CHAPTER 13
SOLUTIONS TO EXERCISES—SET B
EXERCISE 13-1B
1. (a) Cash …………………………………………….. 18,000
Land ………………………………………. 15,000
Gain on Disposal …………………….. 3,000
2. (a) Cash ……………………………………………………………… 32,000
Common Stock ………………………………………… 32,000
(b) The cash receipt (of $32,000) is reported in the financing section.
4. (a) Salaries and Wages Expense ………………………….. 11,000
Cash ………………………………………………………. 11,000
(b) Salaries and wages expense is not reported separately on the
statement of cash flows. It is part of the computation of net income
5. (a) Equipment …………………………………………………….. 9,000
Common Stock ……………………………………….. 1,000
Paid-in Capital in Excess of Par Value ………. 8,000
(b) The issuance of common stock for equipment ($9,000) is reported
as a noncash financing and investing activity at the bottom of the
statement of cash flows.
EXERCISE 13-2B
LEONARD COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ……………………………………………………. $160,000
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation expense ……………………………… $20,000
EXERCISE 13-3B
RANNIER INC.
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………………. $132,000
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation expense …………………………... $15,000)
Increase in accounts receivable …………….. (16,000)
EXERCISE 13-4B
BASSETT CORP
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ……………………………………………….. $ 47,000)
Adjustments to reconcile net income
to net cash provided by operating
activities
Cash flows from investing activities
Sale of equipment ……………………………………… 8,000*
Purchase of equipment ……………………………… (80,000)
Cash flows from financing activities
Payment of cash dividends ……………………….. (19,000)
*Cost of equipment sold ……………………………. $ 44,000)
EXERCISE 13-5B
(a) VOX CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………………. $ 27,630)
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation expense …………………………... $ 5,000 )
Cash flows from financing activities
* $26,000 – 20,000 = $6,000; $6,000 – $3,900 = $ 2,100
EXERCISE 13-6B
VINCENTE COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………….. $ 99,000)
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation expense ……………………. $29,000)
Cash flows from investing activities
Sale of land ………………………………………….. 20,000)
Purchase of equipment ………………………… (50,000)
Net cash used by investing
activities ……………………………………. (30,000)
EXERCISE 13-7B
(a) HARMAN CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………… $ 34,300)
Adjustments to reconcile net income
to net cash provided by operating
activities
Cash flows from investing activities
Sale of equipment ………………………………… 5,300)
Cash flows from financing activities
Issuance of common stock ……………………. $10,000)
Retirement of bonds ……………………………… (20,000)
(b) $49,600 – $0 – $31,400 = $18,200
*EXERCISE 13-8B
Revenues ………………………………………………………… $175,000)
Deduct: Increase in accounts receivable ………….. 60,000
Cash receipts from customers* ………………….. $115,000
Operating expenses …………………………………………. 88,000)
**
Accounts Receivable
Cash receipts for year 115,000
Operating expenses for year 88,000
Balance, End of year 25,000
*EXERCISE 13-9B
(a) Cash payments to suppliers
Cost of goods sold …………………………... $ 5,586.1 million
Add: Decrease in accounts payable ……. 3.7
(b) Cash payments for operating expenses
Operating expenses exclusive
of depreciation ……………………………… $10,285.6 million
($11,493.4 – $1,207.8)
*EXERCISE 13-10B
Cash flows from operating activities
Cash receipts from
Customers ………………………………………….. $212,000*
Dividend revenue ………………………………… 18,000*
$230,000*
Less cash payments:
To suppliers for merchandise ………………. 105,000
*EXERCISE 13-11B
Cash payments for rent
Rent expense …………………………………………….. $ 60,000*
Add: Increase in prepaid rent ……………………… 3,500*
Cash payments for rent ………………………………. $ 63,500*
SOLUTIONS TO PROBLEMS—SET C
PROBLEM 13-1C
(a) Cash inflows (outflows) related to plant assets 2017:
Equipment purchase ($90,000)
Land purchase (30,000)
Proceeds from equipment sales 7,000*
*Cost of equipment sold $240,000 + $90,000 – $300,000 = $30,000
Note to instructor—some students may find journal entries helpful in under–
standing this exercise.
