EXERCISE 12-7
MITCH COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………. $ 93,000)
Adjustments to reconcile net income
to net cash provided by operating
Cash flows from investing activities
Sale of land ………………………………………… 20,000)
Purchase of equipment ………………………. (60,000)
Net cash used by investing
activities ………………………………….. (40,000)
EXERCISE 12-8
Point in Time
Phase
M
N
Introductory phase
Decline phase
EXERCISE 12-9
PepsiCo
Free cash flow
$6,796 – $2,128 – $2,732
EXERCISE 12-10
Merrill
Corporation
Wingate
Corporation
Free cash flow
$80,000 – $40,000 – $5,000
= $35,000
$100,000 – $70,000 – $10,000
= $20,000
*EXERCISE 12-11
Revenues ……………………………………………………….. $198,000)
Deduct: Increase in accounts receivable …………. 60,000
Cash receipts from customers* …………………. $138,000
Operating expenses ………………………………………… 83,000)
*EXERCISE 12-12
(a) Cash payments to suppliers
Cost of goods sold …………………… $5,178.0 million
Deduct: Decrease in inventory …. 5.3
(b) Cash payments for operating expenses
Operating expenses exclusive
of depreciation
($10,725.7 – $1,216.2) ……………. $9,509.5 million
*EXERCISE 12-13
Cash flows from operating activities
Cash receipts from
Less cash payments:
To suppliers for merchandise ……………… $97,000
*EXERCISE 12-14
BALBOA CORP.
Statement of Cash Flows—Direct Method
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers ……………………… $566,100
Less: Cash payments:
For goods and services ………………………….. $279,100
Cash flows from financing activities
Issuance of common stock …………………….. 355,000
Payment of cash dividend ………………………. (21,800)
*EXERCISE 12-15
Cash payments for rent
Rent expense ……………………………………………………… $ 30,000*
Add: Increase in prepaid rent ……………………………… 1,500*
Cash payments for rent ……………………………………….. $ 31,500*
SOLUTIONS TO PROBLEMS
PROBLEM 12-1A
SCF Section
Affected
If Operating, did it
increase/decrease
Reported cash
from Operating
activities
(a)
Depreciation expense was
$80,000
O
A
(b)
Interest Payable account
increased $5,000
O
A
(c)
Acquired land by issuing
–
(e)
Paid $17,000 cash dividend to
–
Paid $4,000 cash dividend to
–
Accounts Receivable account
Received $100,000 from
Acquired equipment for
Received $26,000 from sale of
I
–
PROBLEM 12-2A
(a) Net income can be determined by analyzing the retained earnings
account.
Retained earnings beginning of year ……………………… $270,000
Add: Net income (plug) …………………………………………. 58,800*
(b) Cash inflow from the issue of stock was $12,000 ($160,800 – $140,000 –
$8,800).
Common Stock
140,000
8,800
Stock Dividend
Shares Issued for Cash
160,800
(c) Both of the above activities (issue of common stock and payment of
dividends) would be classified as financing activities on the statement
PROBLEM 12-3A
MUNSUN COMPANY
Partial Statement of Cash Flows
For the Year Ended November 30, 2017
Cash flows from operating activities
Net income ……………………………………………………. $1,750,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense ………………………… $ 110,000
*PROBLEM 12-4A
MUNSUN COMPANY
Partial Statement of Cash Flows
For the Year Ended November 30, 2017
Cash flows from operating activities
Cash receipts from customers ……… $7,980,000 (1)
Less cash payments:
Computations:
(1) Cash receipts from customers
(2) Cash payments to suppliers
Cost of goods sold …………………………………….. $4,700,000
(3) Cash payments for operating expenses
Operating expenses, exclusive
of depreciation …………………………. $1,040,000*
PROBLEM 12-5A
REWE COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………… $229,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
*PROBLEM 12-6A
REWE COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers ……… $960,000 (1)
(1) Cash receipts from customers
Revenues ………………………………………………………………. $970,000
(2) Cash payments for operating expenses
Operating expenses per income statement …………….. $614,000
(3) Cash payments for income taxes
Income tax expense per income statement……………… $ 56,000
PROBLEM 12-7A
(a) WARNER COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………… $32,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cash flows from investing activities
Sale of equipment ………………………………… 8,500
Cash flows from financing activities
Issuance of common stock …………………… 4,000
(b) $38,500 – $0 – $20,000 = $18,500
LO 2, 3 BT: AP Difficulty: Hard TOT: 40 min. AACSB: Analytic AICPA FC: Measurement and Reporting
*PROBLEM 12-8A
(a) WARNER COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers ….. $236,000 (1)
Less cash payments:
To suppliers ………………………. $179,000 (2)
For operating expenses ……… 6,500 (3)
Computations:
(1) Cash receipts from customers
Sales ………………………………………………………………. $242,000
(2) Cash payments to suppliers
Cost of goods sold ……………………………………………….. $175,000
(3) Cash payments for operating expenses
(4) Cash payments for income taxes
Income tax expense ……………………………………………… $ 8,000
PROBLEM 12-9A
GRANGER INC.
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ……………………………………………….. $154,580
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense …………………………. $46,500
Loss on disposal of plant assets …………. 7,500
Cash flows from investing activities
Sale of plant assets …………………………………… 1,500
Purchase of investments …………………………... (29,000)
LO 2 BT: AP Difficulty: Hard TOT: 40 min. AACSB: Analytic AICPA FC: Reporting
*PROBLEM 12-10A
GRANGER INC.
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers ………….. $338,660 (1)
Less cash payments:
To suppliers ……………………………… $110,410 (2)
Cash flows from investing activities
Sale of plant assets ………………………….. 1,500
Purchase of investments ………………….. (29,000)