….
(h)
96,375
(g)
46,875
157,500
$550,016
Balance sheet—credits
Accum. depreciation—Equip. ……….….
(g)
30,125
(f)
20,750
$ 36,625
Accounts payable …………………………..
(e)
61,534
53,141
Short–term notes payable ……………..….
(j)
4,000
10,000
Long–term notes payable ………………….
(k)
50,125
(i)
66,375
65,000
Common stock, $5 par value ………..….
(l)
12,500
162,750
Paid-in capital in excess of
par value, common stock …………..….
(l)
37,500
37,500
Retained earnings …………………………..
(m)
50,100
(a)
114,975
185,000
$550,016
Statement of cash flows
Operating activities
Net income ……………………………………….
(a)
114,975
Increase in accts. receivable …………….
(b)
15,185
Increase in merch. inventory …………….
(c)
23,856
Decrease in prepaid expenses ………….
(d)
625
Decrease in accounts payable ………….
(e)
61,534
Depreciation expense ……………………….
(f)
20,750
Loss on sale of equipment ……………….
(g)
5,125
Investing activities
Receipt from sale of equipment …….….
(g)
11,625
Payment to purchase equipment ….….
(h)
30,000
Financing activities
Borrowed on short-term note………..….
(j)
4,000
Payment on long–term note …………..….
(k)
50,125
Issued common stock for cash …….….
(l)
50,000
Payments of cash dividends …………….
(m)
50,100
Noncash investing and
financing activities
Purchase of equip. financed
by long-term note payable ………
(i)
66,375
(h)
66,375
$600,775
$600,775
Problem 12-5AB (40 minutes)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers (Note 1) ………………..
$567,315
Cash paid for inventory (Note 2) …………………………..
(370,390)
Cash paid for other expenses (Note 3) ………………....
(131,775)
Cash paid for income taxes ………………………………...
(24,250)
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
Noncash investing and financing activities
Supporting calculations
(1) Sales – Increase in receivables = $582,500 – ($65,810 – $50,625) = $567,315
(2) Cost of Increase in Decrease in
+
+
Problem 12-6A (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income ………………………………………………………………………..
$136,000
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Depreciation expense ………………………………………………....
54,000
Changes in current assets and current liabilities
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
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 December 31, 2014 …………………………………..
107,000
Cash balance at December 31, 2015 …………………………………..
$164,000
PROBLEM SET B
Problem 12-1B (35 minutes)
SALT LAKE COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2015
Cash flows from operating activities
Net income ………………………………………………………………….…
$ 20,000
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
Depreciation expense …………………………………………….…
$32,000
Changes in current operating assets and liabilities
Increase in accounts receivable ……………………………..…
(600
)
Decrease in inventory …………………………………………….…
120
Decrease in accounts payable ………………………………..…
(200
)
Increase in salaries payable ………………………………………
300
Increase in utilities payable …………………………………….…
200
Decrease in prepaid insurance ……………………………….…
40
Decrease in prepaid rent ………………………………………..…
100
31,960
Net cash provided by operating activities …………………….…
$ 51,960
Problem 12-3B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income ………………………………………………………………………………
$158,100
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement item not affecting cash
Depreciation expense …………………………………………………….…
38,600
Loss on disposal of equipment ……………………………………..……
2,100
Changes in current assets and current liabilities
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)
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, 2014 …………………………………………
61,550
Cash balance at December 31, 2015 …………………………………………
$123,450
Problem 12-3B (Continued)
Part 2
Gazelle Corporation’s dividend payments of $53,600 represent 34% of the
$158,100 net income for the year, and 41% of cash inflow provided by
Problem 12-5BB (40 minutes)
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers (Note 1) ………………...
$1,188,650
Cash paid for inventory (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, 2014 ………………………..
61,550
Cash balance at December 31, 2015 ………………………..
$123,450
(2) Cost of Decrease in Decrease in
–
+
Problem 12-6B (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net income ……………………………………………………………………..
$202,767
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Depreciation expense …………………………………………………
15,700
Changes in current assets and current liabilities
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)
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, 2014 ………………………………..
28,400
Cash balance at December 31, 2015 ………………………………..
$ 58,750