Chapter 12 Statement of Cash Flows
12–41
Chapter 12 Statement of Cash Flows
12–42
PROBLEM 12-20A (cont.)
(10)
Reconciliation of Common Stock Account
Beginning balance
$120,000
Increase due to issuing common stock
?
= 40,000
Ending balance
$160,000
This cash inflow appears in the financing activities section of the
statement of cash flows.
(11)
Reconciliation of Land Account
$24,000
?
= -0-
(10,000)
$14,000
The reconciliation suggests that no land was purchased during the
period. The full sales price of $6,000 as reported in the transaction
data results in a cash inflow that appears in the investing section of
the statement of cash flows. The gain is not shown in the operating
activities section of the statement of cash flows under the direct
method.
12–43
PROBLEM 12-20A (cont.)
(12)
Reconciliation of Taxes Payable Account
Beginning balance
$2,400
Increase due to recognizing accrued tax expense
6,600
Decrease due to cash settlements of taxes pay.
?
= (6,800)
Ending balance
$2,200
The $6,800 cash outflow for settlements of taxes payable appears in
the operating activities section of the statement of cash flows.
(13)
Reconciliation of Investments Account
Beginning balance
$20,000
Increase due to purchasing investments
50,000
Decrease due to selling investments
(10,000)
Ending balance
$60,000
This outflow is reported in the investing activities section of the
statement of cash flows. The transaction data indicates that
investments were sold for $22,000 cash. This cash inflow from the
sale of investments should be shown in the investing activities
section of the statement of cash flows. The loss is not shown in the
operating activities section of the statement of cash flows under the
direct method.
Chapter 12 Statement of Cash Flows
12–44
PROBLEM 12-20A (cont.)
b.
York Company
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Cash Receipts from:
Sales
$586,000
Total Cash Inflows
$586,000
Cash Payments for:
Inventory purchased
(92,600)
Salaries
(240,000)
Other operating expenses
(242,000)
Interest
(5,500)
Taxes
(6,800)
Total cash outflows
(586,900)
Net cash flow from operating activities
( 900)
Cash Flows from Investing Activities:
Proceeds from sale of land
6,000
Proceeds from sale of investments
22,000
Paid to purchase investments
(50,000)
Paid to purchase equipment
(12,000)
Disbursed for notes receivable
(40,000)
Net cash outflow from investing activities
(74,000)
Cash Flows from Financing Activities:
Proceeds from stock issue
40,000
Proceeds from loan
8,000
Net cash inflow from financing activities
48,000
Net decrease in cash
(26,900)
Plus: beginning cash balance
86,000
Ending cash balance
$ 59,100
12–45
PROBLEM 12-21A
(1) Reconciliation of Accounts Receivable
Beginning balance
$ 40,000
Increase due to revenue recognized on account
300,000
Decrease due to cash collections from
customers
?
= (304,000)
Ending balance
$ 36,000
(2) Reconciliation of Inventory
Beginning balance
$ 64,000
Increase due to inventory purchases
?
= 152,000
Decrease due to recognizing cost of goods
sold
(144,000)
Ending balance
$ 72,000
below.
(2) Continued: Reconciliation of Accounts Payable
Beginning balance
$ 26,400
Increase due to inventory purchases
152,000
Decrease due to cash settlements of accts.
pay.
?
= (154,400)
Ending balance
$ 24,000
(3) Reconciliation of Salaries Payable
Beginning balance
$10,000
Increase due to recognizing sal. exp. on acct.
88,000
Decrease due cash settlements of sal. pay.
?
= (83,000)
Chapter 12 Statement of Cash Flows
12–46
Ending balance
$15,000
PROBLEM 12-21A (cont.)
(4) Reconciliation of Utilities Payable
Beginning balance
$ 1,400
Increase due to recognizing utilities. exp. on acct.
6,400
Decrease due to cash settlements of utilities pay.
?
= (7,000)
Ending balance
$ 800
(5) Reconciliation of Interest Payable
Beginning balance
$ 1,000
Increase due to recognizing int. exp. on acct.
2,400
Decrease due to cash settlements of int. payable
?
