© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
6.35 a. continued.
Accumulated Depreciation-
B
u
il
d
i
n
g
s
a
n
d
M
a
c h
i n
e
r
y
B
u
il
d
i
n
g
s
a
n
d
M
a
c h
i n
e
r
y
√ 8,678 3,974 √
(7) 1,018 150 (4) (4) 120 510 (3)
√ 9,546 4,364 √
L
a
n
d
A
cc
o
u n
t
s P
ay
a
b
l
e
√ 594 412 √
(8) 36 146 (9)
√ 630 558 √
T
ax
es P
ay
a
b
l
e
O
t
h
e
r S h
o
r
t
–
T e r
m
P
aya
b
l
e
s
274 √ 588 √
16 (10) 138 (11)
290 √ 726 √
B
o n
d
s P
aya
b
l
e
C
o
m
m
on S
t
o c k
1,984 √ 1,672 √
(12) 50 32 (13)
1,934 √ 1,704 √
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
2,676 √
(2) 60 568 (1)
3,184 √
b. Dickerson Manufacturing Company is capital intensive. Its cash flow from
operations exceeds net income because of the depreciation expense addback.
Cash flow from operations appears substantial, but so are its expenditures for
building and equipment. The firm’s relatively low dividend payout rate suggests
that it expects large capital expenditures to continue.
6-27Solutions
6.36 (GTI,
Inc.; preparing direct method of deriving cash flow from operations from data in published
report.) (amounts in thousands of US$)
a.T-Account Work Sheet for 2012
C
a
s h
√ 430
O
p
e
r
a
t
i
on
s
Net Income (1) 417 168 (3) Increase in
Depreciation Expense (6) 641 Accounts
Amortization Expense (8) 25 Receivable
632 (4) Increase in
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
(15) 289
(16) 9
√
475
I
n
ve
n
t
ories
154 (5) Increase in
Pr
epaym
en
t
s
769 (10) Decrease in
Accounts
P
ayab
l
e
299 (12) Decrease in Other
Current Liabilities
37 (14) Decrease in Other
Noncurrent
Liabilities
I
n
v
es
t
i
n
g
1,433 (7) Acquisition of
Property, Plant,
and Equipment
391 (9) Acquisition of
P
at
en
t
Fi
n
a
ncin
g
Issue of Notes Payable (11) 220 12 (2) Dividends Paid
Increase in Long-Term
Debt (13) 2,339
Increase in Preferred
Stock
Increase in Common
Stock
Solutions 6-28
6.36 a. continued.
A
cc
o
u n
t
s
R
e c e i
va
b
l
e
I
n
v
e
n
t
o r i
es
√ 3,768 √ 2,334
(3) 168 (4) 632
√ 3,936 √ 2,966
Property,
Pl
a
n
t
,
P r
e
p
a
y
m
e n
t
s
a
n
d
E
q
u
i
p
m
e n
t
(
N
e
t
)
√ 116 √ 3,806
(5) 154 (7) 1,433 641 (6)
√ 270 √ 4,598
O
t
h
e
r N
o
n c u rr
e
n
t
A
ss
e
t
s
A
cc
o
u n
t
s P
ay
a
b
l
e
√ 193 1,578 √
(9) 391 25 (8) (10) 769
√ 559 809 √
N
o
t
e
s P
ay
a
b
l
e
t
o
B
a
n k
s
O
t
h
e
r
C
u r r
e
n
t
L i
ab
i
li
t
i
e
s
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
11 √ 1,076
√
220 (11) (12) 299
231 √ 777 √
L
o
n
g
–
T
e
r
m
D
e
b
t
O
t
h
e
r N
o
n c u rr
e
n
t
L i
ab
i
li
t
i
e
s
2,353 √ 126 √
2,339 (13) (14) 37
4,692 √ 89 √
P r
e
f
e
rr
ed
S
t
o c k
C
o
m
m
on S
t
o c k
0 √ 83
√
289 (15) 2 (16)
289 √ 85 √
6-29Solution6.36 a. continued.
