Exercise 12-12B (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., 6/30/2015
115,000
Bal., 6/30/2015
9,000
Purchase
Sale 48,600
Sale *40,600
Depr. Expense
Bal., 6/30/2016
124,000
Bal., 6/30/2016
(6)
Carrying value of notes retired ……………………………………………………………
$ 30,000
Cash payment to retire notes ………………………………………………………………
$ 30,000
(7)
Retained Earnings
Bal., 6/30/2015
24,100
Dividends (plug)
Net income
99,510
Bal., 6/30/2016
33,300
Exercise 12-13A (30 minutes)
SCORETECK CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2016
December
31, 2015
Analysis of Changes
December
31, 2016
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 ………
(f)
70,000
Decrease in merch. inventory …………..
Decrease in accounts payable ………….
10,000
Depreciation expense ……………………….
(c)
Investing activities
Payment for plant assets…………………..
70,000
Financing activities
Paid cash dividends ………………………….
Issued note payable ………………………….
(e)
Exercise 12–14B (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
b. Paid cash to acquire
inventory
X
c. Sold inventory for cash
X
period
Exercise 12-15B (15 minutes)
Case X:
Sales revenue …………………………..………………………
$515,000
Accounts receivable, Dec. 31, 2015 ……………………
$ 27,200
Accounts receivable, Dec. 31, 2016 ……………………
Less increase in accounts receivable ………………..
Cash received from customers ………………………….
$508,600
Case Y:
Rent expense ……………………………………………………
$139,800
Rent payable, Dec. 31, 2015 …………………………..
Rent payable, Dec. 31, 2016 …………………………..
Plus decrease in rent payable …………………………..
Cash paid for rent ……………………………………………..
$141,400
Case Z:
Cost of goods sold ……………………………………………
$525,000
Inventory, Dec. 31, 2016 …………………………..
$130,400
Inventory, Dec. 31, 2015 …………………………..
Less decrease in merch. inventory ……………………
Exercise 12–16B (20 minutes)
Cash flows from operating activities
Receipts from customers (see note a) …………………………..…………
$1,797,500
Payments for inventory (see note b) ………………………………………..
(1,028,500)
Payments for salaries (see note c) …………………………………………..
Payments for rent ………………………………………………………………….
Payments for utilities …………………………………………………………….
Exercise 12-17B (20 minutes)
FERRON COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
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 …………………………..
60,250
Payment for store equipment ………………………………
Cash flows from financing activities
Receipt from borrowing on six-month note ………….
35,000
Payment of cash dividends …………………………………
Net increase in cash and cash equivalents ……………..
$108,000
Exercise 12-18B (40 minutes)
1.
THOMAS CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2016
Cash flows from operating activities
Cash received from customers ………………………………….
$5,000,000
Cash received from dividends …………………………………..
208,400
Cash paid for inventory …………………………………………….
(2,590,000)
Cash paid for wages …………………………………………………
Cash paid for rent …………………………..…………………………
Cash paid for interest ……………………………………………….
Net cash provided by operating activities ………………….
$1,080,400
Cash flows from investing activities
Cash paid for purchases of machinery ………………………
(2,236,000)
Cash paid for purchases of long-term investments ……
(1,260,000)
Cash received from sale of land ………………………………..
220,000
Cash received from sale of machinery ……………………….
(2,566,000)
Cash flows from financing activities
Cash received from issuing stock …………………………..
1,540,000
Cash received from borrowing ………………………………….
3,600,000
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……………………………………………………
$2,550,400
Beginning balance of cash ………………………………………….
2.
PROBLEM SET A
Problem 12-1A (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2016
Cash flows from operating activities
Net income …………………………………………………………………….
$ 6,000
Adjustments to reconcile net income to net cash
provided by operating activities
Income statement items not affecting cash
)
)
)
Problem 12-2AB (35 minutes)
LANSING COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2016
Cash flows from operating activities
Cash receipts from customers (1) …………………………………………………
$ 97,400
Cash payments to suppliers (2) …………………………………………………….
(42,640)
)
Cash payments for salaries (3) ……………………………………………………..
(17,820)
)
)
Cash payments for utilities (6) ………………………………………………………
)
Cash payments for interest ……………………………………………………….
)
Supporting calculations
(2) Cost of Increase in Decrease in
goods sold inventory accts payable =
+
+
Problem 12-3A (50 minutes)
Part 1
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
Cash flows from operating activities
Net income ………………………………………………………………………………
$114,975
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 …………………………………………..
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, 2015 ………………………………………….
Noncash investing and financing activities
Problem 12-3A (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%)
Problem 12-4AA (60 minutes)
FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2016
December
31, 2015
Analysis of Changes
December
31, 2016
Debit
Credit
Balance sheet—debits
Cash ………………………………………………….
