Accounting Chapter 12 Homework Recorded sales returns of $500 and credited the

*PROBLEM 12-10A (Continued)

Computations:

(1) Cash receipts from customers

(2) Cash payments to suppliers

Cost of goods sold …………………………………………………. $135,460

(3) Cash payments for operating expenses

Operating expenses exclusive of

depreciation ……………………………………….. $12,410

PROBLEM 12-11A

SPICER COMPANY

Statement of Cash Flows

For the Year Ended December 31, 2017

Cash flows from operating activities

Net income ……………………………………………………. $ 37,000

Adjustments to reconcile net income

to net cash provided by operating

activities:

Cash flows from investing activities

Sale of land ($130,000 + $40,000 – $145,000) …… 25,000

Sale of equipment …………………………………………. 8,000

PROBLEM 12-12A

Transaction

Free Cash

Flow

($125,000)

(a)

Recorded credit sales $2,500.

NE

(b)

Collected $1,900 owed by customers.

I

(c)

Paid amount owed

to suppliers, $2,750.

D

(e)

Purchased new equipment $5,000; signed a long-term

note payable for the cost of the equipment.

(f)

Purchased a patent and paid $65,000 cash for the

D

CT 12-1 FINANCIAL REPORTING PROBLEM

(a) Net cash provided by operating activities (in millions):

2014 $59,713

2013 $53,666

(b) The decrease in cash and cash equivalents for the year ended

September 27, 2014 was $415 million.

CT 12-2 COMPARATIVE ANALYSIS PROBLEM

(a)

(in thousands)

Columbia

Sportswear

VF Corporation

CT 12-3 COMPARATIVE ANALYSIS PROBLEM

(a)

(All amounts in millions)

Amazon

Wal-Mart

CT 12-4 REAL-WORLD FOCUS

CT 12-5 REAL-WORLD FOCUS

(a) At the end of 2009 the nonfinancial companies in the Standard and

Poor’s 500 had accumulated $932 billion. This represented a 31%

increase over the prior year.

(b) First, cash (and short term investments) do not generate a very good

CT 12-6 REAL-WORLD FOCUS

(a) The stock was issued at a price of $70 per share. A few months

previously it sold for more than $300 per share.

(b) The company issued shares of stock, even though its stock price was

CT 12-7 DECISION MAKING ACROSS THE ORGANIZATION

(a) COMPUTER SERVICES COMPANY

Statement of Cash Flows

For the Year Ended January 31, 2017

Cash flows from operating activities

Net loss ……………………………………………. $ (35,000)*

Adjustments to reconcile net income

to net cash provided by operating

activities:

CT 12–7 (Continued)

*Computation of net income (loss)

Sales of merchandise …………………………. $385,000

Interest revenue …………………………………. 6,000

Gain on sale of investment

(b) From the information given, it appears that from an operating stand–

point, Computer Services Company did not have a superb first year,

having suffered a $35,000 net loss. Maria is correct; the statement of

cash flows is not prepared in correct form. The correct format

CT 12-8 COMMUNICATION ACTIVITY

MEMO

To: Walt Jax

From: Student

Re: Statement of cash flows

The statement of cash flows provides information about the cash receipts

and cash payments of a firm, classified as operating, investing, and financing

activities. The operating activities section of the company’s statement of

cash flows shows that cash increased by $172,000 as a result of transactions

CT 12-9 ETHICS CASE

(a) The stakeholders in this situation are:

Hans Pfizer, president of Pendleton Automotive Corporation.

Kurt Nolte, controller.

(b) The president’s statement, “We must get that amount above $1 million,”

puts undue pressure on the controller. This statement along with his

statement, “I know you won’t let me down Kurt,” encourages Kurt to do

something unethical.

CT 12–10 ALL ABOUT YOU

(a) The article describes three factors that determine how much money

you should set aside. (1) Your willingness to take risk. You need to evaluate

how willing you are to experience wide swings in your financial position.

(2) Your needs. You need to carefully evaluate your situation and evaluate

(3) Your upcoming expenses. Here you need to look further out into the

horizon and consider the implications of larger events such as a big trip,

a wedding, or education costs.

CT 12-11 FASB CODIFICATION ACTIVITY

(a) Cash equivalents are short-term, highly liquid investments that have

both of the following characteristics:

a. Readily convertible to known amounts of cash

b. So near their maturity that they present insignificant risk of changes

in value because of changes in interest rates.

(b) Financing activities include obtaining resources from owners and

providing them with a return on, and a return of, their investment;

receiving restricted resources that by donor stipulation must be used

CT 12-11 (Continued)

(d) Operating activities include all transactions and other events that are

not defined as investing or financing activities (see paragraph 230–10–

45-12 through 45-15). Operating activities generally involve producing

(e) The primary objective of a statement of cash flows is to provide

relevant information about the cash receipts and cash payments of an

entity during a period.

As indicated in the glossary at this same section, cash includes not

only currency on hand but demand deposits with banks or other

financial institutions. Cash also includes other kinds of accounts that

have the general characteristics of demand deposits in that the

(f) Information about all investing and financing activities of an entity

during a period that affect recognized assets or liabilities but that do

not result in cash receipts or cash payments in the period shall be

IFRS CONCEPTS AND APPLICATION

IFRS 12-1

Under IFRS bank overdrafts are treated as part of cash and cash

equivalents on the balance sheet. As a result, on the statement of cash

IFRS 12-2

The treatment of these items under IFRS and GAAP is as follows:

IFRS GAAP

(a) Interest paid Operating or financing Operating

(b) Interest received Operating or investing Operating

IFRS 12-3 INTERNATIONAL FINANCIAL REPORTING PROBLEM

(a) The company reports interest paid as an operating activity.

(b) The company reports dividends received as an operating activity.