Bal., 6/30/2016
24,100
Dividends (plug)
Net income
99,510
Bal., 6/30/2017
33,300
Exercise 16-12B (continued)
Notes
(1)
Sales …………………………………………………………………………………………………
$678,000
Less increase in accounts receivable ………………………………………………….
Cash received from customers ……………………………………………………………
$664,000
(2)
Cost of goods sold ……………………………………………………………………………..
$411,000
Less decrease in inventory …………………………………………………………………
Purchases ………………………………………………………………………………………….
Plus decrease in accounts payable ……………………………………………………..
5,000
Cash paid for inventory ………………………………………………………………………
$393,300
(3)
Other operating expenses …………………………………………………………………..
$ 67,000
Plus decrease in wages payable ……………………………………………………….
Cash paid for other operating expenses ………………………………………………
$ 75,000
(4)
Income taxes expense ………………………………………………………………………..
$ 43,890
Plus decrease in income taxes payable ……………………………………………….
400
Cash paid for income taxes …………………………………………………………………
$ 44,290
(5)
Cost of equipment sold (Given) …………………………………………………………..
$ 48,600
Accumulated depreciation of equipment sold* ……………………………………..
Book value of equipment sold …………………………………………………………….
Gain on sale of equipment ………………………………………………………………….
2,000
Cash receipt from sale of equipment ……………………………………………………
$ 10,000
Cost of equipment sold ………………………………………………………………………
$ 48,600
Plus net increase in the equipment account balance …………………………..
9,000
Cash paid for new equipment (given) …………………………………………………..
$ 57,600
Equipment
Accumulated Depreciation, Equipment
Bal., 6/30/2016
115,000
Bal., 6/30/2016
Purchase
Sale *40,600
Depr. Expense
Bal., 6/30/2017
124,000
Bal., 6/30/2017
(6)
Carrying value of notes retired ……………………………………………………………
$ 30,000
Cash payment to retire notes ………………………………………………………………
$ 30,000
(7)
Retained Earnings
958
Exercise 16-13A (30 minutes)
SCORETECK CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2017
December
31, 2016
Analysis of Changes
December
31, 2017
Debit
Credit
Balance sheet—debit bal. accounts
Cash ………………………………………………….
$ 80,000
$ 60,000
Inventory……………………………………………
Plant assets ………………………………………
600,000
670,000
Balance sheet—credit bal. accounts
Accum. depreciation—Plant assets ….
$ 100,000
(c)
70,000
$ 170,000
Notes payable ……………………………………
(e)
20,000
Common stock …………………………..……..
$1,050,000
Statement of cash flows
Operating activities
Net income ………………………………………..
(a)
100,000
Increase in accounts receivable ……….
Decrease in merch. inventory …………..
Decrease in accounts payable ………….
Depreciation expense ……………………….
(c)
Investing activities
Payment for plant assets…………………..
Financing activities
Paid cash dividends ………………………….
Issued note payable ………………………….
(e)
959
Exercise 16-14B (15 minutes)
Statement of Cash Flows
Noncash
Operating
Activities
Investing
Activities
Financing
Activities
Investing &
Financing
Activities
Not Reported
on Statement
or in Notes
a. Retired long-term notes
payable by issuing stock
X
payable
period
960
Exercise 16-15B (15 minutes)
Case X:
Sales revenue …………………………………………………..
$515,000
Accounts receivable, Dec. 31, 2017 ……………………
$ 27,200
Accounts receivable, Dec. 31, 2018 ……………………
Less increase in accounts receivable ………………..
Cash received from customers ………………………….
$508,600
Case Y:
Rent expense ……………………………………………………
$139,800
Rent payable, Dec. 31, 2017 …………………………..
Rent payable, Dec. 31, 2018 …………………………..
Plus decrease in rent payable …………………………..
Cash paid for rent ……………………………………………..
Case Z:
Cost of goods sold ……………………………………………
$525,000
Inventory, Dec. 31, 2018 …………………………..
Inventory, Dec. 31, 2017 …………………………..
Less decrease in merch. inventory ……………………
Exercise 16-16B (20 minutes)
Cash flows from operating activities
Receipts from customers (see note a) ……………………………………..
$1,797,500
Payments for inventory (see note b) ………………………………………..
Payments for salaries (see note c) …………………………………………..
Payments for rent ………………………………………………………………….
Payments for utilities …………………………………………………………….
Exercise 16-17B (20 minutes)
FERRON COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Receipts from customers …………………………………….
$ 495,000
Receipts of interest……………………………………………..
3,500
Payments for inventory ……………………………………….
Payments for salaries ………………………………………….
Payments for other expenses ………………………………
Cash flows from investing activities
Receipt from sale of equipment …………………………..
Payment for store equipment ………………………………
Cash flows from financing activities
Receipt from borrowing on six-month note ………….
Payment of cash dividends …………………………………
Net increase in cash and cash equivalents ……………..
$108,000
Note No. ___
Noncash investing and financing activities
(1) Issued common stock to retire $185,500 of bonds payable.