= (3,400)
Ending balance
$ 0
(6) The sales price ($15,200) of the equipment is provided in the
(7) Reconciliation of Notes Receivable
Beginning balance
$16,000
Increase due to loan to borrower
-0-
Decrease due to cash collections from borrower
?
= (16,000)
Ending balance
$ -0-
(8) Reconciliation of Land Account
$30,000
?
= 16,000
Chapter 12 Statement of Cash Flows
12–47
-0-
$46,000
Chapter 12 Statement of Cash Flows
12–48
PROBLEM 12–21A (cont.)
(9) Reconciliation of Notes Payable Account
Beginning balance
$24,000
Increase due to issuing notes payable
-0-
Decrease due to cash settlements of notes
pay.
?
= (24,000)
Ending balance
$ -0-
(10) Reconciliation of Common Stock Account
Beginning balance
$110,000
Increase due to issuing common stock
?
= 40,000
Ending balance
$150,000
(11) The $7,200 cash dividend referenced in the additional
12–49
PROBLEM 12-21A (cont.)
Matrix Shoes
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows from Operating Activities:
Cash receipts from customers (1)
$304,000
Cash Payments for:
Inventory purchased (2)
$(154,400)
Salaries (3)
(83,000)
Utilities (4)
(7,000)
Interest (5)
(3,400)
Total cash outflows
(247,800)
Net cash inflow from operating activities
56,200
Cash Flows from Investing Activities:
Proceeds from sale of equipment (6)
15,200
Proceeds from note collection (7)
16,000
Paid to purchase land (8)
(16,000)
Net cash inflow from investing activities
15,200
Cash Flows from Financing Activities:
Repayment of notes payable (9)
(24,000)
Proceeds from stock issue (10)
40,000
Payment of dividends (11)
(7,200)
Net cash inflow from financing activities
8,800
Net Increase in Cash
80,200
Plus: Beginning Cash Balance
14,100
Ending Cash Balance
$ 94,300
Chapter 12 Statement of Cash Flows
12–50
EXERCISE 12-1B
1.
Subtracted
2.
Not affected (Financing)
3.
Added
4.
Subtracted
5.
Added
6.
Not affected (Financing)
7.
Added
8.
Not affected (Financing)
9.
Added
10.
Added
11.
Not affected (Investing)
12–51
EXERCISE 12-2B
a.
Cash Flows from Operating Activities
Net Income
$41,500
Add: Increase in accounts payable (2)
500
Deduct: Increase in accounts receivable (1)
(2,800)
Net cash inflow from operating activities
$39,200
(1 ) Add decreases and subtract increases in current asset account balances, other than cash, to net
income.
(2) Add increases and subtract decreases in current liability account balances to net income.
b. The increase in the balance in the Accounts Receivable account
suggests that the company did not collect cash for all of the
revenue that was recognized this period. Since the amount of
Chapter 12 Statement of Cash Flows
12–52
EXERCISE 12-3B
Cash Flows from Operating Activities
Net Income
$36,500
Add: Decrease in prepaid rent (1)
250
Decrease in interest receivable (1)
300
Increase in accounts payable (2)
1,700
Increase in unearned revenue (2)
200
Depreciation expense (3)
2,500
Loss on sale of equipment (4)
700
Deduct: Increase in accounts receivable (1)
(3,000)
Decrease in salaries payable (2)
(200)
Gain on sale of land (4)
(900)
Net cash inflow from operating activities
$38,050
(1 ) Add decreases and subtract increases in current asset account balances, other than cash, to net
income.
(2) Add increases and subtract decreases in current liability account balances to net income.
(3) Add noncash expenses (e.g., depreciation) to net income.
(4) Add losses and subtract gains from the sale of noncurrent assets to net income.
12–53
Chapter 12 Statement of Cash Flows
12–54
EXERCISE 12-4B
Reconciliation of Unearned Revenue
Beginning balance
$ 6,000
Increase due to collecting cash in advance
?
= 82,500
Decrease due to recognizing revenue
(84,000)
Ending balance
$ 4,500
Reconciliation of Prepaid Rent
Beginning balance
$3,600
Increase due to the cash payment for rent
?
