Chapter 11 – Statement of Cash Flows
Exercise 11-15 (LO 11-7)
Peach Computer
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Cash received from customers
$2,058,000
Net sales
+ Decrease in accounts receivable
= Cash received from customers
+ Increase in inventory
= Purchases
= Cash paid to suppliers
Operating expenses
= Cash paid for operating expenses
Income tax expense
= Cash paid for income taxes
Chapter 11 – Statement of Cash Flows
Exercise 11-16 (LO 11-7)
Net sales
$3,200,000
− Increase in accounts receivable
(55,000)
$3,145,000
Cost of goods sold
$2,000,000
Income tax expense
Exercise 11-17 (LO 11-7)
1.
($ in millions)
Net sales
$91,758
2.
Cost of goods sold
$69,278
$72,128
Exercise 11-18 (LO 11-7)
Requirement 1
Situation
Sale
Revenue
Accounts Receivable
Increase (Decrease)
Cash Received
from Customers*
1.
2.
3.
Requirement 2
1.
Cash
200
Sales Revenue
200
2.
Cash
170
Accounts Receivable
30
Sales Revenue
3.
Cash
230
Accounts Receivable
30
Sales Revenue
Chapter 11 – Statement of Cash Flows
11–24 Financial Accounting, 5e
Exercise 11-19 (LO 11-7)
Requirement 1
Sit.
Cost of
Goods Sold
Inventory
Increase (Decrease)
Accounts Payable
Increase (Decrease)
Cash Paid
to Suppliers
1.
150
25
20
155
2.
150
20
105
3.
150
25
195
* Cash paid to suppliers = Cost of goods sold
+ Increase in Inventory
Requirement 2
1.
Cost of Goods Sold
150
Inventory
25
Accounts Payable
20
Cash
155
2.
Cost of Goods Sold
150
25
Accounts Payable
Cash
3.
Cost of Goods Sold
150
Inventory
25
Accounts Payable
20
Cash
4.
Cost of Goods Sold
150
Accounts Payable
Inventory
Cash
Chapter 11 – Statement of Cash Flows
Exercise 11-20 (LO 11-7)
Requirement 1
Sit.
Operating
Expenses
Prepaid Insurance
Increase (Decrease)
Salaries Payable
Increase (Decrease)
Cash Paid for
Operating Expenses
* Cash paid for operating expenses = Operating expenses
Requirement 2
1.
Operating Expenses
100
Prepaid Insurance
15
Salaries Payable
10
Cash
105
2.
Operating Expenses
100
15
Salaries Payable
Cash
3.
Operating Expenses
100
Prepaid Insurance
15
Salaries Payable
10
Cash
4.
Operating Expenses
100
Salaries Payable
10
Prepaid Insurance
Cash
Chapter 11 – Statement of Cash Flows
PROBLEMS: SET A
Problem 11-1A (LO 11-1)
Type of
Activity
Cash Inflow
or Outflow
Transaction
O
CO
1. Payment of employee salaries.
I
CI
2. Sale of land for cash.
O
CO
3. Purchase of rent in advance.
O
CI
4. Collection of an account receivable.
CI
5. Issuance of common stock.
O
CO
6. Purchase of inventory.
I
CI
7. Collection of notes receivable.
O
CO
8. Payment of income taxes.
9. Sale of equipment for a note receivable.
CI
10. Issuance of bonds.
I
CO
11. Loan to another company.
CO
CO
13. Purchase of treasury stock.
O
CO
14. Payment of an account payable.
I
CI
15. Sale of equipment for cash.
Chapter 11 – Statement of Cash Flows
Problem 11-2A (LO 11-1, 11-3, 11-4, 11-5)
ATM Software Developers
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Net income
$12,400
Adjustments to reconcile net income to net
Cash Flows from Investing Activities
Cash received from sale of land
8,650
Purchase of equipment
(39,865)
Net cash flows from investing activities
(31,215)
Cash Flows from Financing Activities
Issuance of common stock
13,075
Issuance of long-term notes payable
Payment of dividends
Purchase of treasury stock
Net increase (decrease) in cash
Cash at the beginning of the period
Cash at the end of the period
Chapter 11 – Statement of Cash Flows
11–28 Financial Accounting, 5e
Problem 11-3A (LO 11-4)
Alliance Technologies
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Net income
$56,000
Adjustments to reconcile net income to net
Chapter 11 – Statement of Cash Flows
Problem 11-4A (LO 11-2, 11-3, 11-4, 11-5)
Video Phones, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Net income
$104,000
37,000
40,000
Adjustments to reconcile net income to net
Cash Flows from Investing Activities
Purchase investment in bonds
(115,000)
Proceeds from sale of land
Cash Flows from Financing Activities
Payment of cash dividends
(30,000)
Net increase (decrease) in cash
Cash at the beginning of the period
Cash at the end of the period
Note: Noncash Activities
Purchase equipment issuing a note payable
11–30 Financial Accounting, 5e
Problem 11-5A (LO 11-6)
Requirement 1
($ in millions)
Net Income
÷
Average
Total Assets
=
Return
on Assets
Requirement 2
($ in millions)
Operating
Cash Flows
÷
Average
Total Assets
=
Cash Return
on Assets
Requirement 3
($ in millions)
Operating
Cash Flows
÷
Net Sales
=
Cash Flow
to Sales
($ in millions)
÷
Total Assets
=
Requirement 4
Cyberdyne has a better return on assets, cash return on assets, cash flow to sales, and
asset turnover.
