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Chapter 12 Statement of Cash Flows
12-95
PROBLEM 12-21B
(1) Reconciliation of Accounts Receivable
Beginning balance
$ 60,000
Increase due to revenue recognized on account
450,000
Decrease due to cash collections from
customers
?
= (438,000)
Ending balance
$ 72,000
(2) Reconciliation of Inventory
Beginning balance
$ 75,000
Increase due to inventory purchases
?
= 223,000
Decrease due to recognizing cost of goods sold
(212,000)
Ending balance
$ 86,000
below.
(2) Continued: Reconciliation of Accounts Payable
Beginning balance
$ 36,200
Increase due to inventory purchases
223,000
Decrease due to cash settlements of accts. pay.
?
= (223,900)
Ending balance
$ 35,300
(3) Reconciliation of Salaries Payable
Beginning balance
$ 15,500
Increase due to recognizing sal. exp. on acct.
96,000
Decrease due to cash settlements of salaries
pay.
?
= (93,300)
Chapter 12 Statement of Cash Flows
12-96
Ending balance
$ 18,200
PROBLEM 12-21B (cont.)
(4) Reconciliation of Utilities Payable
Beginning balance
$ 2,800
Increase due to recognizing utilities. exp. on acct.
7,500
Decrease due to cash settlements of utilities pay.
?
= (8,900)
Ending balance
$ 1,400
(5) Reconciliation of Interest Payable
Beginning balance
$ 1,200
Increase due to recognizing int. exp. on acct.
3,500
Decrease due to cash settlements of int. pay.
?
= (4,100)
Ending balance
$ 600
(6) The sales price ($23,500) of the equipment is provided in the
(7) Reconciliation of Notes Receivable
Beginning balance
$24,000
Increase due to loan to borrower
-0-
Decrease due to cash collections from
borrower
?
= (24,000)
Ending balance
$ -0-
12-97
(8) Reconciliation of Land Account
Beginning balance
$45,000
Increase due to purchasing land
?
= 15,000
Decrease due to selling land
-0-
Ending balance
$60,000
PROBLEM 12-21B (cont.)
(9) Reconciliation of Notes Payable Account
Beginning balance
$36,000
Increase due to issuing notes payable
-0-
Decrease due to cash settlements of notes
pay.
?
= (36,000)
Ending balance
$ -0-
(10) Reconciliation of Common Stock Account
Beginning balance
$100,000
Increase due to issuing common stock
?
= 20,000
Ending balance
$120,000
(11) The $50,000 cash dividend referenced in the additional
Chapter 12 Statement of Cash Flows
12-98
PROBLEM 12-21B (cont.)
Boston Materials, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows from Operating Activities:
Cash receipts from customers (1)
$438,000
Cash payments for:
Inventory purchased (2)
$(223,900)
Salaries (3)
(93,300)
Utilities (4)
(8,900)
Interest (5)
(4,100)
Total cash outflows
(330,200)
Net cash flow from operating activities
107,800
Cash Flows from Investing Activities:
Proceeds from sale of equipment (6)
$23,500
Proceeds from note collection (7)
24,000
Paid to purchase land (8)
(15,000)
Net cash flow from investing activities
32,500
Cash Flows from Financing Activities:
Repayment of debt (9)
$(36,000)
Proceeds from stock issue (10)
20,000
Payment of dividends
(50,000)
Net cash flow from financing activities
(66,000)
Net increase in cash
74,300
Plus: Beginning cash balance
25,400
Ending cash balance
$ 99,700
12-99
ATC 12-1
All dollar amounts are in millions.
a. In 2013 Target’s net income was $3,549 higher than its cash flow
from operating activities ($5,520 − $1,971). In 2012 its net
Chapter 12 Statement of Cash Flows
12-100
ATC 12-2
Dollar amounts in thousands.
a. Tesla Motors reported a net loss and a negative net cash flow
from operating activities in 2011, 2012, and 2013, but its losses
were much worse than its negative cash flows. Net losses for
the three years totaled $804,952 (thousand), while negative cash
12-101
ATC 12-3
Transactions
Effect on
Cash Flow
Cash Received from Sales:
Sales of $1,050,000 − Increase in Accts. Rec. of $18,200
=
$1,031,800
Merchandise Sold $766,500 + Increase in Inv. $14,600=
Merchandise Purchases $781,100
$781,100 + Decrease in Accts. Payable $29,800
=
(810,900)
Operating Expenses Paid: $202,400 − Depr. $90,000
=
(112,400)
Interest Paid
=
(16,000)
1.