Equipment …………………………………………………….. 90,000
Cash ………………………………………………………. 90,000
Land …………………………..…………………………………. 30,000
(b) Equipment purchase Investing activities (outflow)
PROBLEM 13-2C
ANTAR COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………… $1,055,000
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation expense ………………………….. $100,000
Amortization expense ………………………….. 20,000
Decrease in accounts receivable ………….. 320,000
*PROBLEM 13-3C
ANTAR COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers …….. $5,720,000 (1)
Less cash payments:
To suppliers ………………………… $3,380,000 (2)
Computations:
(1) Cash receipts from customers
Sales ……………………………………………………….. $5,400,000
(2) Cash payments to suppliers
Cost of goods sold …………………………………… $3,280,000
Add: Increase in inventories ……………………… 150,000
(3) Cash payments for operating expenses
Operating expenses ……………… $ 945,000
($420,000 + $525,000)
Add: Increase in prepaid
PROBLEM 13-4C
CARRON INC.
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………………. $120,000
Adjustments to reconcile net income
to net cash provided by operating activities
*PROBLEM 13-5C
CARRON INC.
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers ………… $580,000 (1)
Less cash payments:
(1) Computation of cash receipts from customers
Revenues ………………………………………………………………. $560,000
(2) Computation of cash payments for operating expenses
Operating expenses ……………………………………………….. $400,000
Add: Decrease in accounts payable………………………… 28,000
PROBLEM 13-6C
(a) JOSTEN COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ……………………………………………. $ 25,000
Adjustments to reconcile net income
to net cash used by operating
activities
Depreciation expense ……………………… $ 5,000
Increase in accounts receivable ………. (11,000)
Cash flows from investing activities
Sale of equipment …………………………………. 12,000
Purchase of equipment ………………………….. (6,000)
Net cash provided by investing
activities …………………………………….. 6,000
Cash flows from financing activities
(b) ($5,000) – $6,000 – $20,000 = ($31,000)
*PROBLEM 13-7C
(a) JOSTEN COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers …….. $270,000 (1)
Less cash payments:
To suppliers ………………………… $233,000 (2)
For operating expenses ……….. 32,000
Cash flows from investing activities
Sale of equipment ………………………. 12,000
Purchase of equipment ………………. (6,000)
Cash flows from financing activities
Issuance of bonds ……………………… 10,000
Computations:
(1) Cash receipts from customers
Sales ………………………………………………………. $281,000
*PROBLEM 13-7C (Continued)
(2) Cash payments to suppliers
Cost of goods sold ………………………………………… $204,000
Add: Increase in inventory …………………………….. 16,000
Cost of purchases………………………………………….. 220,000
(3) Cash payments for income taxes
Income tax expense ……………………………………….. $ 10,000
PROBLEM 13-8C
PRESSURE COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………. $ 111,500
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation expense ………………………… $ 30,500
Gain on disposal of plant assets ………… (4,000)
Cash flows from investing activities
Sale of investments ………………………………….. 27,500
Sale of plant assets ………………………………….. 16,000
Cash flows from financing activities
Issuance of bonds ……………………………………. 75,000
Sale of common stock………………………………. 50,000
Payment of cash dividends ………………………. (49,000)
Net cash provided by financing
*PROBLEM 13-9C
PRESSURE COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers…………. $273,700 (1)
Less cash payments:
To suppliers …………………………….. $ 116,830 (2)
For operating expenses ……………. 23,240 (3)
Cash flows from investing activities
Sale of investments ………………………… 27,500
Sale of plant assets ………………………… 16,000
Cash flows from financing activities
Issuance of bonds ………………………….. 75,000
Sale of common stock …………………….. 50,000
*PROBLEM 13-9C (Continued)
Computations:
(1) Cash receipts from customers
Sales ……………………………………………………………………. $297,500
Deduct: Increase in accounts receivable ……………….. (23,800)
Cash receipts from customers ……………………………….. $273,700
(2) Cash payments to suppliers
Cost of goods sold ……………………………………………….. $ 99,000
Add: Increase in inventory ……………………………………. 24,250
PROBLEM 13-10C
MEDIC COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………….. $47,890
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation expense ……………………………. $ 53,000
Gain on disposal of equipment ………………. (2,000)*
Cash flows from investing activities
Sale of land ………………………………………………….. 30,000
Sale of equipment …………………………..……………. 37,000
Net decrease in cash …………………………………………… (16,000)
Cash at beginning of period ………………………………… 57,000