Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
817
Problem 12-2BB (35 minutes)
SALT LAKE COMPANY
Cash Flows from Operating Activities—Direct Method
For Current Year Ended December 31
Cash flows from operating activities
Cash receipts from customers (1) …………………………………………
$ 155,400
Cash payments to suppliers (2) …………………………………………….
(72,080
)
Cash payments for salaries (3) ……………………………………………..
(19,700
)
Cash payments for rent (4) ……………………………………………………
)
Cash payments for insurance (5) …………………………………………..
)
Cash payments for utilities (6) ………………………………………………
)
Cash payments for interest …………………………………………………..
)
Supporting calculations
(1) Sales – Increase in receivables = $156,000 – ($3,600 – $3,000) = $155,400
(2) Cost of Decrease in Decrease in
goods sold inventory accounts payable =
$72,000 – ($980 – $860) + ($2,600 – $2,400) = $72,080
–
+
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
818
Problem 12-3B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Current Year Ended December 31
$158,100
38,600
10,100
(84,250)
26,050
(43,250)
(17,200)
(42,500)
45,000
Net increase in cash …………………………………………………………..
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
819
Problem 12-3B (Continued)
Part 2
Gazelle Corporation’s dividend payments of $53,600 represent 34% of the
$158,100 net income for the year, and 41% of cash inflow provided by
operations of $130,200.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
820
Problem 12-4BA (60 minutes)
GAZELLE 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 ………………………………………………
$ 61,550
$123,450
Accounts receivable ……………………..
80,750
(b)
$ 3,650
77,100
Inventory ……………………………………….
250,700
(c)
Prepaid expenses ………………………….
17,000
(d)
15,100
Equipment …………………………………….
200,000
(g)
51,000
262,250
$610,000
$718,500
Balance sheet—credits
Accum. depreciation—Equip. ……….
$ 95,000
(g)
22,850
(f)
38,600
$110,750
Accounts payable ………………………….
102,000
(e)
84,250
17,750
Long–term notes payable ………………
87,500
(j)
42,500
(i)
70,000
115,000
Common stock, $5 par value …………
200,000
(k)
15,000
215,000
Paid–in capital in excess of
par value, common stock ……………
0
(k)
30,000
30,000
Retained earnings …………………………
125,500
(l)
53,600
(a)
158,100
230,000
$610,000
$718,500
Statement of cash flows
Operating activities
Net income …………………………………….
(a)
Decrease in accounts receivable …..
(b)
Decrease in inventory ……………………
(c)
Decrease in prepaid expenses ………
(d)
1,900
Decrease in accounts payable ………
(e)
84,250
Depreciation expense ……………………
38,600
Loss on sale of equipment ……………
(g)
2,100
Investing activities
Receipt from sale of equipment …….
(g)
26,050
Payment to purchase equipment ….
(h)
43,250
Financing activities
Payment on long–term notes …………
(j)
42,500
Issued common stock for cash …….
(k)
45,000
Payments of cash dividends …………
(l)
53,600
Noncash investing and financing
activities
Purchase of equip. financed
by long-term notes payable ….
(i)
70,000
(h)
70,000
$671,950
$671,950
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
821
Problem 12-4BA (Concluded)
GAZELLE CORPORATION
Statement of Cash Flows
For Current Year Ended December 31
$158,100
38,600
10,100
(84,250)
26,050
(43,250)
(17,200)
45,000
(53,600)
Net increase in cash …………………………………………………………..
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
822
Problem 12-5BB (40 minutes)
GAZELLE CORPORATION
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Cash received from customers (Note 1) …………….
$1,188,650
Cash paid for inventory (Note 2) ………………………..
(669,150)
Cash paid for operating expenses (Note 3) ………..
(360,950)
Cash paid for income taxes ………………………………
Net cash provided by operating activities …………
Cash flows from investing activities
Cash received from sale of equipment ……………..
26,050
Cash paid for equipment ………………………………….
Net cash used in investing activities…………………
Cash flows from financing activities
Cash paid on long-term notes …………………………..
(42,500)
Cash received from issuing stock (3,000 x $15) ……
45,000
Cash paid for dividends …………………………………..
(53,600)
Net increase in cash …………………………………………..
Noncash investing and financing activities
Purchased equipment for $113,250 by signing a $70,000 long-term notes payable
and paying $43,250 in cash.
