Chapter 13 – Statement of Cash Flows
13–21
PROBLEMS
P13–1.
Req.1
Related Cash
Balance sheet at December 31
Flow Section
2012
2011
Change
Δ in Cash
Cash
$68,250
$63,500
+4,750
10
Net increase in cash
O
Accounts receivable
15,250
22,250
-7,000
3
Add to net income the decrease in A/R
$256,000
$208,000
O
Accounts payable
$9,000
$19,000
-10,000
5
Subtract from net income the decrease in Accounts
Payable
Add to net income the increase in Wages payable
Note payable, long-term
59,500
71,000
8
Cash used for repayment of note principal
Contributed capital
98,500
65,900
9
Issuance of stock for cash
Retained earnings
85,000
1
Increased for net income amount of $46,750
Decreased for dividends declared & paid $12,650
$256,000
$208,000
Income statement for 2012
Sales
$195,000
Cost of goods sold
92,000
Depreciation expense
Other expenses
43,000
Net Income
$46,750
O
Merchandise inventory
22,250
18,000
+4,250
4
Subtract from net income the increase in Inventory
Property and equipment
209,250
150,000
7
Payment in cash for equipment
depreciation
Chapter 13 – Statement of Cash Flows
P13-1 (continued)
HiDef Films, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities:
Net income
$46,750 1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
2
Decrease in accounts receivable
7,000
Increase in merchandise inventory
(4,250)
4
Decrease in accounts payable
(10,000)
5
Increase in wages payable
2,800
6
8,800
Net cash provided by operating activities
55,550
Cash flows from investing activities:
Cash payments to purchase fixed assets
(59,250) 7
Cash flows from financing activities:
Cash payments on long-term note
(11,500)
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 $4,750 came from inflows of $55,550 from operating
activities and a stock issuance of $32,600. A large percentage of the cash inflows were
Chapter 13 – Statement of Cash Flows
13–23
P13–2.
Req. 1
Related
Cash
Balance sheet at December 31
Flow
Section
2013
2012
Change
Δ in Cash
Cash
$37,000
$29,000
+8,000
10
Net increase in cash
O
Less: Accumulated
depreciation
(41,000)
(36,000)
–5,000
2
Add back to NI because depreciation expense does
not affect cash
$201,000
$170,000
O
Accounts payable
$36,000
$27,000
+9,000
5
Add to net income the increase in Accounts Payable
F
Note payable, long-term
8
Cash used for repayment of note principal
F
Contributed capital
Issuance of stock for cash
Retained earnings
1
Increased for net income amount
$201,000
$170,000
Income statement for 2013
Sales
$120,000
Cost of goods sold
70,000
Other expenses
37,800
Net Income
O
Accounts receivable
+4,000
3
Subtract from net income the increase in A/R
O
Merchandise inventory
+3,000
4
Subtract from net income the increase in Inventory
I
Property and equipment
7
Payment in cash for equipment
Chapter 13 – Statement of Cash Flows
P13–2. (continued)
BG Wholesalers
Statement of Cash Flows
For the Year Ended December 31, 2013
Cash flows from operating activities:
Net income
$12,200
1
Adjustments to reconcile net income to net
cash provided by operating activities:
2
(4,000)
(3,000)
4
5
(200)
6
Net cash provided by operating activities
19,000
Cash flows from investing activities:
Cash payments to purchase fixed assets
(21,000)
7
Cash flows from financing activities:
Cash payments on long-term note
(6,000)
8
Cash receipts from issuing stock
9
Req. 2
There was an increase in cash for BG Wholesalers this year of $8,000. Operating
Chapter 13 – Statement of Cash Flows
13–25
P13–3.
Req.1
Related Cash
Balance sheet at December 31
Flow Section
2012
2011
Change
Δ in Cash
Cash
$68,250
$63,500
+4,750
10
Net increase in cash
O
Accounts receivable
15,250
22,250
-7,000
3
Add to sales to compute collections from customers
$256,000
$208,000
O
Accounts payable
$9,000
$19,000
-10,000
5
Add to CGS to compute payments to suppliers
Note payable, long-term
59,500
71,000
8
Contributed capital
98,500
9
$256,000
$208,000
Income statement for 2012
Sales
$195,000
Cost of goods sold
Depreciation expense
Other expenses
Net Income
$46,750
O
Merchandise inventory
22,250
18,000
+4,250
4
Property and equipment
209,250
150,000
7
depreciation
Chapter 13 – Statement of Cash Flows
P13-3. (continued)
HiDef Films Inc.
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities:
Collections from customers ($195,000 +
$7,000)
$202,000
3
(40,200)
Net cash provided by operating activities
55,550
Cash flows from investing activities:
Cash payments to purchase fixed assets
(59,250) 7
Cash flows from financing activities:
Cash payments on long-term note
(11,500)
8
Cash payments for dividends
Cash receipts from issuing stock
Chapter 13 – Statement of Cash Flows
13–27
Req. 2
An overall increase in cash of $4,750 came from an inflow of $55,550 from operating activities and a stock issuance of
P13–4.
Req. 1
ALPHA COMPANY
Cash Flows from Operating Activities
Direct Method
Cash flows from operating activities:
Cash receipts from customers ……………………………………………………….
$20,890
Cash payments to suppliers ………………………………………………………….
)
Cash payments for salaries …………………………………………………………..
)
Cash payments for rent ………………………………………………………………..
)
Cash payments for insurance ………………………………………………………..