A
dd
i
t
i
o n
a
l
P
a
i
d
–
I
n
C
ap
i
t
a
l
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
4,385 √ 1,035 √
7 (16) (2) 12 417 (1)
4,392 √ 1,440 T-
Account Work Sheet for 2013
C
a
s h
√ 475
O
p
e
r
a
t
i
on
s
Decrease in Accounts 2,691 (1) Net Loss
Receivable (3) 1,391 13 (10) Decrease in
Decrease in Inventories (4) 872 Accounts Payable
Decrease in Prepay- (Inventory)
ments (5) 148 82 (12) Decrease in
Depreciation Expense (6) 625 Other Current
Amortization Expense (8) 40 Liabilities
Increase in Other Non-
current Liabilities (14) 24
I
n
v
es
t
i
n
g
Sale of Patents (9) 63 54 (7) Acquisition of
Property, Plant,
and Equipment
Fi
n
a
ncin
g
Issue of Notes Payable 8 (2) Dividends Paid
to Banks (11) 2,182 2,608 (13) Decrease in Long-
Increase in Common Term Debt
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Stock (15) 3
√ 367
Solutions 6-30
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
(15) 289
(16) 9
√
475
I
n
ve
n
t
ories
154 (5) Increase in
Pr
epaym
en
t
s
769 (10) Decrease in
Accounts
P
ayab
l
e
299 (12) Decrease in Other
Current Liabilities
37 (14) Decrease in Other
Noncurrent
Liabilities
I
n
v
es
t
i
n
g
1,433 (7) Acquisition of
Property, Plant,
and Equipment
391 (9) Acquisition of
P
at
en
t
Fi
n
a
ncin
g
Issue of Notes Payable (11) 220 12 (2) Dividends Paid
Increase in Long-Term
Debt (13) 2,339
Increase in Preferred
Stock
Increase in Common
Stock
Solutions 6-28
6.36 a. continued.
A
cc
o
u n
t
s
R
e c e i
va
b
l
e
I
n
v
e
n
t
o r i
es
√ 3,768 √ 2,334
(3) 168 (4) 632
√ 3,936 √ 2,966
Property,
Pl
a
n
t
,
P r
e
p
a
y
m
e n
t
s
a
n
d
E
q
u
i
p
m
e n
t
(
N
e
t
)
√ 116 √ 3,806
(5) 154 (7) 1,433 641 (6)
√ 270 √ 4,598
O
t
h
e
r N
o
n c u rr
e
n
t
A
ss
e
t
s
A
cc
o
u n
t
s P
ay
a
b
l
e
√ 193 1,578 √
(9) 391 25 (8) (10) 769
√ 559 809 √
N
o
t
e
s P
ay
a
b
l
e
t
o
B
a
n k
s
O
t
h
e
r
C
u r r
e
n
t
L i
ab
i
li
t
i
e
s
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
11 √ 1,076
√
220 (11) (12) 299
231 √ 777 √
L
o
n
g
–
T
e
r
m
D
e
b
t
O
t
h
e
r N
o
n c u rr
e
n
t
L i
ab
i
li
t
i
e
s
2,353 √ 126 √
2,339 (13) (14) 37
4,692 √ 89 √
P r
e
f
e
rr
ed
S
t
o c k
C
o
m
m
on S
t
o c k
0 √ 83
√
289 (15) 2 (16)
289 √ 85 √
6-29Solution6.36 a. continued.
A
dd
i
t
i
o n
a
l
P
a
i
d
–
I
n
C
ap
i
t
a
l
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
4,385 √ 1,035 √
7 (16) (2) 12 417 (1)
4,392 √ 1,440 T-
Account Work Sheet for 2013
C
a
s h
√ 475
O
p
e
r
a
t
i
on
s
Decrease in Accounts 2,691 (1) Net Loss
Receivable (3) 1,391 13 (10) Decrease in
Decrease in Inventories (4) 872 Accounts Payable
Decrease in Prepay- (Inventory)
ments (5) 148 82 (12) Decrease in
Depreciation Expense (6) 625 Other Current
Amortization Expense (8) 40 Liabilities
Increase in Other Non-
current Liabilities (14) 24
I
n
v
es
t
i
n
g
Sale of Patents (9) 63 54 (7) Acquisition of
Property, Plant,
and Equipment
Fi
n
a
ncin
g
Issue of Notes Payable 8 (2) Dividends Paid
to Banks (11) 2,182 2,608 (13) Decrease in Long-
Increase in Common Term Debt
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Stock (15) 3
√ 367
Solutions 6-30