$ 73,500
$ 49,800
Accounts receivable …………………………
50,625
(b)
$15,185
65,810
Inventory …………………………………………..
251,800
(c)
23,856
275,656
Prepaid expenses …………………………..
(d)
Equipment ………………………………………..
(h)
96,375
(g)
46,875
$485,800
$550,016
Balance sheet—credits
Accum. depreciation—Equip. …………..
(g)
30,125
20,750
$ 36,625
Accounts payable …………………………..
114,675
(e)
61,534
53,141
Short–term notes payable …………………
10,000
Long–term notes payable ………………….
48,750
(k)
50,125
66,375
65,000
Common stock, $5 par value ……………
150,250
12,500
162,750
37,500
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 …………….
(b)
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)
5,125
Investing activities
Receipt from sale of equipment ………..
(g)
11,625
Payment to purchase equipment ……..
(h)
30,000
Financing activities
Borrowed on short–term note……………
4,000
Payment on long–term note ………………
50,125
Issued common stock for cash ………..
50,000
Payments of cash dividends …………….
50,100
66,375
$600,775
Problem 12-4AA (Concluded)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
Cash flows from operating activities
Net income ………………………………………………………………………………
$114,975
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 received from sale of equipment …………………………………..
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 ………………………………………
Noncash investing and financing activities
Problem 12-5AB (40 minutes)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
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 …………………
11,625
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) ……..
50,000
Noncash investing and financing activities
Purchased equipment for $96,375 by signing a $66,375 long-term note payable
and paying $30,000 in cash.
Supporting calculations
(2) Cost of Increase in Decrease in
goods sold inventory payables =
+
+
Problem 12-6A (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2016
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 ………………………..
Problem 12-7AA (50 minutes)
GOLDEN CORPORATION
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 2016
December
31, 2015
Analysis of Changes
December
31, 2016
Debit
Credit
Balance sheet—debits
Cash ………………………………………………….
$ 107,000
$ 164,000
Accounts receivable …………………………
71,000
(b)
$ 12,000
83,000
Inventory …………………………………………..
Equipment ………………………………………..
$1,003,000
$1,183,000
Balance sheet—credits
Accum. depreciation—Equip. …………..
$ 104,000
$ 158,000
Accounts payable …………………………..
71,000
87,000
Income taxes payable ……………………….
25,000
(e)
28,000
Common stock, $2 par value …………….
Retained earnings …………………………..
(a)
122,000
$1,003,000
Statement of cash flows
Operating activities
Net income ………………………………………..
Increase in accounts receivable ………
Increase in merch. inventory …………….
(c)
Increase in accounts payable ……………
Increase in income tax payable …………
Depreciation expense ……………………….
Investing activities
Payment for equipment …………………….
Financing activities
Issued common stock for cash ………..
Paid cash dividends ………………………….
Problem 12-7AA (Concluded)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2016
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
Changes in current assets and current liabilities
Net cash provided by operating activities ………………………..
Cash flows from investing activities
Cash paid for equipment …………………………………………………..
(36,000)
Cash flows from financing activities
(89,000)
Cash balance at beginning of 2016 ……………………………………..
Problem 12-8AB (35 minutes)
GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2016
Cash flows from operating activities
Cash received from customers (Note 1) ……………..
$1,780,000
Cash paid for inventory (Note 2) ……………………….
(1,145,000)
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
goods sold inventory accounts payable =
+
–
PROBLEM SET B
Problem 12-1B (35 minutes)
LAKE COMPANY
Cash Flows from Operating Activities—Indirect Method
For Year Ended December 31, 2016
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
)
)
Problem 12-2BB (35 minutes)
LAKE COMPANY
Cash Flows from Operating Activities—Direct Method
For Year Ended December 31, 2016
Cash flows from operating activities
Cash receipts from customers (1) ………………………………………………..
$ 155,400
Cash payments to suppliers (2) ……………………………………………………
(72,080
)
Cash payments for salaries (3) …………………………………………………….
(19,700
)
Cash payments for rent (4) ……………………………………………………….
)
Cash payments for insurance (5) ………………………………………………….
)
Cash payments for utilities (6) ……………………………………………………..
)
Cash payments for interest ……………………………………………………….
)
Supporting calculations
(2) Cost of Decrease in Decrease in
goods sold inventory accounts payable =
–
+
Problem 12-3B (40 minutes)
Part 1
GAZELLE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2016
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 ……………………………………………………….
38,600
Changes in current assets and current liabilities
Decrease in accounts receivable ($80,750 – $77,100) …………….
Decrease in inventory ($250,700 – $240,600) ……………………
10,100
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 …………………………………..
26,050
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) ……………………….
45,000
Cash paid for dividends …………………………..…………………………..