(20-30 min.) E 12-20A
Req. 1
Nyman Travel Products, Inc.
Statement of Cash Flows
Year Ended December 31, 2016
Cash flows from operating activities:
Net income ……………………………………………………
$ 29,900
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense ……………………………….
$ 33,000
Decrease in accounts receivable ……………….
14,000
Decrease in inventory……………………………….
13,000
Increase in prepaid expenses ……………………
Increase in accounts payable ……………………
Increase in accrued liabilities ……………………
Net cash provided by operating activities ….
Cash flows from investing activities:
Acquisition of plant assets …………………………….
$(90,000)
Proceeds from sale of land …………………………….
34,000
Net cash used for investing activities ………..
(56,000)
Cash flows from financing activities:
Proceeds from issuance of common stock ……..
$ 60,000
Payment of long-term note payable ………………..
(14,000)
Payment of dividends ……………………………………
(12,000)
Net cash provided by financing activities …..
34,000
Net increase in cash …………………………………………
$ 97,000
Cash balance, December 31, 2015 ……………………..
Cash balance, December 31, 2016 ……………………..
$165,000
Noncash investing and financing activities:
(continued) E 12-20A
Req. 2
Nyman’s cash flows look strong. Operations are the main source of
cash. The company is investing in new plant assets without having to
(5-10 min.) E 12-21A
Case A — A combination of operations and issuing stock generated
most of the cash for acquisition of plant assets. The company
also sold plant assets for cash.
Most healthy financially — Case A
Mid-range — Case B
Least healthy financially — Case C
(10-15 min.) E 12-22A
a. Cash proceeds of sale = Book value of asset sold, $7,000* –
Loss on sale, $5,000
= $2,000
b. Cash dividend declared = $28,000*
_____
*$44,000 + $59,000 − $6,000 − Cash dividends (X) = $69,000
Cash dividends = $28,000
(10-15 min.) E 12-23A
Cash flows from operating activities:
Receipts:
Collections from customers
($90,000 + $45,000) ……………………….
$ 135,000
Collection of dividend revenue ………….
Total cash receipts ……………………….
Payments:
To suppliers ……………………………………..
$(54,000)
To employees …………………………………..
(36,000)
For interest ………………………………………
(20,000)
For income tax …………………………………
Total cash payments …………………….
Net cash provided by operating activities
(5-10 min.) E 12-24A
Salary Payable — Report cash payments to employees as operating
cash flows.
Buildings — Report acquisitions of buildings and the proceeds from
sales of buildings as investing cash flows.
(20-30 min.) E 12-25A
Req. 1
Value World, Inc.
Statement of Cash Flows
Year Ended June 30, 2016
Cash flows from operating activities:
Receipts:
Collections from customers
($275,000 − $12,000) ………………………………
$ 263,000
Dividends received …………………………………….
8,500
Total cash receipts ………………………………..
271,500
Payments:
To suppliers ($110,000 + $13,000 – $2,300) ….
$(120,700)
To employees ($60,000 + $1,500) ………………..
(61,500)
For income tax …………………………………………..
For interest ……………………………………………….
Total cash payments ……………………………..
Net cash provided by operating activities ……
79,100
Cash flows from investing activities:
Acquisition of plant assets …………………………….
Proceeds from sale of land …………………………....
Net cash used for investing activities………….
Cash flows from financing activities:
Proceeds from issuance of common stock ……..
$ 31,000
Payment of long-term note payable ………………..
(17,000)
Payment of dividends …………………………………….
Net cash provided by financing activities ……
Net decrease in cash ………………………………………….
Cash balance, June 30, 2015 ………………………………
Cash balance, June 30, 2016 ………………………………
Noncash investing and financing activities:
(continued) E 12-25A
Req. 2
Value World’s cash flows look strong. Operations are the main source of
cash. The company invested in new plant assets without having to
(10-15 min.) E 12-26A
$6,000 increase in
a.
Cash collections
=
$141,000
−
Accounts Receivable
($53,000 − $47,000)
=
$135,000
=
$76,000
−
−
(10-15 min.) E 12-27B
O+
a.
Increase in salary payable
O+
k.
Net income
O+
b.
Depreciation of equipment
O+
l.
Loss on sale of equipment
I+
Sale of long-term
O+
Decrease in accounts
investment
receivable
F+
d.
Issuance of common stock
NIF
n.
Acquisition of equipment
payable
e.
Decrease in accrued
liabilities
O+
o.
Increase in accounts
payable
O+
f.
Amortization of intangible
assets
F–
p.
Payment of cash dividend
I–
g.
Acquisition of building by
I–
q.
Purchase of long-term
cash payment
Investment with cash
Payment of long-term debt
Cash sale of land
F+
i.
Issuance of long-term note
Increase in prepaid
payable to borrow cash
expenses
j.
Purchase of treasury stock
(5-10 min.) E 12-28B
a.
Financing
h.
Investing
b.
Financing
i.
Investing
Investing
Operating
d.
Noncash investing and
Operating
financing
Operating
Financing
m.
Financing
Operating
g.
