1.
2.
3.
4.
5.
Net cash provided by operating activities
Adjustments to reconcile net income to net cash
provided by operating activities
Title
Title
Title
Title
Title
Title
Amount
Amount
Amount
Amount
Amount
Amount
Formula
Formula
Amount
Cash flows from operating activities
For the Year Ended November 30, 2014
during the year.
Partial Statement of Cash Flows
PAXSON COMPANY
Net income
Administrative expenses include depreciation expense of
$110,000
Instructions
Accrued expenses payable decreased
$100,000
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2014, for
Paxson Company, using the indirect method.
Accounts payable to suppliers of merchandise decreased
$350,000
during the year.
For the Year Ended November 30, 2014
450,000
Selling expenses
Operating expenses
2,900,000
Gross profit
$1,750,000
1,150,000
Net income
700,000
Administrative expenses
Total cost of goods sold
1,600,000
Ending inventory
$300,000
during the year, and inventory decreased
Prepaid expenses increased
$150,000
during the year.
Primer on Using Excel in Accounting by Rex A Schildhouse
The income statement of Paxson Company is presented here.
P12-3A, Prepare the operating activities section—indirect method.
Accounts receivable decreased
$380,000
Income Statement
PAXSON COMPANY
6,300,000
Goods available for sale
4,400,000
Additional information:
$1,900,000
Beginning inventory
Cost of goods sold
$7,600,000
Sales
Purchases
4,700,000
Name:
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
KimFin_7e_SET_Ch12.xlsx, Page 1 of 30 Page(s), 4/15/202211:59 AM
1.
2.
3.
4.
5.
PAXSON COMPANY
Net income
300,000
380,000
Net cash provided by operating activities
Decrease in accounts receivable
Decrease in inventory
Increase in prepaid expenses
Decrease in accrued expenses payable
$1,940,000
$110,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense
$1,750,000
Cash flows from operating activities
For the Year Ended November 30, 2014
Partial Statement of Cash Flows
Administrative expenses include depreciation expense of
$110,000
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2014, for
Paxson Company, using the indirect method.
Accounts payable to suppliers of merchandise decreased
$350,000
during the year.
Accrued expenses payable decreased
$100,000
during the year.
$380,000
$300,000
during the year, and inventory decreased
Prepaid expenses increased
$150,000
during the year.
Additional information:
$1,900,000
Beginning inventory
4,400,000
Purchases
For the Year Ended November 30, 2014
Income Statement
PAXSON COMPANY
1,600,000
Ending inventory
Cost of goods sold
$7,600,000
Sales
Goods available for sale
450,000
Selling expenses
2,900,000
Gross profit
4,700,000
Total cost of goods sold
Name:
P12-3A, Prepare the operating activities section—indirect method.
Operating expenses
Accounts receivable decreased
Solution
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
The income statement of Paxson Company is presented here.
Date:
$1,750,000
1,150,000
Net income
700,000
Administrative expenses
Instructor:
Course:
6,300,000
KimFin_7e_SET_Ch12.xlsx, Page 2 of 30 Page(s), 4/15/202211:59 AM
Name:
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-5A, Prepare the operating activities section—indirect method.
Thornton Company’s income statement contained the condensed information below.
THORNTON COMPANY
Income Statement
For the Year Ended December 31, 2014
Service revenue
Income tax expense
56,000
$970,000
Operating expenses, excluding depreciation
$614,000
Depreciation expense
55,000
Loss on sale of plant assets
16,000
685,000
Income before income taxes
285,000
Income taxes payable
13,000
7,000
Net income
$229,000
Thornton’s balance sheet contained the comparative data at December 31.
2014
2013
Accounts receivable
$70,000
$60,000
Accounts payable
41,000
32,000
Title
Amount
Accounts payable pertain to operating expenses.
Instructions:
Prepare the operating activities section of the statement of cash flows using the indirect method.
THORNTON COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Amount
Adjustments to reconcile net income to net cash
provided by operating activities
Title
Amount
Title
Amount
Title
Formula
Title
Amount
Title
Amount
Formula
KimFin_7e_SET_Ch12.xlsx, Page 3 of 30 Page(s), 4/15/202211:59 AM
Name:
Solution
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-5A, Prepare the operating activities section—indirect method.
Thornton Company’s income statement contained the condensed information below.
THORNTON COMPANY
Income Statement
For the Year Ended December 31, 2014
Service revenue
Income tax expense
56,000
$970,000
Operating expenses, excluding depreciation
$614,000
Depreciation expense
55,000
Loss on sale of plant assets
16,000
685,000
Income before income taxes
285,000
Income taxes payable
13,000
7,000
Net income
$229,000
Thornton’s balance sheet contained the comparative data at December 31.
