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Exercise 4–3
Requirement 1
GENERAL LIGHTING CORPORATION
Income Statement
For the Year Ended December 31, 2016
Revenues and gains:
Sales .................................................................
$2,350,000
Expenses and losses:
Cost of goods sold ............................................
$1,200,300
Selling ..............................................................
300,000
4–22 Intermediate Accounting, 8/e
Exercise 4–3 (concluded)
Requirement 2
GENERAL LIGHTING CORPORATION
Income Statement
For the Year Ended December 31, 2016
Sales revenue .......................................................
$2,350,000
Operating expenses:
Selling ...............................................................
$300,000
Other income (expense):
Interest revenue .................................................
80,000
Loss on sale of investments ..............................
(22,500)
Exercise 4–4
LINDOR CORPORATION
Statement of Comprehensive Income
For the Year Ended December 31, 2016
Sales revenue ......................................................
$2,300,000
Operating expenses:
Selling and administrative .................................
420,000
Other income (expense):
Interest expense ..................................................
(40,000)
Income before income taxes ................................
440,000
4–24 Intermediate Accounting, 8/e
Exercise 4–5
AXEL CORPORATION
Income Statement
For the Year Ended December 31, 2016
Sales revenue .......................................................
$ 592,000
Operating expenses:
Selling ..............................................................
$67,000
Other income (expense):
Interest and dividends .......................................
32,000
Interest expense ................................................
(26,000)
Exercise 4–6
CHANCE COMPANY
Partial Income Statement
For the Year Ended December 31, 2016
Income from continuing operations ....................................
$ 350,000
Discontinued operations:
Loss from operations of discontinued component
* Loss on discontinued operations:
Loss on sale of assets $(400,000)
4–26 Intermediate Accounting, 8/e
Exercise 4–7
ESQUIRE COMIC BOOK COMPANY
Partial Income Statement
For the Year Ended December 31, 2016
Income from continuing operations * ..................................
$ 552,000
Discontinued operations:
Income from operations of discontinued component
* Income from continuing operations:
Income before considering additional items $1,000,000
Exercise 4–8
Requirement 1
KANDON ENTERPRISES, INC.
Partial Income Statement
For the Year Ended December 31, 2016
Income from continuing operations ....................................
$ 400,000
Discontinued operations:
* Loss on discontinued operations:
Loss from operations $(140,000)
4–28 Intermediate Accounting, 8/e
Exercise 4–8 (concluded)
Requirement 2
KANDON ENTERPRISES, INC.
Partial Income Statement
For the Year Ended December 31, 2016
Income from continuing operations ...................................
$ 400,000
Discontinued operations:
Exercise 4–9
Pretax income from continuing operations $14,000,000
Income tax expense (5,600,000)
*1 – tax rate of 40% = 60%
Pretax income of division $4,000,000
Exercise 4–10
Earnings per share:
Income from continuing operations $5.00
4–30 Intermediate Accounting, 8/e
Exercise 4–11
THE MASSOUD CONSULTING GROUP
Statement of Comprehensive Income
For the Year Ended December 31, 2016
Net income ..........................................................
$1,354,000
Other comprehensive income (loss):
Exercise 4–12
1. b Purchase of equipment for cash.
Exercise 4–13
Bluebonnet Bakers
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Collections from customers $ 380,000
Interest on note receivable 6,000
Cash flows from investing activities:
Collection of note receivable 50,000
Cash flows from financing activities:
Proceeds from note payable 100,000
4–32 Intermediate Accounting, 8/e
Exercise 4–14
Cash collected for interest, considered an operating cash flow by U.S. GAAP,
could be classified as either an operating cash flow or an investing cash flow
according to International Accounting Standards.
Cash paid for interest, considered an operating cash flow by U.S. GAAP, could
BLUEBONNET BAKERS
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Collections from customers $ 380,000
Purchase of inventory (160,000)
Cash flows from investing activities:
Collection of note receivable 50,000
Interest on note receivable 6,000
Cash flows from financing activities:
Proceeds from note payable 100,000
Payment of note payable (25,000)
Exercise 4–15
Cash flows from operating activities:
Net income $17,300
Adjustments for noncash effects:
Exercise 4–16
Requirement 1
Operating Investing Financing
1. $300,000
2. $(10,000) ✓
4–34 Intermediate Accounting, 8/e
Exercise 4–16 (concluded)
Requirement 2
WAINWRIGHT CORPORATION
Statement of Cash Flows
For the Month Ended March 31, 2016
Cash flows from operating activities:
Collections from customers $ 55,000
Payment of rent (5,000)
Noncash investing and financing activities:
Acquired $40,000 of equipment by paying cash and issuing a note as follows:
Cost of equipment $40,000
Exercise 4–17
Cash flows from operating activities:
Net income $624,000
Adjustments for noncash effects:
Depreciation and amortization expense 87,000
Changes in operating assets and liabilities:
Exercise 4–18
Cash flows from operating activities:
Net income $1,250,000
Adjustments for noncash effects:
Depreciation expense 140,000
Exercise 4–19
Consistent with U.S. GAAP, international standards also require a statement of
cash flows. Consistent with U.S. GAAP, cash flows are classified as operating,
4–38 Intermediate Accounting, 8/e
Exercise 4–19 (concluded)
Accordingly, the statement of cash flows prepared according to IFRS mostly
likely would be presented as follows (differences from U.S. GAAP in italics):
BRONCO METALS
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Collections from customers $ 353,000
Purchase of inventory (186,000)
Exercise 4–20
TIGER ENTERPRISES
Statement of Cash Flows
For the Year Ended December 31, 2016
($ in thousands)
Cash flows from operating activities:
Net income $ 900
Adjustments for noncash effects:
Depreciation expense 240
Changes in operating assets and liabilities:
Decrease in accounts receivable 80
Increase in inventory (40)
4–40 Intermediate Accounting, 8/e
Exercise 4–21
The T-account analysis of the transactions related to operating cash flows is
shown below. To derive the cash flows, the beginning and ending balances in the
Cash Flows (Operating)
(a.) 7,080 (b.) 130
Sales Revenue Accounts Receivable
1/1 830 (a.) 7,080
Prepaid Insurance Insurance Expense
1/1 20
12/31 50
Accounts Payable Inventory Cost of Goods Sold
(c.) 3,460 1/1 360
1/1 600
3,360 <-----------> 3,360
Admin. & Other Payables Admin. & Other Expense
(d.) 1,900 1/1 400
Income Taxes Payable Income Tax Expense
(e.) 550 1/1 150