Exercise 16-18B (40 minutes)
1.
THOMAS CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Cash received from customers ………………………………….
$5,000,000
Cash received from dividends …………………………………..
208,400
Cash paid for inventory …………………………………………….
Cash paid for wages …………………………………………………
Cash paid for rent ……………………………………………………..
Cash paid for interest ……………………………………………….
Net cash provided by operating activities ………………….
Cash flows from investing activities
Cash paid for purchases of machinery ………………………
Cash paid for purchases of long-term investments ……
Cash received from sale of land ………………………………..
220,000
Cash received from sale of machinery ……………………….
Cash flows from financing activities
Cash received from issuing stock …………………………..
Cash received from borrowing ………………………………….
Cash paid for note payable ……………………………………….
Cash paid for dividends …………………………………………….
Cash paid for treasury stock purchases. ……………………
Net cash provided by financing activities …………………..
Net increase in cash……………………………………………………
Beginning balance of cash ………………………………………….
2.
a. (i) Financing section reported the largest cash inflow of $4,036,000.
(ii) Investing section reported the largest cash outflow of $2,566,000.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 16
963
PROBLEM SET A
Problem 16-1A (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………………………………….
$ 6,000
)
)
)
964
Problem 16-2AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers (1) …………………………………………………
$ 97,400
)
)
)
)
)
Supporting calculations
(1) Sales + Decrease in receivables = $97,200 + ($5,800 – $5,600) = $97,400
965
Problem 16-3A (50 minutes)
Part 1
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………………………………………
$114,975
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense ……………………………………………………….
20,750
Loss on disposal of equipment …………………………………………..
Increase in inventory ($275,656 – $251,800) …………………………..
Decrease in prepaid expenses ($1,875 – $1,250) ……………………
Decrease in accounts payable ($114,675 – $53,141) ………………
Cash flows from investing activities
Cash received from sale of equipment …………………………………..
11,625
Cash paid for equipment ……………………………………………………….
Cash paid on long–term note …………………………………………………..
Cash received from issuing stock (2,500 x $20) ……………………….
50,000
Cash paid for dividends ……………………………………………………….
(50,100)
Cash balance at December 31, 2016 ………………………………………….
Problem 16-3A (Concluded)
Part 2
Forten Company’s operations provide a positive net cash inflow of $40,900—a
good result. At the same time, the cash balance decreased by $23,700 (32%)
66,375
$600,775
Problem 16-4AA (60 minutes)
FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2017
December
31, 2016
Analysis of Changes
December
31, 2017
Debit
Credit
Balance sheet—debits
Cash ………………………………………………….
$ 73,500
$ 49,800
Accounts receivable …………………………
(b)
$15,185
Inventory …………………………………………..
(c)
23,856
Prepaid expenses …………………………..
$ 625
Equipment ………………………………………..
(h)
96,375
46,875
$485,800
$550,016
Balance sheet—credits
Accum. depreciation—Equip. …………..
$ 46,000
(g)
30,125
(f)
20,750
$ 36,625
Accounts payable …………………………..
(e)
61,534
Short–term notes payable …………………
Long–term notes payable ………………….
(k)
50,125
66,375
Common stock, $5 par value ……………
12,500
37,500
Retained earnings …………………………..
50,100
$485,800
$550,016
Statement of cash flows
Operating activities
Net income ……………………………………….
(a)
114,975
Increase in accts. receivable …………….
15,185
Increase in merch. inventory …………….
23,856
Decrease in prepaid expenses ………….
(d)
Decrease in accounts payable ………….
61,534
Depreciation expense ……………………….
20,750
Loss on sale of equipment ……………….
(g)
Investing activities
Receipt from sale of equipment ………..
(g)
11,625
Payment to purchase equipment ……..
30,000
Financing activities
Borrowed on short–term note……………
Payment on long–term note ………………
50,125
Issued common stock for cash ………..
50,000
Payments of cash dividends …………….
50,100
Noncash investing and
financing activities
Purchase of equip. financed
968
Problem 16-4AA (Concluded)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………………………………………
Adjustments to reconcile net income to net
cash provided by operating activities:
Income statement items not affecting cash
Depreciation expense ……………………………………………………….
20,750
Loss on disposal of equipment …………………………………………..
Changes in current assets and current liabilities
Increase in accounts receivable ($65,810 – $50,625) ……………..
Increase in inventory ($275,656 – $251,800) …………………………..
Decrease in prepaid expenses ($1,875 – $1,250 ) …………………..
Decrease in accounts payable ($114,675 – $53,141) ………………
Net cash provided by operating activities …………………………..
Cash flows from investing activities
Cash received from sale of equipment …………………………………..
11,625
Cash flows from financing activities
Cash borrowed on short–term note ………………………………………..
Cash paid on long–term note …………………………………………………..
Cash received from issuing stock (2,500 x $20) ……………………….
50,000
Cash paid for dividends ……………………………………………………….
(50,100)
Net cash used in financing activities …………………………..………….
