E17-14 Prepare a worksheet
Comparative balance sheets for International Company are presented below.
2017 2016
Cash $73,000 $22,000
Accounts receivable 85,000 76,000
Inventory 180,000 189,000
Land 75,000 100,000
Equipment 250,000 200,000
Accumulated depreciation – equipment (66,000) (42,000)
Total $597,000 $545,000
Liabilities and Stockholders’ Equity
Accounts payable $34,000 $47,000
Bonds payable 150,000 200,000
Common Stock ($1 par) 214,000 164,000
Retained earnings 199,000 134,000
Total $597,000 $545,000
Additional information:
1. Net income for 2017 was $135,000.
2. Cash dividends of $70,000 were declared and paid.
3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
4. Common stock was issued for $50,000 cash.
5. Depreciation expense was $24,000.
6. Sales for the year were $978,000.
Instructions
Prepare a worksheet for a statement of cash flows for 2017 using the indirect method. Enter
the reconciling items directly on the worksheet, using letters to cross-reference each entry.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
Balance
12/31/16
Debit Credit
Balance
12/31/17
Cash Value Value Value
Accounts Receivable Value Value Value
Inventory Value Value Value Value Value
Land Value Value Value Value Value
Equipment Value Value Value Value Value
Total ? ? ? ?
Accumulated depreciation –equipment Value Value Value
Accounts payable Value Value Value
Bonds payable Value Value Value
Common stock Value Value Value
Retained earnings Value Value Value Value
Total ? ?
Operating activities
Net income Value
Increase in accounts receivable Value
Decrease in inventory Value
Decrease in accounts payable Value
Depreciation expense Value
Investing activities
Sale of land Value
Purchase of equipment Value
Financing activities
Credits
Statement of Cash Flow Effects
Balance Sheet Accounts
Reconciling Items
Worksheet
Statement of Cash Flows
For the Year Ended December 31, 2017
Debits
INTERNATIONAL COMPANY
Comparative Balance Sheets
December 31
Assets
INTERNATIONAL COMPANY
Payment of dividends Value
Redemption of bonds Value
Issuance of common stock Value
Totals ? ?
Increase in cash Value
Totals ? ?
After you have completed the requirements of E17-14, consider the additional question.
Answers are on the other tab in this file.
1. Assume that in 2017, the balances for accounts receivable, inventory and accounts payable changed to
$90,000, $168,000 and $27,000 respectively. Revise the worksheet to show the impact of these changes.
E17-14 Solution
Balance
12/31/16
Debit Credit
Balance
12/31/17
Cash 22,000 (k) 51,000 73,000
Accounts Receivable
76,000 (a) 9,000 85,000
Inventory 189,000 (b) 9,000 180,000
Accumulated depreciation –equipment 42,000 (d) 24,000 66,000
Accounts payable 47,000 (c) 13,000 34,000
Bonds payable 200,000 (h) 50,000 150,000
Operating activities
Net income (j) 135,000
Increase in accounts receivable (a) 9,000
Decrease in inventory (b) 9,000
Decrease in accounts payable (c) 13,000
Depreciation expense (d) 24,000
Investing activities
Sale of land (e) 25,000
Debits
Credits
Statement of Cash Flow Effects
INTERNATIONAL COMPANY
Worksheet
Statement of Cash Flows
For the Year Ended December 31, 2017
Reconciling Items
Balance Sheet Accounts
P17-14 Solution to additional question
1. Assume that in 2017, the balances for accounts receivable, inventory and accounts payable changed to
$90,000, $168,000 and $27,000 respectively. Revise the worksheet to show the impact of these changes.
Balance
12/31/16
Debit Credit
Balance
12/31/17
Cash 22,000 (k) 51,000 73,000
Accounts Receivable
76,000 (a) 14,000 90,000
Accumulated depreciation –equipment 42,000 (d) 24,000 66,000
Accounts payable 47,000 (c) 20,000 27,000
Bonds payable 200,000 (h) 50,000 150,000
Operating activities
Net income (j) 135,000
Increase in accounts receivable (a) 14,000
Decrease in inventory (b) 21,000
Decrease in accounts payable (c) 20,000
Depreciation expense (d) 24,000
Investing activities
Sale of land (e) 25,000
Purchase of equipment (f) 50,000
Debits
Credits
Statement of Cash Flow Effects
INTERNATIONAL COMPANY
Worksheet
Statement of Cash Flows
For the Year Ended December 31, 2017
Reconciling Items
Balance Sheet Accounts
P17-3A Prepare the operating activities section – indirect method
The income statement of Whitlock Company is presented here.
