Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
797
Exercise 12-16A (30 minutes)
SCORETECK CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2021
December
31, 2020
December
31, 2021
Debit
Credit
Balance sheet—debit bal. accounts
Cash ……………………………………………..
$ 80,000
$ 70,000
Inventory ……………………………………….
$ 30,000
Plant assets …………………………………..
600,000
690,000
Balance sheet—credit bal. accounts
Accum. depreciation—Plant assets .
$ 100,000
(c)
70,000
$ 170,000
Notes payable ……………………………….
(e)
20,000
Common stock ……………………………..
$1,150,000
Statement of cash flows
Operating activities
Net income ……………………………………
(a)
100,000
Increase in accounts receivable …..
(f)
50,000
Decrease in inventory …………………..
(g)
Decrease in accounts payable ……..
10,000
Depreciation expense …………………..
(c)
Investing activities
90,000
Financing activities
Cash paid for dividends ………………..
Cash from issuance of notes………..
(e)
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Exercise 12-17B (15 minutes)
Statement of Cash Flows
Noncash
Operating
Activities
Investing
Activities
Financing
Activities
Investing &
Financing
Activities
Not Reported
on Statement
or in Notes
a. Retired long-term notes
payable by issuing stock
X
b. Paid cash toward accounts
payable
X
assets
f. Recorded depreciation
expense
X
g. Paid cash to acquire
treasury stock
X
799
Exercise 12-18B (15 minutes)
Case X:
Sales revenue ……………………………………….
$515,000
Accounts receivable, Beg. bal. ………………
$ 27,200
Accounts receivable, End. bal. ………………
(33,600)
Less increase in accounts receivable ……
Cash received from customers ……………..
$508,600
Rent payable, Beg. bal. …………………………
Rent payable, End. bal. …………………………
Plus decrease in rent payable ……………….
Cash paid for rent …………………………………
Case Z:
Cost of goods sold ……………………………….
$525,000
Inventory, End. bal. ……………………………….
$130,400
Inventory, Beg. bal. ……………………………….
(158,600)
Less decrease in inventory ……………………
Cost of goods purchased ……………………..
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Exercise 12-19B (40 minutes)
Part 1
IKIBAN, INC.
Statement of Cash Flows (Direct Method)
For Year Ended June 30, 2021
Cash flows from operating activities
Cash received from customers (Note 1) ………….
$664,000
Cash paid for inventory (Note 2) ……………………..
Cash paid for income taxes (Note 4) ……………….
Net cash provided by operating activities ……….
Cash flows from investing activities
Cash received from sale of equip. (Note 5) ……..
10,000
Cash paid for equipment (Note 5—given) ………..
(57,600)
Net cash used in investing activities……………….
(47,600)
Cash flows from financing activities
Cash received from stock issuance ………………..
60,000
Cash paid to retire notes (Note 6) ……………………
Cash paid for dividends (Note 7) …………………….
(90,310)
Net cash used in financing activities ………………
Net increase in cash ………………………………………….
Cash balance at prior year-end ………………………….
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
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Exercise 12-19B (continued)
Notes
(1)
Sales …………………………..………………………………………………………………..
$678,000
Less increase in accounts receivable …………………………..…………………
(14,000)
Cash received from customers ………………………………………………………
$664,000
(2)
Cost of goods sold ………………………………………………………………………..
$411,000
Less decrease in inventory…………………………………………………………….
(22,700)
Purchases …………………………………………………………………………………….
Plus decrease in accounts payable ………………………………………………..
5,000
Cash paid for inventory …………………………………………………………………
$393,300
(3)
Other operating expenses ……………………………………………………………..
$ 67,000
Plus decrease in wages payable …………………………………………………….
9,000
Less decrease in prepaid expenses ………………………………………………..
(1,000)
Cash paid for other operating expenses …………………………………………
$ 75,000
(4)
Income taxes expense …………………………………………………………………..
$ 43,890
Plus decrease in income taxes payable…………………………………………..
400
Cash paid for income taxes ……………………………………………………………
$ 44,290
(5)
Cost of equipment sold (Given) ……………………………………………………..
