Financial Accounting, 10/e 12–21
E12–23.
Req. 1
Cash flows from operating activities—direct method
Cash collected from customers1
$151,600
Cash payments to suppliers2
Cash payments for other expenses3
Cash payments for income tax4
Net cash provided by operating activities
$30,758
1. Cash collected from customers = Revenues + Decrease in Accounts receivable
$150,800 + $800 = $151,600
Req. 2
The primary reason for the net loss was the depreciation and amortization expenses,
which are noncash expenses. A large depreciation and amortization expense, along
E12–24
Req. 1
Panel A: Changes in Cash Account
Operating
(1) Net Income
20,200 7,000 (3) Inventory
Cash (A)
Contributed Capital (SE)
Accounts Receivable (A)
Merchandise Inventory (A)
Accounts Payable (L)
Wages Payable (L)
Financial Accounting, 10/e 12–23
E12–24 (continued)
Req. 2
GOLFGEAR & MORE, INC.
Statement of Cash Flows
For the Year Ended December 31, Current Year
Cash flows from operating activities:
Net income
$ 20,200
Depreciation expense
3,000
Changes in current assets and current liabilities:
Inventory
(7,000
)
Accounts Payable
(3,000
)
Wages Payable
(1,000
)
Income Taxes Payable
1,500
Cash flows provided by operating activities
13,700
Cash flows from investing activities:
Purchase of investment
(15,000
)
Proceeds from sale of equipment
6,000
Cash flows provided by (used in) investing activities
(9,000
)
Cash flows from financing activities:
Issuance of common stock
6,000
Dividends paid
(12,000
)
Cash flows provided by (used in) financing activities
(6,000
)
Net increase (decrease) in cash
(1,300
)
Cash, beginning of year
20,500
Cash, end of year
$ 19,200
PROBLEMS
P12–1.
Req.1
Balance sheet at December 31
Related Cash
Flow Section
Current
Year
Prior
Year
Change
Δ in Cash
Cash
$73,250
$63,500
+9,750
10
Net increase in Cash
O
Accounts receivable
15,250
21,350
-6,100
3
Add to net income the decrease in A/R
O
Merchandise inventory
18,000
4
Subtract from net income the increase in Inventory
Property and equipment
209,250
160,350
7
depreciation
affect cash
$263,750
$217,450
O
Accounts payable
$16,500
$19,000
-2,500
5
Subtract from net income the decrease in Accounts
Payable
O
Wages payable
2,000
2,700
-700
6
Payable
Note payable, long-term
56,300
8
additional paid-in capital
Retained earnings
1
Increased for net income amount of $26,800
$263,750
$217,450
Subtract from net income the decrease in Wages
Income statement for Current Year
Sales
$205,000
Cost of goods sold
Depreciation expense
Other expenses
Net Income
Financial Accounting, 10/e 12–25
P12-1 (continued)
Sharp Screen Films, Inc.
Statement of Cash Flows
For the Year Ended December 31, Current Year
Cash flows from operating activities:
Net income
$26,800 1
Adjustments to reconcile net income to net
cash provided by operating activities:
2
3
4
5
6
Cash flows from investing activities:
Cash payments to purchase property and
equipment
(48,900) 7
Cash flows from financing activities:
Cash payments on long-term note
(14,700)
8
Cash payments for dividends
Cash receipts from issuing stock
9
Net increase in cash during the year
Req. 2
An overall increase in cash of $9,750 came from inflows of $35,950 from operating
activities and a stock issuance of $38,050. A large percentage of the cash inflows were
P12–2.
Req. 1
Related
Cash
Balance sheet at December 31
Flow
Section
Current
Year
Prior
Year
Change
Δ in Cash
Cash
$37,000
$29,000
+8,000
10
Net increase in Cash
O
Accounts receivable
+4,000
Subtract from net income the increase in A/R
O
Merchandise inventory
+3,000
4
Subtract from net income the increase in Inventory
Property and equipment
7
Payment in cash for equipment
3
O
Accounts payable
$36,000
$27,000
+9,000
5
Add to net income the increase in Accounts Payable
O
Accrued wage expense
1,200
1,400
–200
6
Subtract from net income the decrease in Accrued
Wage Expense
Note payable, long-term
8
Cash used for repayment of note principal
F
Common stock and additional
Issuance of stock for cash
Retained earnings
1
Increased for net income amount
Income statement for current year
Sales
$120,000
Cost of goods sold
Other expenses
Net Income
Financial Accounting,10/e 12-27
P12–2. (continued)
BGP Electrical Supply
Statement of Cash Flows
For the Year Ended December 31, Current Year
Cash flows from operating activities:
Net income
$12,200
1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
$ 5,000
2
Increase in accounts receivable
3
Increase in merchandise inventory
4
Increase in accounts payable
5
Decrease in accrued wage expense
(200)
6
Net cash provided by operating activities
19,000
Cash flows from investing activities:
Cash payments to purchase property and
equipment
(21,000)
7
Cash flows from financing activities:
9
Net increase in cash during the year
8
Req. 2
There was an increase in cash for BGP this year of $8,000. Operating activities
P12–3.