Sales revenue $7,700,000
Cost of goods sold
Beginning inventory $1,900,000
Purchases 4,400,000
Goods available for sale 6,300,000
Ending inventory 1,400,000
Total cost of goods sold 4,900,000
Gross profit 2,800,000
Operating expenses 1,150,000
Net income 1,650,000
Additional information:
1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Operating expenses include depreciation expense of $70,0000.
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2017,
for Whitlock Company, using the indirect method.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
Cash flows from operating activities
Net income Value
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense Value
Increase in accounts receivable Value
Decrease in inventory Value
Increase in prepaid expenses Value
Decrease in accounts payable Value
Decrease in accrued expenses payable Value ?
Net cash provided by operating activities ?
After you have completed the requirements of P17-3A, consider the additional question.
Answers are on the other tab in this file.
1. Assume that in 2017, accounts receivable increased $180,000, inventory decreased $475,000; prepaid expenses decreased $50,000, and
accrued expenses payable increased $75,000. Show the impact of these changes on the operating activities section of the statement of
cash flows.
For the Year Ended November 30, 2017
WHITLOCK COMPANY
Income Statement
For the Year Ended November 30, 2017
WHITLOCK COMPANY
Partial Statement of Cash Flows
P17-3A Solution
Cash flows from operating activities
Net income $1,650,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense $70,000
Increase in accounts receivable (200,000)
WHITLOCK COMPANY
Partial Statement of Cash Flows
For the Year Ended November 30, 2017
P17-3A Solution to additional question
1. Assume that in 2017, accounts receivable increased $180,000, inventory decreased $475,000; prepaid expenses decreased $50,000, and
accrued expenses payable increased $75,000. Show the impact of these changes on the operating activities section of the statement of
cash flows.
Cash flows from operating activities
Net income $1,650,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense $70,000
WHITLOCK COMPANY
Partial Statement of Cash Flows
For the Year Ended November 30, 2017
P17-5A Prepare the operating activities section- indirect method
Zumbrunn Company’s income statement contained the condensed information below.
Service revenue $970,000
Operating expenses, excluding depreciation $624,000
Depreciation expense 60,000
Loss on disposal of equipment 16,000 700,000
Income before income taxes 270,000
Income tax expense 40,000
Net income $230,000
Zumbrunn‘s balance sheet contained the comparative data at December 31, shown below.
2017 2016
Accounts receivable $75,000 $65,000
Accounts payable 46,000 28,000
Income taxes payable 11,000 7,000
Accounts payable pertain to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the indirect method.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
Cash flows from operating activities
Net income Value
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense Value
Loss on disposal of equipment Value
Increase in accounts receivable Value
Increase in accounts payable Value
Increase in income taxes payable Value ?
Net cash provided by operating activities ?
After you have completed the requirements of P17-5A, consider the additional question.
Answers are on the other tab in this file.
1. Assume that the 2017 balance for accounts receivable, accounts payable and income taxes
payable changed to $100,000, $69,000 and $12,000 respectively. Show the impact of these
changes on the operating activities section of the statement of cash flows.
For the Year Ended December 31, 2017
ZUMBRUNN COMPANY
Income Statement
For the Year Ended December 31, 2017
ZUMBRUNN COMPANY
Partial Statement of Cash Flows
P17-5A Solution
Cash flows from operating activities
Net income $230,000
Adjustments to reconcile net income to
net cash provided by operating activities
ZUMBRUNN COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
P17-5A Solution to additional question
1. Assume that the 2017 balance for accounts receivable, accounts payable and income taxes
payable changed to $100,000, $69,000 and $12,000 respectively. Show the impact of these
changes on the operating activities section of the statement of cash flows.
Cash flows from operating activities
Net income $230,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense $60,000
ZUMBRUNN COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
P17-6A Prepare the operating activities section- direct method
Zumbrunn Company‘s income statement contained the condensed information below.