= 25,600
Decrease due to recognizing rent expense
(24,000)
Ending balance
$5,200
Cash flow from Operating Activities
Receipts from customers
$82,500
Paid for rent
(25,600)
Net cash inflow from operating activities
$56,900
12–55
EXERCISE 12-5B
a.
Reconciliation of Accounts Receivable
Beginning balance
$ 56,000
Increase due to revenue recognized on account
650,000
Decrease due to cash collections from customers
?
= (644,000)
Ending balance
$ 62,000
Reconciliation of Interest Receivable
Beginning balance
$ 6,000
Increase due to interest revenue recognized on
acct.
15,000
Decrease due to cash collections of interest rec.
?
= (13,000)
Ending balance
$ 8,000
Cash Inflows from Operating Activities
Collections from Customers
$644,000
Collections of Interest
13,000
Net cash inflows from operating activities
$657,000
Reconciliation of Other Operating Expenses Payable
Beginning balance
$ 29,000
Increase due to recognizing other oper. exp. on acct.
110,000
Decrease due to settlements for other oper. exp. pay.
?
= (113,000)
Ending balance
$ 26,000
Reconciliation of Salaries Payable
Beginning balance
$ 9,000
Increase due to recognizing salaries expense on acct.
420,000
Decrease due to cash settlements of salaries pay.
?
= (417,000)
Chapter 12 Statement of Cash Flows
12–56
Ending balance
$ 12,000
EXERCISE 12–5B (cont.)
Outflow from Operating Activities
Payment of other operating expenses
$113,000
Payment of salaries
417,000
Net cash outflow from operating activities
$530,000
Chapter 12 Statement of Cash Flows
12–57
EXERCISE 12-6B
a.
Operating Activities – Direct Method
Cash receipts from customers
$2,950
Cash payments for operating expenses
(900)
Net cash inflow from operating activities
$2,050
Operating Activities – Indirect Method
Net income (revenue $3,800 – expenses $1,200)
$2,600
Add: Increase in accounts payable
300
Subtract: Increase in accounts receivable
(850)
Net cash inflow from operating activities
$2,050
12–58
EXERCISE 12-7B
a. Direct Method
Reconciliation of Accounts Receivable
Beginning balance
$72,000
Increase due to revenue recognized on account
420,000
Decrease due to cash collections from cust.
?
= (427,000)
Ending balance
$65,000
Reconciliation of Prepaid Rent
Beginning balance
$ 1,950
Increase due to the cash payment for rent
?
= 51,450
Decrease due to recognizing rent expense
(52,000)
Ending balance
$ 1,400
Reconciliation of Utilities Payable
Beginning balance
$ 3,800
Increase due to recog. utilities exp. on acct.
45,300
Decrease due to cash settlements of utilities
pay.
?
= (45,900)
Ending balance
$ 3,200
Reconciliation of Other Operating Expenses Payable
Beginning balance
$ 31,500
Increase due to recognizing other oper. exp. on
acct.
195,000
Decrease due to cash settlements of other
operating expenses payable
?
= (199,500)
Ending balance
$ 27,000
Chapter 12 Statement of Cash Flows
12–59
EXERCISE 12-7B (cont.)
Cash Flows from Operating Activities
Receipts from customers
$427,000
Paid for rent
(51,450)
Paid for utilities
(45,900)
Paid for operating expenses
(199,500)
Net cash inflow from operating activities
$130,150
2017
2016
Change
Accounts receivable
$65,000
$72,000
(7,000)
Prepaid rent
1,400
1,950
(550)
Utilities payable
3,200
3,800
(600)
Other operating expenses payable
27,000
31,500
(4,500)
Cash Flow From Operating Activities
Net income:
$127,700
Add: Decrease in accounts receivable (1)
7,000
Decrease in prepaid rent (1)
550
Deduct: Decrease utilities payable (2)
(600)
Decrease in operating expenses pay. (2)
(4,500)
Net cash flow from operating activities
$130,150
(1 ) Add decreases and subtract increases in noncash current asset account balances to net income.
(2) Add increases and subtract decreases in current liability account balances to net income.
12–60