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BRIEF EXERCISE 13-5
Cash flows from operating activities
Net income ............................................................ $280,000
Adjustments to reconcile net income
BRIEF EXERCISE 13-6
Net income .................................................................... $300,000
Adjustments to reconcile net income to net
cash provided by operating activities
Decrease in accounts receivable ......................... $ 80,000)
BRIEF EXERCISE 13-7
Original cost of equipment sold .................................. $22,000
BRIEF EXERCISE 13-8
BRIEF EXERCISE 13-9
BRIEF EXERCISE 13-10
BRIEF EXERCISE 13-11
Free cash flow is cash provided by operations less capital expenditures and cash
dividends paid. For Morrow Inc. this would be $384,000 ($734,000 – $280,000 –
*BRIEF EXERCISE 13-12
+ Decrease in accounts receivable
Receipts from
customers
=
Sales
revenues
– Increase in accounts receivable
*BRIEF EXERCISE 13-13
+ Decrease in income taxes payable
Cash payment
for income taxes
=
Income Tax
Expense
– Increase in income taxes payable
*BRIEF EXERCISE 13-14
+ Increase in prepaid expenses
Cash
payments for
operating
expenses
=
Operating
expenses,
excluding
depreciation
– Decrease in prepaid expenses
and
+ Decrease in accrued expenses payable
– Increase in accrued expenses payable
$69,000 = $80,000 – $6,600 – $4,400
*BRIEF EXERCISE 13-15
Balance
1/1/15
Reconciling Items
Balance
12/31/15
Balance Sheet Accounts
Debit
Credit
Prepaid expenses
Accrued expenses payable
18,600
8,200
(a) 5,600
(b) 2,400
13,000
10,600
Statement of Cash Flow Effects
Operating activities
Decrease in prepaid expenses
Increase in accrued expenses
payable
(a) 5,600
(b) 2,400
8,000
0,000
8,000
SOLUTIONS TO DO IT! REVIEW EXERCISES
DO IT! 13-1
DO IT! 13-2
Cash flows from operating activities
Net income ............................................................. $130,000
Adjustments to reconcile net income to net
cash provided by operating activities:
DO IT! 13-3
(b) Cash provided by operating activities fails to take into account that a
SOLUTIONS TO EXERCISES
EXERCISE 13-1
EXERCISE 13-2
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Operating activity.
Noncash investing and
financing activity.
Investing activity.
Financing activity.
Operating activity.
Operating activity.
Operating activity.
Financing activity.
(i)
(j)
(k)
(l)
(m)
(n)
Operating activity.
Noncash investing and financing
activity.
Investing activity.
Noncash investing and financing
activity.
Operating activity (loss); investing
activity (cash proceeds from sale).
Financing activity.
EXERCISE 13-3
1. (a) Cash ........................................................... 15,000
2. (a) Cash ........................................................... 20,000
3. (a) Depreciation Expense .............................. 17,000
section.
EXERCISE 13-3 (Continued)
4. (a) Salaries and Wages Expense ............................... 9,000
the statement of cash flows.
5. (a) Equipment .............................................................. 8,000
statement of cash flows.
6. (a) Cash ....................................................................... 1,200
EXERCISE 13-4
GUTIERREZ COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities
Net income .............................................................. $225,000
Adjustments to reconcile net income to net
cash provided by operating activities
EXERCISE 13-5
SCOGGIN INC.
Partial Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities
Net income .......................................................... $153,000
Adjustments to reconcile net income to net
cash provided by operating activities
EXERCISE 13-6
HERRICK CORP
Partial Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities
Net income ....................................................... $ 77,000)
Cash flows from investing activities
Sale of equipment ............................................ 12,000*
Cash flows from financing activities
*Cost of equipment sold .................................. $ 49,000)
EXERCISE 13-7
(a) ROJAS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities
Net income .......................................................... $ 22,630)
Adjustments to reconcile net income
Cash flows from investing activities
Cash flows from financing activities
Net increase in cash ................................................. 3,600
EXERCISE 13-8
VELO COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities
Net income .................................................. $93,000)
Adjustments to reconcile net income
Cash flows from investing activities
Cash flows from financing activities
Issuance of common stock ....................... 42,000)