Sold Land
=
44,000
2.
Sold Equipment
=
18,000
3.
Purchased Equipment
=
(190,000)
4.
Sold Marketable Securities
=
70,000
5.
Purchased Marketable Securities
=
(104,000)
6.
Paid Loan
=
(20,000)
7.
Paid off Bond Issue
=
(100,000)
Issued New Bonds
=
200,000
8.
Sold Treasury Stock
=
10,000
9.
Issued Common Stock
=
40,000
10.
Issued Preferred Stock
=
17,600
11.
Paid Dividends
=
(38,500)
Change in Cash ($160,200 − $120,600)
=
$ 39,600
Chapter 12 Statement of Cash Flows
12-102
ATC 12-3 (cont.)
Blythe Industries, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows From Operating Activities:
Cash Receipts from:
Sales
$1,031,800
Total Cash Inflows
$1,031,800
Cash Payments for:
Inventory Purchased
(810,900)
Operating Expenses
(112,400)
Interest
(16,000)
Total Cash Outflows
(939,300)
Net Cash Flow from Operating Activities
92,500
Cash Flows From Investing Activities:
Proceeds from Sale of Land
44,000
Proceeds from Sale of Equipment
18,000
Proceeds from Sale of Marketable Securities
70,000
Paid to Purchase Marketable Securities
(104,000)
Paid to Purchase Equipment
(190,000)
Net Cash Flow from Investing Activities
(162,000)
Cash Flows From Financing Activities:
Proceeds from Common Stock Issue
40,000
Proceeds from Preferred Stock Issue
17,600
Proceeds from Sale of Treasury Stock
10,000
Proceeds from Bonds Issue
200,000
Repayment of Loan
(20,000)
Repayment of Bonds
(100,000)
Payment of Dividends
(38,500)
Net Cash Flow from Financing Activities
109,100
Net Increase in Cash
39,600
Plus: Beginning Cash Balance
120,600
Chapter 12 Statement of Cash Flows
12-103
Ending Cash Balance
$ 160,200
ATC 12-3 (cont.)
Class Discussion:
a. Cost per share of the treasury stock was $100 ($10,000 100
shares).
12-104
ATC 12-4
This is a writing assignment that will help the students to understand
Chapter 12 Statement of Cash Flows
12-105
ATC 12-5
Some of the points the student should note are:
Inventory has more than doubled and must be paid for. However, it is
difficult to tell whether sales have increased proportionately to the
increase in inventory. If sales have not increased enough, the company
12-106
ATC 12-6
a.
Crocket Apartments
Statement of Cash Flows
For the year ended December 31, 2016
Cash Flows from Operating Activities
Receipts from Rent Revenue ($580,000 − $4,000)
$576,000
Paid for Interest ($184,000 − $6,000)
(178,000)
Paid for Operating Activities ($88,000 + $2,000)
(90,000)
Paid for Management Fees
(56,000)
Net Cash from Operating Activities
$252,000
Cash Flows from Investing Activities
Paid to Purchase Computer
(24,000)
Cash Flows from Financing Activities
Repayment of Loan
(150,000)
Paiyment for Distribution
(20,000)
Net Cash Flow from Financing Activities
(170,000)
Net Change in Cash
58,000
b. Clearly, the apartment complex is generating a positive cash
flow. If Ms. Crocket keeps the apartments, she will have more,
not less, money to spend. Also, Ms. Crocket should consider
quitting her own job thereby having time to manage the
Chapter 12 Statement of Cash Flows
12-107
ATC 12-7
This solution is based on the company’s From10-K for the fiscal year
ended February 1, 2014 (2013). Dollar amounts are in millions.
($329). It also borrowed more money issuing new long-term
($378).