2014
2013
Accounts receivable
$70,000
$60,000
Accounts payable
41,000
32,000
Depreciation expense
$55,000
Accounts payable pertain to operating expenses.
Instructions:
Prepare the operating activities section of the statement of cash flows using the indirect method.
THORNTON COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
$229,000
Adjustments to reconcile net income to net cash
provided by operating activities
Loss on sale of equipment
16,000
Increase in accounts payable
Net cash provided by operating activities
$305,000
Increase in income taxes payable
76,000
KimFin_7e_SET_Ch12.xlsx, Page 4 of 30 Page(s), 4/15/202211:59 AM
Name:
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-6A, Prepare the operating activities section—direct method.
Thornton Company’s income statement contained the condensed information below.
THORNTON COMPANY
Income Statement
For the Year Ended December 31, 2014
Service revenue
Loss on sale of plant assets
16,000
685,000
Income before income taxes
285,000
Income tax expense
56,000
$970,000
Operating expenses, excluding depreciation
$614,000
Depreciation expense
55,000
$70,000
$60,000
Accounts payable
41,000
32,000
Income taxes payable
13,000
7,000
Net income
$229,000
Thornton’s balance sheet contained the comparative data at December 31.
2014
2013
Accounts receivable
Cash flows from operating activities
Title
Amount
Title
Title
Amount
Accounts payable pertain to operating expenses.
Instructions:
Prepare the operating activities section of the statement of cash flows using the direct method.
THORNTON COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2014
(1)
Computation of cash receipts from customers
Title
Amount
Title
Amount
Title
Formula
Title
Amount
Formula
Title
Formula
(2)
Computation of cash payments for operating expenses
Title
Amount
Title
Amount
Title
Formula
(3)
Computation of cash payments for income taxes
Title
Amount
Title
Amount
Title
Formula
KimFin_7e_SET_Ch12.xlsx, Page 5 of 30 Page(s), 4/15/202211:59 AM
Name:
Solution
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-6A, Prepare the operating activities section—direct method.
Thornton Company’s income statement contained the condensed information below.
THORNTON COMPANY
Income Statement
For the Year Ended December 31, 2014
Service revenue
Loss on sale of plant assets
16,000
685,000
Income before income taxes
285,000
Income tax expense
56,000
$970,000
Operating expenses, excluding depreciation
$614,000
Depreciation expense
55,000
$70,000
$60,000
Accounts payable
41,000
32,000
Income taxes payable
13,000
7,000
Net income
$229,000
Thornton’s balance sheet contained the comparative data at December 31.
2014
2013
Accounts receivable
Cash flows from operating activities
Cash receipts from customers (1)
$960,000
Less cash payments:
$605,000
Computation of cash receipts from customers
$970,000
Deduct: Increase in accounts receivable ($70,000 – $60,000)
10,000
Cash receipts from customers
$960,000
50,000
655,000
$305,000
Operating expenses per income statement
$614,000
Deduct: Increase in accounts payable ($41,000 – $32,000)
Cash payments for operating expenses
$605,000
Computation of cash payments for income taxes
Income tax expense per income statement
$56,000
Deduct: Increase in income taxes payable ($13,000 – $7,000)
Cash payments for income taxes
$50,000
Accounts payable pertain to operating expenses.
Instructions:
Prepare the operating activities section of the statement of cash flows using the direct method.
THORNTON COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2014
KimFin_7e_SET_Ch12.xlsx, Page 6 of 30 Page(s), 4/15/202211:59 AM
1.
2.
Name:
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-7A, Prepare a statement of cash flows—indirect method, and compute cash-based ratios.
Presented below are the financial statements of Kurtzel Company.
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
Inventory
28,000
20,000
Property, plant, and equipment
60,000
78,000
2014
2013
Cash
$35,000
$20,000
Accounts receivable
20,000
14,000
Liabilities and Stockholders’ Equity
Accounts payable
$19,000
$15,000
Income taxes payable
7,000
8,000
Accumulated depreciation
(32,000)
(24,000)
Total
$111,000
$108,000
Retained earnings
50,000
38,000
Total
$111,000
$108,000
Bonds payable
17,000
33,000
Common stock
18,000
14,000
Gross profit
67,000
Selling expenses
$18,000
Administrative expenses
6,000
24,000
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales revenue
$242,000
Cost of goods sold
175,000
Income tax expense
8,000
Net income
$32,000
Additional data:
Income from operations
43,000
Interest expense
3,000
Income before income taxes
40,000
3.
