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 12-4BA (60 minutes)
GAZELLE CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2015
December
31, 2014
Analysis of Changes
December
Debit
Credit
Balance sheet—debits
Cash ………………………………………………….
$ 61,550
$123,450
Accounts receivable ………………………...
80,750
(b)
$ 3,650
77,100
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
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
Problem 12-4BA (Concluded)
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 items 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 beginning of year 2015 ……………………………………
Cash balance at end of year 2015 …………………………..…………………
$123,450
Noncash investing and financing activities
Purchased equipment for $113,250 by signing a $70,000 long-term note
payable and paying $43,250 in cash.
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
Noncash investing and financing activities
Purchased equipment for $113,250 by signing a $70,000 long-term note payable
and paying $43,250 in cash.
Supporting calculations
(1) Sales + Decrease in receivables = $1,185,000 + ($80,750 – $77,100) = $1,188,650
(2) Cost of Decrease in Decrease in
(3) Other expenses – Decrease in prepaid expenses = $362,850 – ($17,000 – $15,100)
–
+
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
Problem 12-7BA (50 minutes)
SATU COMPANY
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2015
December
31, 2014
Analysis of Changes
December
Debit
Credit
Balance sheet—debits
Cash ………………………………………………….
$ 28,400
$ 58,750
Accounts receivable ………………………...
25,860
(b)
$ 5,638
20,222
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
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
Problem 12-7BA (concluded)
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 beginning of 2015 ………………………………….
28,400
Cash balance at end of 2015 ……………………………………………
$ 58,750
Problem 12-8BB (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers (Note 1) ……………...
$756,438
Cash paid for inventory (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, 2014 ……………………….
28,400
Cash balance at December 31, 2015 ……………………….
$58,750
Supporting calculations
(1) Sales + Decrease in receivables = $750,800 + ($25,860 – $20,222) = $756,438
(2) Cost of Increase in Decrease in
(3) Income taxes expense + Decrease in income taxes payable
= $89,200 + ($6,100 – $2,100) = $93,200
+
+
SERIAL PROBLEM — SP 12
Serial Problem — SP 12, Business Solutions (45 minutes)
BUSINESS SOLUTIONS
Statement of Cash Flows (Indirect)
For Quarter Ended March 31, 2016
Cash flows from operating activities
Net income ……………………………………………………….………………..……
$ 18,833
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Depreciation expense–Office Equipment …………………………..
400
Depreciation expense–Computer Equipment ……………….……
1,250
Changes in current assets and current liabilities
Increase in accounts receivable ($22,867 – $5,668) ………….……
(17,199)
Increase in inventory ($704 – $0) ……………………………………..……
(704)
Increase in computer supplies ($2,005 – $580) ………………..……
(1,425)
Decrease in prepaid insurance ($1,665 – $1,110) ……………..……
555
Decrease in accounts payable ($1,100 – $0) …………………….……
(1,100)
Increase in wages payable ($875 – $500) ………………………..…
375
Decrease in unearned computer service revenue ………………
(1,500)
Net cash used by operating activities …………………………..…..……
$ (515)
Cash flows from investing activities
Net cash used in investing activities ………………………………………
0
Cash flows from financing activities
Cash received from stock issuance ………………………………….……
25,000
Cash paid for dividends …………………………………………………….…
(4,800)
Net cash provided by financing activities…………………………..
20,200
Net increase in cash ……………………………………………………………..……
$ 19,685
Cash balance at December 31, 2015 …………………………………….……
48,372
Cash balance at March 31, 2016 …………………………………………..……
$ 68,057
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Financial and Managerial Accounting, 6th Edition
724
Reporting in Action — BTN 12-1
1. Apple uses the indirect method of reporting operating cash flows. We
2. In all three fiscal years, Apple’s cash flows from operating activities
markedly exceed its cash dividends paid, as shown in the table below:
($ millions)
Fiscal 2013
Fiscal 2012
Fiscal 2011
Cash provided by operating activities ……
$53,666
$50,856
$37,529
Cash dividends paid …………………………..
(10,564)
(2,488)
(0)
3. In fiscal 2013, the largest item in reconciling the difference between net
income and cash flow from operations was depreciation and amortization
of $6,757 million.
4. In fiscal 2013, the largest cash inflow from investing activities was $104,130
million from proceeds from sales of marketable securities. The largest cash
outflow from investing activities was for purchases of marketable
securities, in the amount of $148,489 million.
5. Answer depends on the financial statement information obtained.