P22-7 (continued)
1. (continued)
Worksheet Entries
Debit Credit
Net Cash Flow From Operating Activities
Net income
Add: Depreciation expense
Decrease in accounts receivable
Cash Flows From Investing Activities
Payment for purchase of short-term marketable securities
Proceeds from sale of long-term investments
Proceeds from sale of equipment
Payment for purchase of equipment
(a)
(b)
(c)
(m)
(o)
4,800
2,100
110
2,300
100
(d)
(p)
1,300
16,200
P22-7 (continued)
2. LAMBERSON COMPANY
Statement of Cash Flows
For Year Ended December 31, 2010
Net Cash Flow From Operating Activities
Net income $ 4,800
Adjustments for differences between income
flows and cash flows from operating activities:
Add: Depreciation expense 2,100
Decrease in accounts receivable 110
Cash Flows From Investing Activities
Payment for purchase of short-term
marketable securities $ (1,300)
Proceeds from sale of long-term investments 2,300
Proceeds from sale of equipment 100
Cash, December 31, 2010 $ 2,400
Schedule 1: Investing and Financing Activities Not Affecting Cash
Financing Activities
Conversion of preferred stock to common stock $ (9,000)
Issuance of common stock to convert preferred stock 9,000
22-43
P22-7 (continued)
3. (continued)
P22-8
1.
BOTT COMPANY
Worksheet for Statement of Cash Flows
For Year Ended December 31, 2010
Balances Worksheet Entries
Account Titles 12/31/2009
12/31/2010
Change
Debit Credit
Debits
Cash
Noncash Accounts:
Credits
Accumulated depreciation
Premium on common stock
1,800
24,000
28,800
2,000
31,800
41,150
200
7,800
12,350
(w)
200
(b)
(q)
(u)
(m)
(o-1)
(q)
6,000
3,000
1,500
300
2,000
6,900
22-44
P22-8 (continued)
1. (continued)
Worksheet Entries
Debit Credit
Net Cash Flow From Operating Activities
Net income
Gain on sale of sale
Amortization of bond premium
Cash Flows From Investing Activities
Payment for loan on note receivable
Proceeds from sale of land
Net Increase in Cash
Totals
(a)
(p)
11,500
3,800
50,520
(j)
(p)
(v)
(e)
(w)
900
100
1,000
32,000
200
50,520
Notes to Instructor:
1Since the tax refund is due to the prior period adjustment of last year’s operations, it is
best reported as a cash flow from operating activities, as opposed to a cash flow from
22-45
P22-8 (continued)
2. BOTT COMPANY
Statement of Cash Flows
For Year Ended December 31, 2010
Net Cash Flow From Operating Activities
Net cash provided by operating activities
Proceeds from issuance of common stock 9,900
Payment of dividends (4,000)
Net cash provided by financing activities 15,450
Net Increase in Cash (Schedule 2) $ 200
Cash, January, 1, 2010 1,800
Cash, December 31, 2010 $ 2,000
Schedule 1: Net Cash Flow From Operating Activities
Net income $ 11,500
Adjustments for differences between income flows
and cash flows from operating activities:
Add: Depreciation expense 6,000
22-46
P22-8 (continued)
2. (continued)
Schedule 2: Investing and Financing Activities Not Affecting Cash
Financing Activities
P22-9
HEINZ COMPANY
Worksheet for Statement of Cash Flows
For Year Ended December 31, 2010
Balances Worksheet Entries
Account Titles 12/31/2009
12/31/2010
Change
Debit Credit
Debits
Cash
Noncash Accounts:
Accounts receivable
Credits
Accum. depr.: buildings
2,700
5,900
35,000
3,520
6,215
34,500
820
315
(500)
(s)
(e)
(m)
820
315
3,200
(b)
2,700
P22-9 (continued)
Worksheet Entries
Debit Credit
Net Cash Flow From Operating Activities
Net loss
Add: Depreciation expense: buildings
Cash Flows From Investing Activities
Proceeds from building destroyed by tornadob
Proceeds from sale of long-term investments
(b)
(m)
(o)
2,700
2,200
800
(a)
1,400
22-48
P22-9 (continued)
aThe $31,850 ending retained earnings balance is derived by subtracting
the $1,400 net loss and the $2,100 dividends from the $35,350 beginning
retained earnings balance. The computation of the net loss is shown below.
Revenues:
Expenses:
Cost of goods sold $23,800
Wages expense 16,510
Other operating expenses 1,100
bStudents may have difficulty with the extraordinary loss transaction.