$ 48,600
Accumulated depreciation of equipment sold* ………………………………..
(40,600)
Book value of equipment sold ………………………………………………………..
8,000
Gain on sale of equipment ……………………………………………………………..
2,000
Cash receipt from sale of equipment ………………………………………………
$ 10,000
Cost of equipment sold ………………………………………………………………….
$ 48,600
Plus net increase in the equipment account balance ……………………….
9,000
Cash paid for new equipment (given) ……………………………………………..
$ 57,600
Equipment
Accumulated Depreciation, Equipment
Bal., 6/30/2020
115,000
Bal., 6/30/2020
9,000
Purchase
Sale 48,600
Sale *40,600
Depr. Expense
Bal., 6/30/2021
124,000
Bal., 6/30/2021
(6)
Carrying value of notes retired ……………………………………………………….
$ 30,000
Cash payment to retire notes …………………………..…………………………….
$ 30,000
(7)
Retained Earnings
Bal., 6/30/2020
24,100
Dividends (plug)
Net income
99,510
Bal., 6/30/2021
33,300
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Exercise 12–20B (20 minutes)
Cash flows from operating activities
Receipts from customers (see note a) ………………………………..
$1,797,500
Payments for inventory (see note b) …………………………………..
Payments for salaries (see note c) ……………………………………..
Payments for rent …………………………………………………………….
Note a: Sales – Increase in receivables
$1,828,000 – $30,500 = $1,797,500
$991,000 + $25,000 + $12,500 = $1,028,500
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
Exercise 12–21B (20 minutes)
FERRON COMPANY
Statement of Cash Flows
For Year Ended December 31
Cash flows from operating activities
Receipts from customers …………………………..……
$ 495,000
Receipts of interest …………………………………………
3,500
Payments for inventory …………………………………..
Payments for salaries ……………………………………..
Payments for other expenses ………………………….
(20,000)
Net cash provided by operating activities ………..
Cash flows from investing activities
Receipt from sale of equipment ……………………….
60,250
Payment for store equipment …………………………..
(24,750)
Net cash provided by investing activities …………
35,500
Cash flows from financing activities
Payment to retire long-term notes payable ………
Payment of cash dividends ……………………………..
(10,000)
Net cash used in financing activities ……………….
Net increase in cash and cash equivalents …………
Note No. ___
Noncash investing and financing activities
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
Exercise 12-22B (40 minutes)
1.
THOMAS CORPORATION
Statement of Cash Flows
For Year Ended December 31
Cash flows from operating activities
Cash received from customers …………………………...
$5,000,000
Cash received from dividends ……………………………..
208,400
Cash paid for inventory ……………………………………….
(2,590,000)
Cash paid for wages ……………………………………………
Cash paid for rent ……………………………………………….
Cash paid for interest ………………………………………….
Cash paid for taxes ……………………………………………..
(450,000)
Net cash provided by operating activities …………….
Cash flows from investing activities
Cash paid for purchases of machinery ………………..
(2,236,000)
Cash paid for purchases of stock investments …….
(1,260,000)
Cash received from sale of land …………………………..
220,000
Cash received from sale of machinery …………………
710,000
Net cash used in investing activities ……………………
(2,566,000)
Cash flows from financing activities
Cash received from issuing stock ……………………….
Cash received from borrowing …………………………….
Cash paid for long-term notes payable ………………..
Cash paid for dividends ………………………………………
Cash paid for treasury stock purchases. ……………..
(218,000)
Net cash provided by financing activities …………….
Net increase in cash ……………………………………………..
Beginning balance of cash ……………………………………
2.
a. (i) Financing section reported the largest cash inflow of $4,036,000.
(ii) Investing section reported the largest cash outflow of $2,566,000.
b. The largest individual item among the investing cash outflows is the purchase
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
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PROBLEM SET A
Problem 12-1A (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Indirect Method
For Current Year Ended December 31
Cash flows from operating activities
Net income ……………………………………………………….………..
$ 6,000
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
)
)
)
Net cash provided by operating activities ……………………
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
Problem 12-2AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Current Year Ended December 31
Cash flows from operating activities
Cash receipts from customers (1) ………………………………………….