Req.1
Related Cash
Balance sheet at December 31
Flow Section
Current
Year
Prior
Year
Change
Δ in Cash
Cash
$73,250
$63,500
+9,750
10
Net increase in Cash
O
Accounts receivable
15,250
21,350
-6,100
3
Add to sales to compute collections from customers
O
Merchandise inventory
23,450
18,000
+5,450
4
Add to CGS to compute cash paid to suppliers
Property and equipment
160,350
7
Payment in cash for equipment
depreciation
additional paid-in capital
Income statement for current year
Sales
$205,000
Cost of goods sold
123,500
Depreciation expense
11,700
Other expenses
Net Income
Financial Accounting, 10e 12-29
P12-3. (continued)
Sharp Screen Films Inc.
Statement of Cash Flows
For the Year Ended December 31, Current Year
Cash flows from operating activities:
Collections from customers ($205,000 +
$6,100)
$211,100
3
(131,450)
6
Cash flows from investing activities:
Cash payments to purchase property and
equipment
(48,900) 7
Cash flows from financing activities:
Cash payments on long-term note
(14,700)
8
Cash payments for dividends
Cash receipts from issuing stock
9
Req. 2
An overall increase in cash of $9,750 came from inflows of $35,950 from operating
P12–4.
Req. 1
OMEGA COMPANY
Cash Flows from Operating Activities
Direct Method
(in thousands)
Cash flows from operating activities:
Cash receipts from customers ……………………………………………………….
$22,780
Cash payments to suppliers …………………………………………………………..
)
Cash payments for salaries …………………………………………………………..
)
Cash payments for rent…………………………………………………………………
)
Cash payments for insurance ………………………………………………………..
(1,113
)
Cash payments for utilities ……………………………………………………….……
)
Cash payments for bond interest ……………………………………………………
)
Req. 2
OMEGA COMPANY
Cash Flows from Operating Activities
Indirect Method
(in thousands)
Cash flows from operating activities:
Net loss …………………………………………………………………
$ (220
)
Adjustments to reconcile net loss to net cash
provided by operating activities:
)
)
)
Financial Accounting, 10e 12-31
P12–5.
Req. 1
Related
Cash
Balance sheet at December 31
Flow
Section
Current
Year
Prior
Year
Change
Δ in Cash
Cash
$ 34,000
$ 29,000
+5,000
10
Net increase in Cash
O
Accounts receivable
35,000
28,000
+7,000
3
Subtract from net income the increase in A/R
O
Merchandise inventory
41,000
38,000
+3,000
4
Subtract from net income the increase in Inventory
Property and equipment
7
$201,000
O
Accounts payable
$ 36,000
$ 27,000
+9,000
5
Add to net income the increase in Accounts Payable
Note payable, long-term
38,000
44,000
8
Cash used for repayment of note principal
Retained earnings
37,200
25,000
1
Increased for net income amount
$201,000
Income statement for current year
Sales
$120,000
Gain on sale of equipment
Cost of goods sold
70,000
Other expenses
Net Income
$ 12,200
P12–5. (continued)
XS Supply Company
Statement of Cash Flows
For the Year Ended December 31, Current Year
Cash flows from operating activities:
Net income
$12,200
1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
$ 12,000
2
Gain on sale of equipment
(1,000)
Increase in accounts receivable
(7,000)
3
Increase in merchandise inventory
(3,000)
4
Increase in accounts payable
5
Decrease in wages payable
6
Cash flows from investing activities:
Cash payments to purchase equipment
(31,000)
7
Cash received from sale of equipment
4,000
Net cash used by investing activities
(27,000)
Cash flows from financing activities:
Cash payments on long-term note
(6,000)
8
Cash receipts from issuing stock
9
Net increase in cash during the year
Req. 2
There was an increase in cash for XS Supply Company this year of $5,000. Operating
activities provided a positive cash flow of $22,000. This inflow of cash from operating
Financial Accounting, 10e 12-33
P12–6.
Req.1
Panel A: Changes in Cash Account
Operating
(1) Net Income 7,000 3,000 (4) Inventory
(2) Depreciation 4,000
(3) Accounts Receivable 2,000
(6) Wages Payable 500
Net cash provided by operating
activities 16,500
Investing
12,000
(7) Purchased Property, Plant &
(9) Proceeds from Stock Issuance 18,500 6,000 (8) Payment of Long-term Note
Net increase in cash and cash equivalents 15,000
Cash (A)
Panel B: Changes in Non-cash Accounts
Beg. bal. 28,000 Beg. bal. 36,000
(3) Decrease 2,000 (4) Increase 3,000
End. bal. 26,000 End. bal. 39,000
Beg. bal. 60,000 Beg. bal. 24,000
Retained Earnings (SE)
Accounts Receivable (A)
Inventory (A)
Common Stock (SE)
Financial Accounting, 10e 12-35
P12–6. (continued)
Req. 2
HANKS COMPANY
Statement of Cash Flows
For the Year Ended December 31, Current Year
Cash flows from operating activities:
Net income …………………………………………………………….
$7,000
Net cash provided by operating activities ………………………..
Adjustments to reconcile net income to net cash
Cash flows from investing activities:
Cash payments to purchase fixed assets …………………..
(12,000
)
Cash flows from financing activities:
Cash payments on long-term note …………………………….
)
Cash receipts from issuing stock ………………………………
Cash payments for dividends ……………………………………
)
Net increase in cash during the year ……………………………….
Cash balance, January 1, current year …………………………...
Cash balance, December 31, current year ……………………….
Req. 3
There were no noncash investing and financing activities during the current year.