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CHAPTER 15 Statement of Cash Flows
P 15-42
1. a. Indirect Method:
Cash flows from operating activities:
Net income…………………………………………
…
$122,400
Add (deduct) adjusting items:
CHAPTER 15 Statement of Cash Flows
P 15-42 (Continued)
2.
Cash flows from operating activities:
Net income……………………………….……………………
…
$ 122,400
Add (deduct) adjusting items:
Increase in accounts receivable……………………………
…
(18,000)
Net cash from investing activities……………………… (99,000)
Cash flows from financing activities:
Retirement of mortgage………………………………….…
…
$(108,000)
Issuance of bonds…………………………………………….
…
90,000
Rosie-Lee Company
Statement of Cash Flows
For the Year Ended June 30, 2014
P 15-43
Beginning Ending
Balance Debit Credit Balance
Assets:
Cash……………………………..………… $270,000 (1) $ 63,000 $333,000
Accounts receivable……………………. 126,000 (2) 18,000 144,000
Cash flows from operating activities :
Net income (loss)……………………..…
…
(14) 122,400
Increase in accounts receivable……… (2) 18,000
Increase in account payable…………
…
(8) 18,000
Transaction
Worksheet: Rosie-Lee Company
15-19
CHAPTER 15 Statement of Cash Flows
P 15-43 (Continued)
Cash flows from operating activities:
Net income……………………………..…………………
…
$ 122,400
Add (deduct) adjusting items:
Increase in accounts receivable……………………… (18,000)
Cash flows from investing activities:
Sale of equipment……………………………….………
…
$ 3,600
Purchase of investments………………………………
…
(54,000)
Purchase of equipment………………………………… (30,600)
Purchase of land………………………………………..
…
(18,000)
Net cash from investing activities………………
…
(99,000)
Cash flows from financing activities:
Rosie-Lee Company
Statement of Cash Flows
For the Year Ended June 30, 2014
CHAPTER 15 Statement of Cash Flows
P 15-44
Cash flows from operating activities:
Net loss…………………………………………………
…
$ (15,000)
Add (deduct) adjusting items:
Decrease in accounts receivable……………………
…
20,000
Cash flows from financing activities:
Retirement of preferred stock………………………
…
$(110,000)
Issuance of common stock…………………………
…
100,000
Brierwold Corporation
Statement of Cash Flows
15-21
CHAPTER 15 Statement of Cash Flows
P 15-45
Beginning Ending
Balance Debit Credit Balance
Assets:
Cash…………………………………
…
$ 100,000 (1) $ 50,000 $ 150,000
Accounts receivable………………
…
200,000 (2) $ 20,000 180,000
Inventory……………………………
…
400,000 (3) 10,000 410,000
Cash flows from operating activities :
Net loss……………………………… (12) 15,000
Depreciation expense……………
…
Gain on sale of equipment………
…
Decrease in accounts receivable
…
(2) 20,000
Transaction
Worksheet: Brierwold Corporation
CHAPTER 15 Statement of Cash Flows
P 15-45 (Continued)
Cash flows from operating activities:
Net loss………………………………….………………
…
$ (15,000)
Add (deduct) adjusting items:
Decrease in accounts receivable……………………
…
20,000
Increase in inventory…………………………………… (10,000)
Cash flows from financing activities:
Retirement of preferred stock………………………… $(110,000)
Issuance of common stock……………………………
…
100,000
Receipt of mortgage……………………………...……
…
110,000
Brierwold Corporation
Statement of Cash Flows
A
t the Year Ended
15-23
CHAPTER 15 Statement of Cash Flows
P 15-46
Cash flows from operating activities:
Net income………………………………………...…………………………
…
$ 17,500
Add (deduct) adjusting items:
Increase in accounts receivable………………………………...………
…
(10,000)
Increase in accounts payable………………………………...…………
…
7,500
Net cash from operating activities…………………………….……
…
$ 111,800
P 15-47
1.