$ 97,400
)
)
)
)
)
)
Supporting calculations
(1) Sales + Decrease in receivables = $97,200 + ($5,800 – $5,600) = $97,400
(2) Cost of Increase in Decrease in
goods sold inventory accts payable =
$42,000 + ($1,980 – $1,540) + ($4,600 – $4,400) = $42,640
+
+
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Problem 12-3A (50 minutes)
Part 1
FORTEN COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income ………………………………………………………………………
$114,975
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense ………………………………………………….
20,750
Loss on disposal of equipment …………………………………..
Increase in inventory ($275,656 – $251,800) ……………………..
Decrease in prepaid expenses ($1,875 – $1,250) ……………
Decrease in accounts payable ($114,675 – $53,141) ………
(61,534)
Cash flows from investing activities
Cash received from sale of equipment…………………………...
11,625
Cash paid for equipment …………………………..…………………….
(30,000)
Net cash used in investing activities ………………………………..
(18,375)
Cash flows from financing activities
Cash received from issuing stock (2,500 x $20) ……………….
50,000
Cash paid for dividends ………………………………………………….
(50,100)
Net decrease in cash ………………………………………………………….
Cash balance at December 31, prior year ………………………….
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
808
Problem 12-3A (Concluded)
Part 2
Forten Company’s operations provide a positive net cash inflow of $40,900—a
good result. At the same time, the cash balance decreased by $23,700 (32%)
during the year. Two major cash outflows are the retirement of debt ($46,125)
and the dividend payment ($50,100), which together represent 87% of the
809
Problem 12-4AA (60 minutes)
FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Current Year Ended December 31
Dec. 31,
Prior Year
Analysis of Changes
Dec. 31,
Current Year
Debit
Credit
Balance sheet—debits
Cash ……………………………………………
$ 73,500
$ 49,800
Accounts receivable …………………..
(b)
$15,185
65,810
Inventory …………………………………….
251,800
(c)
23,856
Prepaid expenses ……………………….
(d)
$ 625
Equipment ………………………………….
(h)
96,375
(g)
46,875
$485,800
$550,016
Balance sheet—credits
Accum. depreciation—Equip. …….
$ 46,000
(g)
30,125
(f)
20,750
$ 36,625
Accounts payable ………………………
114,675
(e)
61,534
53,141
Long–term notes payable ……………
66,375
75,000
Common stock, $5 par value ……..
150,250
(k)
12,500
37,500
37,500
Retained earnings ………………………
50,100
$485,800
$550,016
Statement of cash flows
Operating activities
Net income …………………………………
(a)
114,975
Increase in accts. receivable ………
(b)
15,185
Increase in inventory ………………….
(c)
23,856
Decrease in prepaid expenses……
(d)
Decrease in accounts payable ……
(e)
61,534
Depreciation expense …………………
20,750
Loss on sale of equipment …………
(g)
Investing activities
Receipt from sale of equipment ….
(g)
11,625
Payment to purchase equipment .
(h)
30,000
Financing activities
Payment on long–term notes ………
Issued common stock for cash ….
(k)
50,000
Payments of cash dividends ………
50,100
$592,775
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
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Problem 12-4AA (Concluded)
FORTEN COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income ………………………………………………………………………
$114,975
Depreciation expense ………………………………………………….
20,750
Loss on disposal of equipment …………………………………..
Increase in inventory ($275,656 – $251,800) ……………………..
Decrease in prepaid expenses ($1,875 – $1,250) ……………
Decrease in accounts payable ($114,675 – $53,141) ………
Adjustments to reconcile net income to net
Cash flows from investing activities
Cash received from sale of equipment…………………………...
11,625
Cash paid for equipment …………………………..…………………….
(30,000)
Net cash used in investing activities ………………………………..
(18,375)
Cash flows from financing activities
Cash paid on long–term notes …………………………………………
Cash received from issuing stock (2,500 x $20) ……………….
50,000
Net cash used in financing activities …………………………..….
Cash balance at beginning of year …………………………………….