Supporting calculations
(1) Sales + Decrease in receivables = $1,185,000 + ($80,750 – $77,100) = $1,188,650
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
823
Problem 12-6B (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income ……………………………………………………………………
$202,767
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation expense ……………………………………………….
15,700
Decrease in accounts receivable ($25,860 – $20,222) ….
Increase in inventory ($165,667 – $140,320) …………………
(25,347)
Decrease in accounts payable ($157,530 – $20,372) ……
Decrease in taxes payable ($6,100 – $2,100) ……………….
Net cash provided by operating activities …………………..
Cash flows from investing activities
Cash paid for equipment ……………………………………………..
(30,250)
Net cash used in investing activities …………………………..
(30,250)
Cash flows from financing activities
Cash received from issuing stock (3,000 x $21) ……………
63,000
Cash paid for dividends ………………………………………………
Cash balance at December 31, prior year ………………………
824
Problem 12-7BA (50 minutes)
SATU 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 ………………………………………………
$ 28,400
$ 58,750
Accounts receivable ……………………..
25,860
20,222
Inventory ……………………………………….
140,320
(c)
165,667
Equipment …………………………………….
(g)
$272,080
$352,389
Balance sheet—credits
Accum. depreciation—Equip. ……….
$ 31,000
(f)
15,700
$ 46,700
Accounts payable ………………………….
157,530
(d)
137,158
20,372
Income taxes payable ……………………
(e)
Common stock, $5 par value …………
25,000
(h)
15,000
40,000
20,000
48,000
68,000
Retained earnings …………………………
$272,080
$352,389
Statement of cash flows
Operating activities
Net income …………………………………….
(a)
202,767
Decrease in accounts receivable ….
(b)
Increase in inventory ……………………..
(c)
25,347
Decrease in accounts payable ………
(d)
Decrease in income taxes payable ..
Depreciation expense ……………………
Investing activities
Payment for equipment …………………
(g)
30,250
Financing activities
Issued common stock for cash …….
(h)
Paid cash dividends ………………………
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
825
Problem 12-7BA (concluded)
SATU COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income ……………………………………………………………………
$202,767
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 ……………………………………………..
(30,250)
Net cash used in investing activities …………………………..
(30,250)
Cash flows from financing activities
Cash received from issuing stock (3,000 x $21) ……………
63,000
Cash paid for dividends ………………………………………………
Cash balance at beginning of the year …………………………..
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
Problem 12-8BB (35 minutes)
SATU COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Cash received from customers (Note 1) …………..
$756,438
Cash paid for inventory (Note 2) ………………………
Cash paid for operating expenses ……………………
Cash paid for income taxes (Note 3) ………………..
Net cash provided by operating activities ………..
Cash flows from investing activities
Cash paid for equipment ……………………………………………
(30,250)
Net cash used in investing activities …………………………
(30,250)
Cash flows from financing activities
Cash received from issuing stock (3,000 x $21) ….
Net cash provided by financing activities ………..
Net increase in cash ……………………………………………
Supporting calculations
(1) Sales + Decrease in receivables = $750,800 + ($25,860 – $20,222) = $756,438
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 12
827
SERIAL PROBLEM — SP 12
Serial Problem — Business Solutions (45 minutes)
BUSINESS SOLUTIONS
Statement of Cash Flows (Indirect)
For Quarter Ended March 31, 2022
Cash flows from operating activities
Net income ………………………………………………………………………
$ 18,833
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation expense–Office Equipment ……………………
400
Depreciation expense–Computer Equipment …………….
Increase in accounts receivable ($22,867 – $5,668) …………
Increase in inventory ($704 – $0) ……………………………………
Increase in computer supplies ($2,005 – $580) ……………..
(1,425)
Decrease in prepaid insurance ($1,665 – $1,110) …………..
555
Decrease in accounts payable ($1,100 – $0) ………………….
(1,100)
Increase in wages payable ($875 – $500) ………………………
375
Decrease in unearned computer service revenue ………
(1,500)
Net cash used by operating activities……………………………..
Cash flows from investing activities
Cash flows from financing activities
Cash received from stock issuance ………………………………..
25,000
Cash paid for dividends ………………………………………………….
(4,800)
Net cash provided by financing activities ……………………….
Net increase in cash …………………………………………………………..