CHAPTER 17
SOLUTIONS TO EXERCISES—SET B
EXERCISE 17-1B
1. (a) Cash …………………………………………….. 18,000
Land ………………………………………. 15,000
Gain on Disposal …………………….. 3,000
(b) The cash receipt ($18,000) is reported in the investing section. The gain
($3,000) is deducted from net income in the operating section.
2. (a) Cash ……………………………………………………………… 32,000
Common Stock ………………………………………… 32,000
4. (a) Salaries and Wages Expense ………………………….. 11,000
Cash ………………………………………………………. 11,000
5. (a) Equipment …………………………………………………….. 9,000
Common Stock ……………………………………….. 1,000
Paid-in Capital in Excess of Par Value ………. 8,000
EXERCISE 17-2B
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 17-3B
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 17-4B
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)
*Accumulated depreciation ……………………….. (30,000)
EXERCISE 17-5B
(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
)
Loss on disposal of land* ……………………… 2,100
Cash flows from investing activities
Sale of land ………………………………………………… 3,900
Cash flows from financing activities
Issuance of common stock ………………………….. $ 6,000
Net increase in cash …………………………………………. 9,300
)
Cash at beginning of period ………………………………. 10,000
)
EXERCISE 17-6B
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)
Cash flows from financing activities
Issuance of common stock …………………… 52,000)
Redemption of bonds …………………………... (50,000)
Net increase in cash ……………………………………. 63,000)
EXERCISE 17-7B
(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
Depreciation expense ……………………… $ 5,200* )
Cash flows from investing activities
Sale of equipment ………………………………… 5,300)
Purchase of investments ………………………. (4,000)
Net cash used by investing activities ……….. 1,300
Cash flows from financing activities
Issuance of common stock ……………………. $10,000)
Net increase in cash …………………………………. 9,500 )
Cash at beginning of period ………………………. 17,700
Cash at end of period ……………………………….. $ 27,200
*EXERCISE 17-8B
Revenues ………………………………………………………… $175,000)
Deduct: Increase in accounts receivable ………….. 60,000
Cash receipts from customers* ………………….. $115,000
Operating expenses …………………………………………. 88,000)
**
Accounts Receivable
Balance, Beginning of year 0
Revenues for the year 175,000
Cash receipts for year 115,000
*EXERCISE 17-9B
(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 17-10B
Cash flows from operating activities
Cash receipts from
Customers ………………………………………….. $212,000*
$230,000*
Less cash payments:
To suppliers for merchandise ………………. 105,000
For operating expenses ……………………….. 28,000
For salaries and wages ………………………… 55,000
*EXERCISE 17-11B
Cash payments for rent
Rent expense …………………………………………….. $ 60,000*
Cash payments for salaries and wages
Salaries and wages expense ……………………….. $ 50,000*
Add: Decrease in salaries and wages payable 2,000*
Cash payments for salaries and wages ……….. $ 52,000*
Cash receipts from customers
Revenue from sales ……………………………………. $150,000*
*EXERCISE 17-12B
ABERNATHY COMPANY
Worksheet
Statement of Cash Flows
For the Year Ended December 31, 2017
Balance
12/31/16
Reconciling Items
Balance
12/31/17
Balance Sheet Accounts
Debit
Credit
Debits
Cash
Accounts receivable
Inventory
22,000
76,000
189,000
(k) 21,000
(a) 9,000
(b) 9,000
43,000
85,000
180,000
Credits
Accumulated depreciation—equipment
Accounts payable
Bonds payable
42,000
47,000
200,000
(c) 13,000
(h) 70,000
(d) 19,000
61,000
34,000
130,000
Statement of Cash Flow Effects
366,000
366,000
Operating activities
Net income
Increase in accounts receivable
Decrease in inventory
Decrease in accounts payable
Purchase of equipment
Financing activities
Payment of dividends
Redemption of bonds
(j) 105,000
(b) 9,000
(a) 9,000
(c) 13,000
(f) 30,000
(g) 40,000
(h) 70,000
SOLUTIONS TO PROBLEMS—SET C
PROBLEM 17-1C
(a) Cash inflows (outflows) related to plant assets 2017:
Equipment purchase ($90,000)
Land purchase (30,000)
Proceeds from equipment sales 7,000*
Accumulated depreciation removed from accounts for sale of equipment
Accumulated Depreciation—
Equipment
96,000
Plug 15,000
63,000
Depreciation Expense
Note to instructor—some students may find journal entries helpful in under–
standing this exercise.
Equipment …………………………………………………….. 90,000
Cash ………………………………………………………. 90,000
Accumulated Depreciation …………………………….. 15,000
Loss on Disposal of Equipment ……………………… 8,000
Equipment ……………………………………………… 30,000
(b) Equipment purchase Investing activities (outflow)
PROBLEM 17-2C
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