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
Bal., 6/30/2014
115,000
Bal., 6/30/2014
Purchase
Sale 48,600
Sale *40,600
Depr. Expense
Bal., 6/30/2015
Bal., 6/30/2015
(6)
Carrying value of notes retired ……………………………………………………………
$ 30,000
Cash payment to retire notes ………………………………………………………………
$ 30,000
Bal., 6/30/2014
24,100
Dividends (plug)
Net income
99,510
Bal., 6/30/2015
33,300
Exercise 12-13A (30 minutes)
SCORETECK CORPORATION
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—debit bal. accounts
Cash ………………………………………………....
$ 80,000
$ 60,000
Accounts receivable………………………....
120,000
(f)
$ 70,000
190,000
Inventory…………………………………………...
250,000
(g)
$ 20,000
230,000
Plant assets……………………………………....
600,000
(d)
70,000
670,000
$1,050,000
$1,150,000
Balance sheet—credit bal. accounts
Accum. depreciation—Plant assets ....
$ 100,000
(c)
70,000
$ 170,000
Accounts payable ……………………………..
150,000
(h)
10,000
140,000
Notes payable …………………………………...
370,000
(e)
20,000
390,000
Common stock ………………………………....
200,000
200,000
Retained earnings ……………………………..
230,000
(b)
80,000
(a)
100,000
250,000
$1,050,000
$1,150,000
Statement of cash flows
Operating activities
Net income …………………………..…………...
(a)
100,000
Increase in accounts receivable ……...
(f)
70,000
Decrease in merch. inventory …………..
(g)
20,000
Decrease in accounts payable ………....
(h)
10,000
Depreciation expense ……………………....
(c)
70,000
Investing activities
Payment for plant assets …………………..
(d)
70,000
Financing activities
Paid cash dividends ………………………....
(b)
80,000
Issued note payable ………………………....
(e)
20,000
_______
$440,000
$440,000
Exercise 12–14B (15 minutes)
Statement of Cash Flows
Noncash
Operating
Activities
Investing
Activities
Financing
Activities
Investing &
Financing
Activities
Not Reported
on Statement
or in Notes
a. Retired long-term notes
payable by issuing stock
X
b. Paid cash to acquire
inventory
X
c. Sold inventory for cash
X
d. Paid cash dividend that
was declared in a prior
period
X
e. Accepted six-month note
receivable in exchange for
plant assets
X
f. Recorded depreciation
expense
X
g. Paid cash to acquire
treasury stock
X
h. Collected cash from sales
X
i. Borrowed cash from bank
by signing a 9-month note
payable
X
j. Paid cash to purchase a
patent
X
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
Exercise 12-17B (20 minutes)
FERRON COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Receipts from customers …………………………………....
$ 495,000
Receipts of interest……………………………………………..
3,500
Payments for inventory ……………………………………....
(254,500)
Payments for salaries ………………………………………....
(76,500)
Payments for other expenses ……………………………...
(20,000)
Net cash provided by operating activities …………....
$147,500
Cash flows from investing activities
Receipt from sale of equipment …………………………..
60,250
Payment for store equipment ……………………………...
(24,750)
Net cash provided by investing activities …………....
35,500
Cash flows from financing activities
Payment to retire long-term notes payable …………..
(100,000)
Receipt from borrowing on six–month note ………....
35,000
Payment of cash dividends…………………………..……..
(10,000)
Net cash used in financing activities …………………...
(75,000)
Net increase in cash and cash equivalents ……………..
$108,000
Cash and cash equivalents at prior year–end ………....
40,000
Cash and cash equivalents at current year–end ……...
$148,000
Note No. ___
Noncash investing and financing activities
(1) Issued common stock to retire $185,500 of bonds payable.
(2) Purchased land financed with a $105,250 long-term note payable.
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
Problem 12-1A (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Indirect 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
Problem 12-2AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2015
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
(3) Salaries expense – Increase in salaries payable = $18,000 – ($880 – $700) = $17,820
(4) Rent expense + Increase in prepaid rent = $9,000 + ($220 – $180) = $9,040
(5) Insurance expense – Decrease in prepaid insurance = $3,800 – ($280 – $260) = $3,780
(6) Utilities expense – Increase in utilities payable = $2,800 – ($220 – $160) = $2,740
+
+
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
Noncash investing and financing activities
Purchased equipment for $96,375 by signing a $66,375 long-term note payable
and paying $30,000 in cash.
Problem 12-3A (Concluded)
Part 2
Forten Company’s operations provide a positive net cash inflow of $40,900—a
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)