© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Appendix 14A 51
Exercise 14A-3 (15 minutes)
Sales ……………………………………………….. $275
A
d
j
ustments to a cash basis:
Decrease in accounts receivable ………… + 2 $277
Cost of
g
oods sold ………………………………. 150
A
j
–
A
j
–
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52 Managerial Accounting, 16th Edition
Exercise 14A-4 (15 minutes)
Sales …………………………………………………… $ 350,000
A
d
j
ustments to a cash basis:
Increase in accounts receivable ……………..
–
19,000 $331,000
A
j
–
A
j
–
–
A
j
–
Note that the $21,000 above agrees with the amount provided by
operating activities under the indirect method in Exercise 14-2.
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Appendix 14A 53
Problem 14A-5 (45 minutes)
1.
T
he income statement ad
j
usted to a cash basis:
Sales ………………………………………………… $500,000
A
d
j
ustments to a cash basis:
Increase in accounts receivable…………..
–
40,000 $460,000
–
A
j
–
–
A
j
–
A
j
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54 Managerial Accounting, 16th Edition
Problem 14A-5 (continued)
2. Rusco Company
Statement of Cash Flows
For
T
his
Y
ear Ended July 31
Operatin
g
activities
:
Cash received from customers ……………………. $460,000
Less cash disbursements for:
T
A
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Appendix 14A 55
Problem 14A-5 (continued)
3. There are two reasons for the sharp decline in cash. First, note that a
relatively small amount of cash was provided by operations during the
Second, the company paid out in dividends half of the cash provided by
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
56 Managerial Accounting, 16th Edition
Problem 14A-6 (30 minutes)
1. Sales …………………………………………………………. $800
A
d
j
ustments to a cash basis:
Increase in accounts receivable…………………….
–
100 $700
–
–
A
j
–
A
j
–
A
j
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Appendix 14A 57
Problem 14A-6 (continued)
2. Weaver Company
Statement of Cash Flows
For
T
his
Y
ear Ended December 31
Operatin
g
activities
:
Cash received from customers …………………………… $700
Less cash disbursements for:
T
A
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
58 Managerial Accounting, 16th Edition
Problem 14A-7 (45 minutes)
1. Sales …………………………………………………… $900,000
A
d
j
ustments to a cash basis:
A
j
–
A
j
–
–
A
j
–
–
© The McGraw-Hill Companies, Inc., 2018. All rights reserved.
Solutions Manual, Appendix 14A 59
Problem 14A-7 (continued)
2. Joyner Company
Statement of Cash Flows
For Year 2
Operatin
g
activities
:
Cash received from customers …………………….. $820,000
Less cash disbursements for:
3. The decline in cash occurs largely because the company only generated
$20,000 from operating activities. This small amount is due primarily to