(10-15 min.) E 12-29B
Cash flows from operating activities:
Net income ………………………………………………..
$13,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense …………………………...
Increase in current assets other
than cash …………………………..………………
Increase in current liabilities …………………
Operating cash flow is good, as shown by the positive net cash flows
(15-20 min.) E 12-30B
Cash flows from operating activities:
Net income ………………………………………………
$ 35,000
Adjustments to reconcile net income to
net cash used for operating activities:
Depreciation expense ………………………….
$ 1,000
Increase in inventory …………………………..
Increase in accounts payable ………………
Decrease in accrued liabilities ……………..
Net cash used for operating activities ………….
Dakota Trading Post Company shows signs of trouble collecting
(20-30 min.) E 12-31B
Req. 1
Norman Travel Products, Inc.
Statement of Cash Flows
Year Ended December 31, 2016
Cash flows from operating activities:
Net income …………………………………………………..
$ 46,900
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense …………………………….
Decrease in accounts receivable …………….
Increase in inventory ………………………………
Increase in prepaid expenses ………………….
(700)
Increase in accounts payable ………………….
11,000
Decrease in accrued liabilities ………………..
(25,000)
15,300
Net cash provided by operating activities …..
62,200
Acquisition of plant assets …………………………...
Proceeds from sale of land …………………………...
Net cash used for investing activities …………
Proceeds from issuance of common stock …….
$ 47,000
Payment of long-term note payable ……………….
(17,000)
Payment of dividends …………………………………..
(12,000)
Net cash provided by financing activities ……
18,000
Net increase in cash …………………………………………
$ 6,200
Cash balance, December 31, 2015 ……………………..
Cash balance, December 31, 2016 ……………………..
$ 90,000
Noncash investing and financing activities:
(continued) E 12-31B
Req. 2
Norman’s cash flows look strong. Operations are the main source of
cash. The company is investing in new plant assets without having to
borrow. It was able to issue stock, pay dividends, and pay off a long-
term note payable — all financing transactions. All of these signs are
favorable.
(5-10 min.) E 12-32B
Case A — A combination of operations and issuing stock generated
most of the cash for acquisition of plant assets. The
Case B — The sale of plant assets generated the cash needed to
acquire new plant assets. They could also have used cash
from the stock issue or cash from operations.
(10-15 min.) E 12-33B
_____
*$120,000 + $26,000 − $16,000 − Book value sold (X) = $112,000
Book value sold = $18,000
Plant Assets, Net
Beginning balance
120,000
Depreciation expense
16,000
Purchases
b. Cash dividend declared = $30,000*
_____
*$48,000 + $61,000 − $6,000 − Cash dividends (X) = $73,000
Cash dividends = $30,000*
Stock dividends
6,000
Beginning balance
Net income
Ending balance
(10-15 min.) E 12-34B
Cash flows from operating activities:
Receipts:
Collections from customers
($125,000 + $34,000) ………………………
Collection of dividend revenue …………..
Total cash receipts ………………………..
Payments:
To suppliers ………………………………………
$(53,000)
To employees ……………………………………
(38,000)
For interest ……………………………………….
For income tax ………………………………….
Total cash payments ……………………..
Net cash provided by operating activities..
Operating cash flow is strong, as shown by the net cash provided by
operating activities.
(5-10 min.) E 12-35B
Salary Payable — Report cash payments to employees as operating
cash flows.
(20-30 min.) E 12-36B
Req. 1
One Stop, Inc.
Statement of Cash Flows
Year Ended June 30, 2016
Cash flows from operating activities:
Receipts:
Collections from customers
($265,000 + $15,000) …………………………………..
$ 280,000
Dividends received ………………………………………..
11,000
Total cash receipts …………………………………….
291,000
Payments:
To suppliers ($109,000 + $7,000 + $2,300) ……….
To employees ($52,000 − $2,300) ……………………
For income tax……………………………………………….
For interest ……………………………………………………
Total cash payments ………………………………….
Net cash provided by operating activities……….
Cash flows from investing activities:
Acquisition of plant assets …………………………………
$(133,000)
Proceeds from sale of land …………………………………
25,000
Net cash used for investing activities …………….
(108,000)
Cash flows from financing activities:
Proceeds from issuance of common stock …………
Payment of long-term note payable …………………….
Payment of dividends …………………………………………
Net cash provided by financing activities ……….
Net increase in cash ……………………………………………….
Cash balance, June 30, 2015 …………………………………..
42,000
Cash balance, June 30, 2016 …………………………………..
$ 97,000
Noncash investing and financing activities:
Acquisition of plant assets by issuing note payable
$ 28,000
(continued) E 12-36B
Req. 2
One Stop’s cash flows look strong. Operations are the main source of
cash. The company is investing in new plant assets without having to
(10-15 min.) E 12-37B
$7,000 decrease in
a.
Cash collections
=
$139,000
+
Accounts Receivable
=
$146,000
=
$68,000
Cash payments
$3,000 increase in
$2,000 increase in
b.
=
$67,000
+
Inventory
−
Accounts Payable