Cash flows from operating activities:
Net income………………………………...……………
Add (deduct) adjusting items:
Decrease in accounts receivable…………………
…
2. First, some assessment of Lemmons’s value is needed. The net worth of Lemmons
as of 2014 is $640,000. What is the market value of these assets? The operating
5,000,000
Golding Company
Statement of Cash Flows
For the Year Ended 2014
$ 25,000,000
15-24
CHAPTER 15 Statement of Cash Flows
P 15-48
Cash flows from operating activities:
Net income………………………………………………… $ 68,000
Add (deduct) adjusting items:
Increase in accounts receivable………………………
…
(10,000)
Cash flows from investing activities:
Sale of equipment………………………………………
…
$ 2,000
Purchase of investments………………………………
…
(30,000)
Cash flows from financing activities:
Retirement of bonds……………………………………
…
$(60,000)
Receipt of mortgage……………………………………
…
50,000
*Beginning accumulated deprecation…………………
…
$ 30,000
Depreciation expense……………………………………
…
11,000
Less accumulated depreciation for asset sold……… (9,000)
Ending accumulated depreciation……………………
…
$ 32,000
Blalock Company
Statement of Cash Flows
For the Year Ended December 31, 201
4
CHAPTER 15 Statement of Cash Flows
P 15-49
Beginning Ending
Balance Debit Credit Balance
Assets:
Cash……………………………………
…
$150,000 (1) $35,000 $185,000
Accounts receivable…………………
…
70,000 (2) 10,000 80,000
Liabilities and equity:
Accounts payable……………………
…
$ 40,000 (8) 10,000 $ 50,000
Bonds payable………………………
…
60,000 (9) 60,000 —
Cash flows from operating activities :
Net income (loss)……………………
…
(14) 68,000
Cash flows from investing activities :
Sale of equipment……………………
…
(5) 2,000
Purchase of equipment……………
…
(4) 17,000
Purchase of land……………………
…
(7) 10,000
Purchase of investments………
…
(3) 30,000
Cash flows from financing activities :
Retirement of bonds…………………
…
(9) 60,000
Transaction
Worksheet: Blalock Company
For the Year Ended, December 31, 201
4
15-26
CHAPTER 15 Statement of Cash Flows
P 15-49 (Continued)
Cash flows from operating activities:
Net income…………………………………………
…
$ 68,000
Add (deduct) adjusting items:
Cash flows from investing activities:
Sale of equipment…………………………………
…
$ 2,000
Purchase of investments…………………………
…
(30,000)
Purchase of equipment…………………………… (17,000)
Purchase of land…………………………………… (10,000)
Net cash from investing activities…………
…
(55,000)
Cash flows from financing activities:
Retirement of bonds………………………………
…
$(60,000)
Blalock Company
For the Year Ended December 31, 2014
Statement of Cash Flows
15-27
CHAPTER 15 Statement of Cash Flows
Case 15-50
1. a. Indirect method:
Net income………………………………………………………………………
…
$32,000
Add (deduct) adjusting items:
Increase in accounts receivable………………………………………….. (4,000)
Decrease in inventory…………………………………………...…………
…
20,000
b. Direct method:
Cash Flows
Revenues…………………………
…
$ (4,000) a$ 316,000
Cost of goods sold………………
…
20,000
b
(200,000)
Income
AdjustmentsStatement
CASES
$ 320,000
15-28
CHAPTER 15 Statement of Cash Flows
Case 15-50 (Continued)
2.
Cash flows from operating activities:
Net income………………………………………………… $32,000
Add (deduct) adjusting items:
Increase in accounts receivable………………………… (4,000)
Cash flows from investing activities:
Sale of equipment…………………………………………
…
6,000
Cash flows from financing activities:
Reduction in bonds payable……………………………
…
$ (8,000)
Payment of dividends……………………………………
…
(8,000)
Piura Manufacturing
Statement of Cash Flows
For the Year Ended June 30, 2014
15-29
CHAPTER 15 Statement of Cash Flows
Case 15-50 (Continued)
3.
Beginning Ending
Balance Debit Credit Balance
Assets:
Cash……………………………………
…
$ 72,000 (1) $74,400 $146,400
Liabilities and equity:
Accounts payable……………………
…
$ 32,000 (7) 16,000 $ 48,000
Wages payable………………………
…
4,000 (8) 1,600 2,400
Cash flows from operating activities :
Net income ……………………………
…
(13
)
32,000
Increase in accounts receivable…
…
(2) 4,000
Decrease in inventory………………
…
(3) 20,000
Cash flows from investing accounts :
Sale of equipment……………………
…
(5) 6,000
Cash flows from financing accounts :
Reduction in bonds payable………
…
(9) 8,000
Payment of dividends………………
…
(12) 8,000
Transaction
Worksheet: Piura Manufacturing
For the Year Ended June 30, 2014
15-30
CHAPTER 15 Statement of Cash Flows
Case 15-50 (Continued)
Cash flows from operating activities:
Net income……………………………………..………
…
$32,000
Add (deduct) adjusting items:
Increase in accounts receivable……………………
…
(4,000)
Cash flows from investing activities:
Sale of equipment…………………………………..…
…
6,000
Cash flows from financing activities:
Reduction in bonds payable…………………………
…
$ (8,000)
4. Although answers may vary, the group should mention that the direct method
provides much more information for investors (a detailed, line-by-line conversion
Piura Manufacturing
Statement of Cash Flows
For the Year Ended June 30, 2014
CHAPTER 15 Statement of Cash Flows
Case 15-51
1. The intent of the owner is to acquire extra operating cash through an arrangement
that essentially provides a side payment by the contractor in order to acquire the
2. Delivering the large order early and reporting it as a cash sale and at the same time
writing off other receivables as collected and borrowing money on the side from
3. The standards that would be violated should Karla agree to Fred’s scheme:
Management accountants have a responsibility to: “Provide decision support
4. Should Fred insist on implementing the plan, then consultation with the board of
directors (if one exists) or owners is mandated. If this brings no resolution of the