Net decrease in cash …………………………………………………………………
969
Problem 16-5AB (40 minutes)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Cash received from customers (Note 1) ………………..
$567,315
Cash paid for inventory (Note 2) …………………………..
Cash paid for other expenses (Note 3) ………………….
Cash paid for income taxes …………………………………
Net cash provided by operating activities …………….
$ 40,900
Cash flows from investing activities
Cash received from sale of equipment …………………
Cash paid for equipment ……………………………………..
Net cash used in investing activities ……………………
Cash flows from financing activities
Cash borrowed on short-term note ………………………
Cash paid on long-term note ……………………………….
Cash received from issuing stock (2,500 x $20) ……..
Noncash investing and financing activities
Supporting calculations
(1) Sales – Increase in receivables = $582,500 – ($65,810 – $50,625) = $567,315
970
Problem 16-6A (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Cash flows from investing activities
Cash paid for equipment …………………………………………………..
(36,000)
Cash flows from financing activities
Cash balance at December 31, 2016 …………………………………..
971
Problem 16-7AA (50 minutes)
GOLDEN CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2017
December
31, 2016
Analysis of Changes
December
31, 2017
Debit
Credit
Balance sheet—debits
Cash ………………………………………………….
$ 107,000
$ 164,000
Accounts receivable …………………………
71,000
83,000
Inventory …………………………………………..
(c)
Equipment ………………………………………..
$1,003,000
$1,183,000
Balance sheet—credits
Accum. depreciation—Equip. …………..
$ 104,000
(f)
$ 54,000
$ 158,000
Accounts payable …………………………..
71,000
(d)
16,000
87,000
Income taxes payable ……………………….
25,000
(e)
28,000
Common stock, $2 par value …………….
24,000
36,000
Retained earnings …………………………..
(a)
122,000
$1,003,000
Statement of cash flows
Operating activities
Net income ………………………………………..
(a)
136,000
Increase in accounts receivable ………
12,000
Increase in merch. inventory …………….
(c)
75,000
Increase in accounts payable ……………
Increase in income tax payable …………
(e)
Depreciation expense ……………………….
Investing activities
Payment for equipment …………………….
(g)
36,000
Financing activities
Issued common stock for cash ………..
Paid cash dividends ………………………….
972
Problem 16-7AA (Concluded)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………………………………..
$136,000
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement items not affecting cash
Depreciation expense ………………………………………………….
54,000
Changes in current assets and current liabilities
Increase in accounts receivable ($83,000 – $71,000) ………
Increase in inventory ($601,000 – $526,000) ……………………
Increase in accounts payable ($87,000 – $71,000) ………….
Increase in taxes payable ($28,000 – $25,000) ………………..
Net cash provided by operating activities ………………………..
(89,000)
973
Problem 16-8AB (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Cash received from customers (Note 1) ……………..
$1,780,000
Cash paid for inventory (Note 2) ……………………….
Cash paid for other operating expenses …………..
Cash paid for income taxes (Note 3) ………………….
Net cash provided by operating activities …………
$122,000
Cash flows from investing activities
Cash paid for equipment …………………………………..
Cash flows from financing activities
Cash from issuing stock (12,000 x $5) ………………..
Cash paid for cash dividends …………………………..
Net cash used in financing activities ………………..
Net increase in cash ……………………………………………
$ 57,000
Supporting calculations
(2) Cost of Increase in Increase in
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 16
974
PROBLEM SET B
Problem 16-1B (35 minutes)
SALT LAKE COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2017
Cash flows from operating activities
Net income …………………………………………………………………….
$ 20,000
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
)
)
975
Problem 16-2BB (35 minutes)
SALT LAKE COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2017
Cash flows from operating activities
Cash receipts from customers (1) ………………………………………………..
$ 155,400
Cash payments to suppliers (2) ……………………………………………………
)
Cash payments for salaries (3) …………………………………………………….
)
Cash payments for rent (4) ……………………………………………………….
)
Cash payments for insurance (5) ………………………………………………….
)
Cash payments for utilities (6) ……………………………………………………..
)
Cash payments for interest ……………………………………………………….
)
Supporting calculations
976
Problem 16-3B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Net income ………………………………………………………………………………
$158,100
Adjustments to reconcile net income to net
cash provided by operating activities
Income statement item not affecting cash
Depreciation expense ……………………………………………………….
Changes in current assets and current liabilities
Decrease in accounts receivable ($80,750 – $77,100) …………….
Decrease in inventory ($250,700 – $240,600) ……………………
Decrease in prepaid expenses ($17,000 – $15,100) ………………..
Decrease in accounts payable ($102,000 – $17,750) ………………
Net cash provided by operating activities …………………………..
Cash received from sale of equipment …………………………………..
Cash paid for equipment ……………………………………………………….
Net cash used in investing activities ………………………………………
Cash borrowed on short–term note ………………………………………..
Cash paid on long–term note …………………………………………………..
Cash received from issuing stock (3,000 x $15) ……………………….
Cash paid for dividends ……………………………………………………….