Noncash investing and financing activities
Purchased equipment for $96,375 by signing a $66,375 long-term notes payable
and paying $30,000 in cash.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
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Problem 12-5AB (40 minutes)
FORTEN COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Cash received from customers (Note 1) ……………
$567,315
Cash paid for inventory (Note 2) ……………………….
(370,390)
Cash paid for operating expenses (Note 3) ……….
(131,775)
Cash paid for income taxes ……………………………..
Net cash provided by operating activities ………..
Cash received from sale of equipment …………….
Cash paid for equipment …………………………………
Net cash used in investing activities………………..
Cash flows from financing activities
Cash paid on long-term notes ………………………….
(46,125)
Cash received from issuing stock (2,500 x $20) …
50,000
Cash paid for dividends ………………………………….
(50,100)
Net cash used in financing activities ……………….
(46,225)
Supporting calculations
(1) Sales – Increase in receivables = $582,500 – ($65,810 – $50,625) = $567,315
(2) Cost of Increase in Decrease in
812
Problem 12-6A (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income ……………………………………………………………………
$136,000
Adjustments to reconcile net income to net
cash provided by operating activities
Net cash provided by operating activities ……………………
Cash flows from investing activities
Cash paid for equipment ………………………………………………
(36,000)
Net cash used in investing activities…………………….
(36,000)
Cash flows from financing activities
Cash balance at December 31, prior year ……………………….
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
813
Problem 12-7AA (50 minutes)
GOLDEN CORPORATION
Spreadsheet for Statement of Cash Flows
For Current Year Ended December 31
Dec. 31,
Prior Year
Analysis of Changes
Dec. 31,
Current Year
Debit
Credit
Balance sheet—debits
Cash ……………………………………………
$ 107,000
$ 164,000
Accounts receivable …………………..
71,000
83,000
Inventory …………………………………….
(c)
Balance sheet—credits
Accum. depreciation—Equip. …….
$ 104,000
(f)
$ 54,000
$ 158,000
Accounts payable ……………………….
71,000
(d)
16,000
87,000
Income taxes payable …………………
25,000
(e)
28,000
Common stock, $2 par value ………
24,000
36,000
Retained earnings ………………………
(a)
122,000
Statement of cash flows
Operating activities
Net income ………………………………….
(a)
136,000
Increase in accounts receivable ..
12,000
Increase in inventory …………………..
(c)
75,000
Increase in accounts payable ……..
Increase in income tax payable …..
(e)
Depreciation expense …………………
Investing activities
Payment for equipment ………………
(g)
36,000
Financing activities
Issued common stock for cash ….
Paid cash dividends ……………………
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
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Problem 12-7AA (Concluded)
GOLDEN CORPORATION
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income ……………………………………………………………………
$136,000
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Changes in current assets and current liabilities
Net cash provided by operating activities ……………………
Cash flows from investing activities
Cash paid for equipment ………………………………………………
(36,000)
Net cash used in investing activities…………………….
(36,000)
Cash flows from financing activities
(89,000)
Cash balance at beginning of the year …………………………...
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
Problem 12-8AB (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Cash received from customers (Note 1) ……….
$1,780,000
Cash paid for inventory (Note 2) ………………….
(1,145,000)
Cash paid for operating expenses ………………
(494,000)
Cash paid for income taxes (Note 3) ……………
(19,000)
Net cash provided by operating activities …..
Cash flows from investing activities
Net cash used in investing activities…………….
Cash flows from financing activities
Cash from issuing stock (12,000 x $5) …………..
60,000
Cash paid for cash dividends …………………….
(89,000)
Net cash used in financing activities ………….
Net increase in cash ………………………………………
Supporting calculations
(1) Sales – Increase in receivables = $1,792,000 – ($83,000 – $71,000) = $1,780,000
(2) Cost of Increase in Increase in
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
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PROBLEM SET B
Problem 12-1B (35 minutes)
SALT LAKE COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Current Ended December 31
Cash flows from operating activities
Net income …………………………………………………………………
$ 20,000
Adjustments to reconcile net income to net cash
provided by operating activities
)
)