)
Cash payments for utilities ……………………………………………………………
)
Cash payments for bond interest ……………………………………………………
)
Chapter 13 – Statement of Cash Flows
13 28
Req. 2
ALPHA COMPANY
Cash Flows from Operating Activities
Indirect Method
Cash flows from operating activities:
Net loss ………………………………………………………………..
$ (870
)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation expense …………………………………………….
Loss on sale of investments ……………………………………
Decrease in accounts receivable ……………………………..
Increase in merchandise inventory …………………………..
)
Increase in accounts payable ………………………………….
Increase in salaries payable ……………………………………
Decrease in rent payable ………………………………………..
)
Decrease in prepaid rent ………………………………………..
Increase in prepaid insurance …………………………………
)
Total adjustments …………………………………………………
Chapter 13 – Statement of Cash Flows
P13–5.
Req. 1
Related
Cash
Balance sheet at December 31
Flow
S ti
2011
2010
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
121,000
100,000
7
does not affect cash
$201,000
$170,000
O
Accounts payable
$ 36,000
$ 27,000
+9,000
5
Add to net income the increase in Accounts payable
O
Wages payable
1,200
1,400
–200
6
Subtract from net income the decrease in Wages
payable
F
Note payable, long-term
38,000
44,000
8
Cash used for repayment of note principal
F
Contributed capital
88,600
72,600
9
Issuance of stock for cash
Retained earnings
37,200
25,000
1
Increased for net income amount
$201,000
$170,000
Income statement for 2011
Sales
$120,000
Gain on sale of equipment
1,00010
Cost of goods sold
70,000
Other expenses
Net Income
$ 12,200
Chapter 13 – Statement of Cash Flows
13 30
P13–5. (continued)
XS Supply Company
Statement of Cash Flows
For the Year Ended December 31, 2011
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
Net cash provided by operating activities
22,000
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 cash provided by financing activities
Net increase in cash during the year
5,000
Cash balance, December 31, 2011
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
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
Chapter 13 – Statement of Cash Flows
13–31
P13–6.
Req.1
Statement of Cash Flows Spreadsheet
Forrest Company
For the Year Ended December 31, 2013
12–31-2012
DR
CR
12–31-2013
BALANCE SHEET
Cash
18,000
26,000
(k)
44,000
Accounts receivable
29,000
3,000
(b)
26,000
Merchandise inventory
36,000
6,000
(c)
30,000
STATEMENT OF CASH FLOWS-INDIRECT METHOD
Inflow
Outflow
Cash flows from operating activities:
Net income
12,000
(a)
Adjustments to net income
Decrease in accounts receivable
3,000
(b)
Decrease in merchandise inventory
6,000
(c)
Increase in accounts payable
3,000
(d)
Depreciation expense
6,000
(e)
Decrease in wages payable
200
(f)
29,800
Cash flows from investing activities:
Cash payment to purchase fixed assets
(g)
Cash flows from financing activities:
Cash payments on long-term note
10,000
(h)
Cash receipts from issuing stock
20,000
(i)
Cash payments for dividends
(j)
26,000
(k)
26,000
Totals
Cash balance, Jan. 1
18,000
Cash balance, Dec. 31
44,000
Fixed assets-net
72,000
(g)
6,000
(e)
76,000
Accounts payable
22,000
3,000
(d)
25,000
Wages payable
(f)
Note payable, long-term
48,000
10,000
(h)
38,000
Common stock-no par
60,000
20,000
(i)
80,000
24,000
3,800
(j)
12,000
(a)
32,200
Chapter 13 – Statement of Cash Flows
13 32
P13–6. (continued)
Req. 2
FORREST COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2013
Cash flows from operating activities:
Net income …………………………………………………………….
$12,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Net cash provided by operating activities ………………
29,800
Cash flows from investing activities:
Cash payments to purchase fixed assets …………………..
(10,000
)
Cash flows from financing activities:
Cash payments on long-term note …………………………….
(10,000
)
Cash receipts from issuing stock ………………………………
20,000
Cash payments for dividends ……………………………………
(3,800
)
Net cash provided by financing activities ……………….
Net increase in cash during the year ……………………………….
26,000
Cash balance, January 1, 2013 ………………………………………
Cash balance, December 31, 2013 …………………………………
$44,000
Depreciation expense …………………………………………….
Decrease in accounts receivable ……………………………..
Decrease in merchandise inventory ………………………….
Increase in accounts payable ………………………………….
Decrease in wages payable …………………………………….
)
Total adjustments …………………………………………………..
Chapter 13 – Statement of Cash Flows
ALTERNATE PROBLEMS
AP13–1.
Req. 1
Related
Cash
Balance sheet at December 31
Flow
Section
2012
2011
Change
Δ in Cash
Cash
$34,000
$29,000
+5,000
10
Net increase in cash
O
Accounts receivable
45,000
28,000
+17,000
3
Subtract from net income the increase in A/R
O
Merchandise inventory
32,000
38,000
–6,000
4
Add to net income the decrease in Inventory
Property and equipment
121,000
100,000
+21,000
7
Payment in cash for equipment
depreciation
$202,000
$170,000
O
Accounts payable
$36,000
$27,000
+9,000
5
Add to net income the increase in Wages payable
F
Note payable, long-term
46,000
–6,000
8
Cash used for repayment of note principal
F
Contributed capital
86,600
70,600
+16,000
9
Issuance of stock for cash
O,F
Retained earnings
37,200
25,000
+12,200
1
Increased for net income of $27,200 and decreased
for dividends declared and paid of $15,000
$202,000
$170,000
Income statement for 2012
Sales
$135,000
Cost of goods sold
Other expenses
Net Income