Chapter 12 – Reporting and Analyzing Cash Flows
Exercise 12-2B (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 toward accounts
payable
c. Sold inventory for cash
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
i. Borrowed cash from bank
by signing a 9-month note
payable
X
j. Paid cash to purchase a
patent
X
Exercise 12-3 (20 minutes)
Cash flows from operating activities
Net income ……………………………………………………………………
$374,000
Adjustments to reconcile net income to net cash
provided by operating activities
Decrease in accounts receivable …………………………………
17,100
Decrease in merchandise inventory ……………………….….
42,000
Increase in prepaid expenses ………………………………..……
(4,700)
Decrease in accounts payable ……………………………….……
(8,200)
Increase in other payables …………………………………….……
1,200
Depreciation expense …………………………………………………
44,000
Amortization expense …………………………………………………
7,200
Gain on sale of plant assets …………………………………..……
(6,000)
Net cash provided by operating activities …………………..……
$466,600
Exercise 12-4 (10 minutes)
Cash flows from operating activities
Net income ………………………………………………………………..…..
$400,000
Adjustments to reconcile net income to operating cash flow
Depreciation ………………………………………………………………..
$80,000
Accounts receivable increase ………………………………….…..
(40,000)
Prepaid expense decrease ……………………………………….…..
12,000
Accounts payable increase …………………………..………….…..
6,000
Wages payable decrease………………………………………….…..
(2,000)
Gain on sale of machinery ……………………………………….…..
(20,000)
36,000
Net cash provided from operating activities ………………….…..
$436,000
Exercise 12-7B (20 minutes)
Cash flows from operating activities
Receipts from customers (see note a) ……………………………………..
$1,797,500
Payments for merchandise (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 12-8 (10 minutes)
Cash flows from investing activities
Cash received from the sale of equipment* …………………………….
$ 51,300
Cash paid for new truck ………………………………………………………….
(89,000)
Cash received from the sale of land ………………………………………..
198,000
Cash received from the sale of long-term investments ……………
60,800
Net cash provided by investing activities ………………………………..
$221,100
* Cash received from sale of equipment = Book value – loss = $65,300 – $14,000 = $51,300
Exercise 12-9 (10 minutes)
Cash flows from financing activities
Sale 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)
Exercise 12–10 (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
Bal., 6/30/2012
Purchase
Sale (plug) *40,600
Bal., 6/30/2013
(2)
Carrying value of notes retired ……………………………………………………………
$ 30,000
Cash payment to retire notes ………………………………………………………………
$ 30,000
24,100
Dividends (plug)
99,510
33,300
Exercise 12–11B (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 merchandise inventory ………………………………………….…
(22,700)
Purchases ……………………………………………………………………………………….…
388,300
Plus decrease in accounts payable …………………………………………………..…
5,000
Cash paid for merchandise …………………………………………………………………
$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., 6/30/2012
Purchase
Sale *40,600
Bal., 6/30/2013
(6)
Carrying value of notes retired ……………………………………………………………
$ 30,000
Cash payment to retire notes ………………………………………………………………
$ 30,000
24,100
Dividends (plug)
99,510
33,300
Exercise 12–14A (30 minutes)
SCORETECK 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—debit bal. accounts
Cash ………………………………………………....
$ 80,000
$ 60,000
Accounts receivable ………………………...
120,000
(f)
$ 70,000
190,000
Merchandise 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