Chapter 11 – Statement of Cash Flows
*Problem 11-6A (LO 11-7)
Alliance Technologies
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Cash received from customers
$412,000
Net sales
+ Decrease in accounts receivable
= Cash received from customers
Cost of goods sold
+ Increase in inventory
= Purchases
= Cash paid to suppliers
Operating expenses
= Cash paid for operating expenses
Income tax expense
= Cash paid for income taxes
Chapter 11 – Statement of Cash Flows
11–32 Financial Accounting, 5e
*Problem 11-7A (LO 11-7)
Video Phones, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Cash received from customers
$3,614,000
Net cash flows from operating activities
Cash Flows from Investing Activities
Purchase investment in bonds
(115,000)
Proceeds from sale of land
31,000
Net cash flows from investing activities
(84,000)
Cash Flows from Financing Activities
Payment of cash dividends
(30,000)
Net cash flows from financing activities
Net increase (decrease) in cash
Cash at the beginning of the period
Cash at the end of the period
Note: Noncash Activities
Purchase equipment issuing a note payable
$70,000
Chapter 11 – Statement of Cash Flows
Net sales
− Increase in accounts receivable
= Cash received from customers
Cost of goods sold
− Decrease in inventory
= Purchases
= Cash paid to suppliers
Operating expenses
= Cash paid for operating expenses
Interest expense
= Cash paid for interest
Income tax expense
− Increase in income tax payable
= Cash paid for income taxes
Chapter 11 – Statement of Cash Flows
11–34 Financial Accounting, 5e
*Problem 11-8A (LO 11-3, 1-7)
Reverse Logic
Income Statement
For the Year Ended December 31, 2021
Net sales
$4,108
Expenses:
Cost of goods sold
$2,624
Operating expenses
Depreciation expense
Income tax expense
Net Income
Net sales
$4,108
− Increase in accounts receivable
(38)
= Cash received from customers
$4,070
Cost of goods sold
− Decrease in inventory
(50)
= Purchases
= Cash paid to suppliers
Operating expenses
= Cash paid for operating expenses
Income tax expense
= Cash paid for income taxes
Chapter 11 – Statement of Cash Flows
PROBLEMS: SET B
Problem 11-1B (LO 11-1)
Type of
Activity
Cash Inflow
or Outflow
Transaction
F
CI
1. Issue common stock.
I
CI
2. Sale of land for cash.
F
CO
3. Purchase of treasury stock.
O
CI
4. Collection of an account receivable.
F
CI
5. Issuance of a note payable.
O
CO
6. Purchase of inventory.
7. Repayment of note payable.
O
CO
8. Payment of employee salaries.
F
CI
10. Issuance of bonds.
CO
11. Investment in bonds.
12. Payment of interest on bonds payable.
F
CO
13. Payment of a cash dividend.
CO
14. Purchase of a building.
CI
15. Collection of a note receivable.
Chapter 11 – Statement of Cash Flows
11–36 Financial Accounting, 5e
Problem 11-2B (LO 11-1, 11-3, 11-4, 11-5)
CPU Hardware Designers
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Net income
$ 80,000
30,000
8,000
11,000
Adjustments to reconcile net income to net
Cash Flows from Investing Activities
Cash received from sale of land
4,000
Purchase of equipment
(230,000)
Net cash flows from investing activities
(226,000)
Cash Flows from Financing Activities
Issuance of common stock
300,000
Payment of dividends
Repayment of notes payable
Net cash flows from financing activities
Net increase (decrease) in cash
Cash at the beginning of the period
Cash at the end of the period
Chapter 11 – Statement of Cash Flows
Problem 11-3B (LO 11-3)
Software Associates
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flows from Operating Activities
Net income
$78,000
Adjustments to reconcile net income to net