During the year equipment was sold for
$8,500
cash. This equipment cost
$18,000
originally and had accumulated depreciation of
$9,500
at the time of sale.
Depreciation expense was
$17,500
Dividends declared and paid were
$20,000
KimFin_7e_SET_Ch12.xlsx, Page 7 of 30 Page(s), 4/15/202211:59 AM
Name:
Date:
Instructor:
Course:
+
+
– – =
Instructions:
(a) Prepare a statement of cash flows using the indirect method.
KURTZEL COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Title
Amount
Title
Amount
Amount
Adjustments to reconcile net income to net cash
provided by operating activities
Title
Amount
Title
Formula
Cash flows from investing activities
Title
Amount
Title
Amount
Title
Amount
Formula
Title
Amount
Title
Formula
Cash flows from financing activities
Title
Amount
Title
Amount
Calculation here as desired
Calculation here as desired
(b) (1) Compute the current cash debt coverage ratio.
Title
Amount
Title
Amount
Title
Formula
Formula
Times
Number
Amount
÷
Amount
Amount
=
(b) (2) Compute the cash debt coverage ratio.
Amount
÷
Amount
Amount
=
Formula
Times
Amount
Amount
Amount
Formula
Number
(b) (3) Compute the free cash flow.
KimFin_7e_SET_Ch12.xlsx, Page 8 of 30 Page(s), 4/15/202211:59 AM
1.
2.
Name:
Solution
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-7A, Prepare a statement of cash flows—indirect method, and compute cash-based ratios.
Presented below are the financial statements of Kurtzel Company.
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
Inventory
28,000
20,000
Property, plant, and equipment
60,000
78,000
2014
2013
Cash
$35,000
$20,000
Accounts receivable
20,000
14,000
Liabilities and Stockholders’ Equity
Accounts payable
$19,000
$15,000
Income taxes payable
7,000
8,000
Accumulated depreciation
(32,000)
(24,000)
Total
$111,000
$108,000
Retained earnings
50,000
38,000
Total
$111,000
$108,000
Bonds payable
17,000
33,000
Common stock
18,000
14,000
Gross profit
67,000
Selling expenses
$18,000
Administrative expenses
6,000
24,000
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales revenue
$242,000
Cost of goods sold
175,000
Income tax expense
8,000
Net income
$32,000
Additional data:
Income from operations
43,000
Interest expense
3,000
Income before income taxes
40,000
3.
During the year equipment was sold for
$8,500
cash. This equipment cost
$18,000
originally and had accumulated depreciation of
$9,500
at the time of sale.
Depreciation expense was
$17,500
Dividends declared and paid were
$20,000
KimFin_7e_SET_Ch12.xlsx, Page 9 of 30 Page(s), 4/15/202211:59 AM
Name:
Solution
Date:
Instructor:
Course:
Instructions:
(a) Prepare a statement of cash flows using the indirect method.
KURTZEL COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
Increase in accounts payable
4,000
Decrease in income taxes payable
Cash flows from investing activities
$32,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense
$17,500
Redemption of bonds
Net increase in cash
Cash flows from financing activities
Issuance of common stock
4,000
(b) (1) Compute the current cash debt coverage ratio.
(b) (2) Compute the cash debt coverage ratio.
(b) (3) Compute the free cash flow.
KimFin_7e_SET_Ch12.xlsx, Page 10 of 30 Page(s), 4/15/202211:59 AM
1.
2.
4.
5.
6.
7.
Name:
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-8A, Prepare a statement of cash flows—direct method, and compute cash-based ratios.
Presented below are the financial statements of Kurtzel Company.
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
Inventory
28,000
20,000
Property, plant, and equipment
60,000
78,000
2014
2013
Cash
$35,000
$20,000
Accounts receivable
20,000
14,000
Liabilities and Stockholders’ Equity
Accounts payable
$19,000
$15,000
Income taxes payable
7,000
8,000
Accumulated depreciation
(32,000)
(24,000)
Total
$111,000
$108,000
Retained earnings
50,000
38,000
Total
$111,000
$108,000
Bonds payable
17,000
33,000
Common stock
18,000
14,000
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
Service revenue
$242,000
Cost of goods sold
175,000
Income from operations
43,000
Interest expense
3,000
Income before income taxes
40,000
Gross profit
67,000
Selling expenses
$18,000
Administrative expenses
6,000
24,000
Depreciation expense was
$17,500
Dividends declared and paid were
$20,000
Income tax expense
8,000
Net income
$32,000
Additional data:
Accounts payable pertains to merchandise suppliers.