Service revenue $970,000
Operating expenses, excluding depreciation
624,000$
Depreciation expense 60,000
Loss on disposal of equipment
16,000 700,000
Income before income taxes 270,000
Income tax expense 40,000
Net income 230,000$
Zumbrunn’s balance sheet contained the comparative data at December 31, shown below.
2017 2016
Accounts receivable $75,000 $65,000
Accounts payable 46,000 28,000
Income taxes payable 11,000 7,000
Accounts payable pertain to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
Cash flows from operating activities
Cash receipts from customers Value (1)
Less cash payments:
For operating expenses Value (2)
For income taxes Value (3) ?
Net cash provided by operating activities
?
(1) Computation of cash receipts from customers
Service revenue Value
Deduct: Increase in accounts receivable Value
Cash receipts from customers ?
(2) Computation of cash payments for operating expenses
Operating expenses per income statement Value
Deduct: Increase in accounts payable Value
Cash payments for operating expenses ?
(3) Computation of cash payments for income taxes
Income tax expense per income statement Value
Deduct: increase in income taxes payable Value
Cash payments for income taxes ?
After you have completed the requirements of P17-6A, consider the additional question.
Answers are on the other tab in this file.
1. Assume that the 2016 balance for accounts receivable, accounts payable and income taxes
payable changed to $50,000, $35,000 and $18,000 respectively. Show the impact of these
changes on the operating activities section of the statement of cash flows.
For the Year Ended December 31, 2017
ZUMBRUNN COMPANY
Income Statement
For the Year Ended December 31, 2017
ZUMBRUNN COMPANY
Partial Statement of Cash Flows
P17-6A Solution
Cash flows from operating activities
Cash receipts from customers 960,000$ (1)
Less cash payments:
For operating expenses 606,000$ (2)
For income taxes 36,000 (3) 642,000
Net cash provided by operating activities 318,000$
(1) Computation of cash receipts from customers
(2) Computation of cash payments for operating expenses
Operating expenses per income statement 624,000$
Deduct: Increase in accounts payable ($46,000 – $28,000) 18,000
ZUMBRUNN COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
P17-6A Solution to additional question
1. Assume that the 2016 balance for accounts receivable, accounts payable and income taxes
payable changed to $50,000, $35,000 and $18,000 respectively. Show the impact of these
changes on the operating activities section of the statement of cash flows.
Cash flows from operating activities
Cash receipts from customers 945,000$ (1)
Less cash payments:
Computation of cash receipts from customers
Computation of cash payments for operating expenses
Computation of cash payments for income taxes
Income tax expense per income statement 40,000$
ZUMBRUNN COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017
P17-7A Prepare a statement of cash flows – indirect method, and compute free cash flow.
The following are the financial statements of Nosker Company.
2017 2016
Assets
Cash $38,000 $20,000
Accounts Receivable 30,000 14,000
Inventory 27,000 20,000
Equipment 60,000 78,000
Accumulated depreciation–equipment (29,000) (24,000)
Total $126,000 $108,000
Liabilities and Stockholders’ Equity
Accounts payable $24,000 $15,000
Income taxes payable 7,000 8,000
Bonds payable 27,000 33,000
Common stock 18,000 14,000
Retained earnings 50,000 38,000
Total $126,000 $108,000
Sales revenue $242,000
Cost of goods sold 175,000
Gross profit 67,000
Operating expenses 24,000
Income from operations 43,000
Interest expense 3,000
Income before income taxes 40,000
Income tax expense 8,000
Net income $32,000
Additional data:
1. Dividends declared and paid were $20,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000
originally and had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.
Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Compute free cash flow.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .
(a)
Cash flows from operating activities
Net income Value
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense Value
Increase in accounts receivable Value
Increase in inventory Value
Increase in accounts payable Value
Decrease in income taxes payable Value ?
Net cash provided by operating activities ?
For the Year Ended December 31, 2017
Statement of Cash Flows
NOSKER COMPANY
For the Year ended December 31, 2017
NOSKER COMPANY
Comparative Balance Sheet
December 31
NOSKER COMPANY
Income Statement