Exercise 21–15
Wilson would report the $3,000,000* investment in the commercial food
The $391,548 ($195,774* + 195,774**) cash lease payments are divided into
Note: By the indirect method of reporting cash flows from operating
activities, Wilson would add back to net income the $150,000
depreciation expense since depreciation didn’t actually reduce cash.
The $84,127 interest expense that reduced net income actually did
reduce cash [the interest portion of the $391,548 ($195,774 x 2) cash
lease payments], so for interest, no adjustment to net income is
necessary.
Exercise 21–15 (concluded)
Calculations:
September 30, 2018*
……………………….Lease payable (calculated below)
…………………………………….Cash (rental payment)
Note:
……………………………….t Present value of an annuity due of $1: n = 20, i = 3% (from Table 6)
December 31, 2018**
…………………………………………Cash (lease payment)
…………………………………………..Right-of-use asset
Exercise 21–16
Investing Activities:
Beilich would report the $600 million investment as a cash outflow among
investing activities in its statement of cash flows.
Operating Activities:
By the direct method of reporting cash flows from operating activities, Beilich
By the indirect method of reporting cash flows from operating activities, Beilich
Exercise 21–17
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income $50,000
Adjustments for noncash effects:
Changes in operating assets and liabilities:
Net cash flows from operating activities $60 ,200
($ in millions)
Net income closed to retained earnings
The operating activities summarized by this transaction are identified
individually when we explain the changes in the components of net
income. But including the entry on the spreadsheet is helpful in partially
explaining the change in retained earnings.
Exercise 21–18
Cash dividend
This transaction identifies a $25 million cash outflow from financing
activities.
Stock dividend
This transaction does not represent a significant investing or financing
Property dividend
This noncash transaction identifies both a $12 million financing activity
Exercise 21–18 (concluded)
Sale of treasury shares
*This transaction identifies a $43 million cash inflow from financing
activities.
Income Statement
Sales $600a
Cost of goods sold 360b
Salaries expense 78c
Exercise 21–19
f Depreciation expense and the loss on sale of land are noncash reductions in
income.
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 26
Adjustments for noncash effects:
Changes in operating assets and liabilities:
Increase in accounts receivable (54)
Exercise 21–20
Requirement 1:
b. Summary Entry Cost of goods sold 185
Depreciation expense and the loss on sale of land are not cash outflows.
Requirement 2:
Cash Flows from Operating Activities:
Cash received from customers $311
Exercise 21–21
Net cash flows from
operating activities $ 57
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,000)
Adjustments for noncash effects:
Changes in operating assets and liabilities:
Increase in salaries payable 500
Exercise 21–22