All operating expenses except for deprecation were paid in cash.
All depreciation expense is in the selling expense category.
All sales and purchases are on account.
3.
During the year equipment was sold for
$8,500
cash. This equipment cost
$18,000
originally and had accumulated depreciation of
$9,500
at the time of sale.
KimFin_7e_SET_Ch12.xlsx, Page 11 of 30 Page(s), 4/15/202211:59 AM
Name:
Date:
Instructor:
Course:
Instructions:
Less cash payments:
Title
Formula
Title
Formula
(a) Prepare a statement of cash flows using the direct method.
KURTZEL COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Title
Formula
Title
Formula
Cash flows from investing activities
Title
Amount
Title
Formula
Title
Formula
Formula
Cash flows from financing activities
Title
Amount
Title
Amount
Title
Formula
Title
Amount
Title
Formula
Title
Amount
Title
Formula
Computations:
(1)
Cash receipts from customers
Title
Amount
Title
Amount
Title
Formula
(2)
Cash payments to suppliers
Title
Amount
Title
Amount
Title
(3)
Cash payments for operating expenses
Title
Amount
Title
Amount
Title
Formula
Formula
Title
Amount
Title
Formula
KimFin_7e_SET_Ch12.xlsx, Page 12 of 30 Page(s), 4/15/202211:59 AM
Name:
Date:
Instructor:
Course:
+
+
– – =
(4)
Cash payments for income taxes
Title
Amount
Add: Title
Amount
Title
Formula
(b) (1) Compute the current cash debt coverage ratio.
Amount
÷
Amount
Amount
=
Calculation as desired
Calculation as desired
(b) (2) Compute the cash debt coverage ratio.
Formula
Times
Number
Number
Calculation as desired
Calculation as desired
Amount
÷
Amount
Amount
=
Formula
Times
(b) (3) Compute the free cash flow.
Amount
Amount
Amount
Formula
KimFin_7e_SET_Ch12.xlsx, Page 13 of 30 Page(s), 4/15/202211:59 AM
1.
2.
4.
5.
6.
7.
Name:
Solution
Date:
Instructor:
Course:
Financial Accounting, Seventh Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P12-8A, Prepare a statement of cash flows—direct method, and compute cash-based ratios.
Presented below are the financial statements of Kurtzel Company.
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
Inventory
28,000
20,000
Property, plant, and equipment
60,000
78,000
2014
2013
Cash
$35,000
$20,000
Accounts receivable
20,000
14,000
Liabilities and Stockholders’ Equity
Accounts payable
$19,000
$15,000
Income taxes payable
7,000
8,000
Accumulated depreciation
(32,000)
(24,000)
Total
$111,000
$108,000
Retained earnings
50,000
38,000
Total
$111,000
$108,000
Bonds payable
17,000
33,000
Common stock
18,000
14,000
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
Service revenue
$242,000
Cost of goods sold
175,000
Income from operations
43,000
Interest expense
3,000
Income before income taxes
40,000
Gross profit
67,000
Selling expenses
$18,000
Administrative expenses
6,000
24,000
Depreciation expense was
$17,500
Dividends declared and paid were
$20,000
Income tax expense
8,000
Net income
$32,000
Additional data:
Accounts payable pertains to merchandise suppliers.
All operating expenses except for deprecation were paid in cash.
All depreciation expense is in the selling expense category.
All sales and purchases are on account.
3.
During the year equipment was sold for
$8,500
cash. This equipment cost
$18,000
originally and had accumulated depreciation of
$9,500
at the time of sale.
KimFin_7e_SET_Ch12.xlsx, Page 14 of 30 Page(s), 4/15/202211:59 AM
Name:
Solution
Date:
Instructor:
Course:
Instructions:
Less cash payments:
6,500
3,000
(a) Prepare a statement of cash flows using the direct method.
KURTZEL COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Cash receipts from customers (1)
$236,000
Cash flows from investing activities
Sale of equipment
Cash flows from financing activities
Issuance of common stock
4,000
Redemption of bonds
Net increase in cash
Computations:
(1)
Cash receipts from customers
Sales
$242,000
Cash payments to suppliers
$175,000
(3)
Cash payments for operating expenses
KimFin_7e_SET_Ch12.xlsx, Page 15 of 30 Page(s), 4/15/202211:59 AM