Chapter 12 – Reporting and Analyzing Cash Flows
Problem 12–5AA (Concluded)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ………………………………………………………………………..
$136,000
Adjustments to reconcile net income to net
cash provided by operating activities
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) …………....
Increase in taxes payable ($28,000 – $25,000) …………………..
Depreciation expense …………………………………………………....
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 beginning of 2013 ……………………………………..
107,000
Cash balance at end of 2013 ……………………………………………....
$164,000
Problem 12–6AB (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Cash received from customers (Note 1) ………….….
$1,780,000
Cash paid for merchandise (Note 2) ………………….
(1,145,000)
Cash paid for other operating expenses ……….….
(494,000)
Cash paid for income taxes (Note 3) ………………….
(19,000)
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 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, 2012 …………………….
107,000
Cash balance at December 31, 2013 …………………….
$164,000
Supporting calculations
(1) Sales – Increase in receivables = $1,792,000 – ($83,000 – $71,000) = $1,780,000
(2) Cost of Increase in Increase in
(3) Income taxes expense – Increase in income taxes payable
+
–
Problem 12–8AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2013
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
+
+
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Solutions Manual, Chapter 12
35
Problem 12-1B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ………………………………………………………………………………
Adjustments to reconcile net income to net
cash provided by operating activities
Decrease in accounts receivable ($80,750 – $77,100) ……….……
Decrease in inventory ($250,700 – $240,600) ……………………
Decrease in prepaid expenses ($17,000 – $15,100) …………..……
Decrease in accounts payable ($102,000 – $17,750) ………………
Depreciation expense …………………………………………………….…
Loss on disposal of equipment ……………………………………..……
Net cash provided by operating activities …………………………..
$130,200
Cash flows from investing activities
Cash received from sale of equipment ……………………………..……
Cash paid for equipment ……………………………………………………….
Net cash used in investing activities …………………………..…….……
(17,200)
Cash flows from financing activities
Cash borrowed on short–term note …………………………………..……
Cash paid on long–term note ……………………………………………..……
Cash received from issuing stock (3,000 x $15) ………………….……
Cash paid for dividends …………………………………………………….…
Net cash used in financing activities ………………………………………
(51,100)
)
Net increase in cash……………………………………………………………..……
$ 61,900
Cash balance at December 31, 2012 …………………………………………
61,550
Cash balance at December 31, 2013 …………………………………………
$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 12-1B (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 12–2BA (Concluded)
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income ………………………………………………………………………………
Adjustments to reconcile net income to net
cash provided by operating activities
Decrease in accounts receivable ($80,750 – $77,100) ……….……
Decrease in inventory ($250,700 – $240,600) ……………………
Decrease in prepaid expenses ($17,000 – $15,100) …………..……
Decrease in accounts payable ($102,000 – $17,750) ………………
Depreciation expense …………………………………………………….…
Loss on disposal of equipment ……………………………………..……
Net cash provided by operating activities …………………………..
$130,200
Cash flows from investing activities
Cash received from sale of equipment ……………………………..……
Cash paid for equipment ……………………………………………………….
Net cash used in investing activities …………………………..…….……
(17,200)
Cash flows from financing activities
Cash borrowed on short–term note …………………………………..……
Cash paid on long–term note ……………………………………………..……
Cash received from issuing stock (3,000 x $15) ………………….……
Cash paid for dividends …………………………………………………….…
Net cash used in financing activities ………………………………………
(51,100)
Net increase in cash……………………………………………………………..……
$ 61,900
Cash balance at beginning of year 2013 ……………………………………
61,550
Cash balance at end of year 2013 ………………………………………..……
$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 12-4B (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net income …………………………………………………………………….
$202,767
Adjustments to reconcile net income to net
cash provided by operating activities
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)
Depreciation expense ………………………………………………….
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, 2012 ………………………………..
28,400
Cash balance at December 31, 2013 ………………………………..
$ 58,750