This may be shown in journal entry form as follows:
P22-10
RICHEY COMPANY
Balance Sheet
December 31, 2010
Assets
Current Assets
Cash $ 1,200
Accounts receivable 4,000
Liabilities
Current Liabilities
Accounts payable $ 5,100
Stockholders’ Equity
Preferred stock, $100 par $ 21,000
Premium on preferred stock 2,300 $23,300
22-50
P22-10 (continued)
Supporting Calculations (for Balance Sheet):
Account
Balance
01/01/10
Calculations
Balance
12/31/10
Cash
$ 1,900
Decreased ($700) from 1/1/10
$ 1,200
Buildings
60,000
Purchase of building $43,000
*Note: Mortgage account
will be included under
long-term liabilities
103,000
Equipment
20,000
Cost of equipment sold $(1,900)
18,100
Patents (net)
7,100
Amount received for
patent $(2,100)
Less: Gain on sale 1,100
Carrying value sold $(1,000)
Add: Patents amortized (600)
Net decrease $(1,600)
5,500
P22-10 (continued)
Account
Balance
01/01/10
Calculations
Balance
12/31/10
Miscellaneous payables
$ 1,200
Increased $200 from 1/1/10
$ 1,400
10% bonds payable
15,000
No change
15,000
Common stock, $10 par
14,000
Issue 150 shares @ $10 par = $1,500
Stock dividend 200 shares
@ $10 par = 2,000
Total increase $3,500
17,500
22-52
P22-11
RYAN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2010
Net Cash Flow From Operating Activities
Net income $ 47,800
Adjustments for differences between income
flows and cash flows from operating activities:
Add: Depreciation expense 13,200
Cash Flows From Investing Activities
Proceeds from sale of land $ 6,500
Cash Flows From Financing Activities
Proceeds from issuance of 10% bonds $ 25,000
Net Increase in Cash (see Schedule 1) $ 7,600
Cash, January 1, 2010 15,300
Cash, December 31, 2010 $ 22,900
Schedule 1: Investing and Financing Activities Not Affecting Cash
Investing Activities
P22-12 (AICPA adapted solution)
Note to Instructor: The worksheet was not required in the original Uniform CPA
1.
ANGEL COMPANY
Worksheet for Statement of Cash Flows
For Quarter Ended March 31, 2011
Balances Worksheet Entries
Account Titles 12/31/10
03/31/11
Change
Debit Credit
Debits
Cash
Noncash Accounts:
Marketable investments
investments
Dividends declared
Totals
Credits
Allow. for change in value
Accumulated depreciation
25,300
17,500
1,000
–
467,830
1,000
15,000
79,400
8,300
900
8,000
629,060
900
16,250
54,100
(9,200)
(100)
8,000
161,230
(100)
1,250
(r)
(o)
(p)
(c)
54,100
500
8,000
600
(c)
(c)
(o)
(b)
9,200
600
500
1,250
P22-12 (continued)
1. (continued)
Worksheet Entries
Debit Credit
Net Cash Flow From Operating Activities
Net income
Add: Depreciation expense
Cash Flows From Investing Activities
Proceeds from sale of marketable investments
Proceeds from condemnation of land (net of tax)
Payment for purchase of equipment
(a)
(b)
(c)
(i)
64,018
1,250
11,600
29,860
(j)
81,500
P22-12 (continued)
2. ANGEL COMPANY
Statement of Cash Flows
For Quarter Ended March 31, 2011
Net Cash Flow From Operating Activities
Net income $ 64,018
Adjustments for differences between income
flows and cash flows from operating activities:
Cash Flows From Investing Activities
Proceeds from sale of marketable investments $ 11,600
Proceeds from condemnation of land (net of tax) 29,860
Payment for purchase of equipment (81,500)
Net cash used for investing activities (40,040)
Schedule 1: Investing and Financing Activities Not Affecting Cash
Financing Activities
22-56
P22-13 (AICPA adapted solution)
Note to Instructor: The worksheet was not required in the original Uniform CPA
Examination question. It has been added to provide students with additional
practice in the development of supporting documents.
1.
FARRELL CORPORATION
Worksheet for Statement of Cash Flows
For Year Ended December 31, 2010
Balances Worksheet Entries
Account Titles 12/31/2009
03/31/2010
Change
Debit Credit
Debits
Cash
Credits
Accumulated depre.
Accounts payable and
180,000
107,000
225,000
139,000
45,000
32,000
(p)
(h)
45,000
21,000
(b)
53,000
22-57
P22-13 (continued)
1. (continued)
Worksheet Entries
Debit Credit
Net Cash Flow From Operating Activities
Net income
Add: Depreciation expense
Increase in inventories
Cash Flows From Investing Activities
Proceeds from sale of equipment
Payment for purchase of equipment
(a)
(b)
(h)
141,000
53,000
19,000
(f)
(l)
118,000
63,000
22-58
P22-13 (continued)
2. FARRELL CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2010
Net Cash Flow From Operating Activities
Net income $141,000
Increase in inventories (118,000)
Net cash provided by operating activities $134,000
Cash Flows From Investing Activities
Proceeds from sale of equipment $ 19,000
Payment for purchase of equipment (63,000)
Schedule 1: Investing and Financing Activities Not Affecting Cash
Investing Activities
Purchase of land by issuance of long-term note $(150,000)
22-59
P22-14
1. and 2. LAMBERSON COMPANY
Statement of Cash Flows
For Year Ended December 31, 2010
Cash Flows From Operating Activities
Cash Inflows:
Cash Flows From Investing Activitiesg
Payment for purchase of short-term
marketable securities $ (1,300)
Proceeds from sale of long-term investments 2,300
Proceeds from sale of equipment 100
Schedule 1: Investing and Financing Activities Not Affecting Cash
Financing Activities
Conversion of preferred stock to common stock $ (9,000)
Issuance of common stock to convert preferred stock 9,000
Payment of long-term note by issuing common stock $ (3,500)
Issuance of common stock to pay long-term note 3,500
22-60
P22-14 (continued)
1. and 2. (continued)
fNo payments of interest are shown because the $410 interest expense is comprised of
P22-15
YELLOW COMPANY
Statement of Cash Flows
For Year Ended December 31, 2010
Cash Flows From Operating Activities
Payments of income taxes (2,900)
Cash outflows for operating activities (59,000)
Net cash provided by operating activities $ 1,800
Cash Flows From Investing Activities
Proceeds from sale of land $ 2,100
Schedule 1: Investing and Financing Activities Not Affecting Cash
Investing Activities
Acquisition of equipment under capital lease $ (7,200)
Financing Activities
Increase of capital lease obligation for equipment 7,200