Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-8A 1. and 2.

Calculation of depreciation to add back to net income: Accumulated Depreciation, beginning balance Accumulated Depreciation, ending balance Debits to Accumulated Depreciation Credits to Accumulated Depreciation

$ $ $ $

70 85 10 25

Correct! Correct! Correct! Correct!

Changes in noncash balance sheet accounts that impact net income: Increase in Decrease in Account Account Balance Balance (80) 35 (2)

Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts Payable Accrued liabilities Income taxes payable

Correct! Correct! Correct!

75 (10) 8

Correct! Correct! Correct!

Changes in noncash balance sheet accounts that impact investing and financing: Increase in Decrease in Account Account Balance Balance (80) 7

Noncurrent Assets Property, plant, and equipment Long-term investments Liabilities and Stockholders' equity Bonds payable Common stock

Correct! Correct!

25 (40)

Correct! Correct!

Property, Plant and Equipment Property, Plant and Equipment, beginning balance Property, Plant and Equipment, ending balance Debits to Property, Plant and Equipment Credits to Property, Plant and Equipment Retained Earnings Retained Earnings, beginning balance Retained Earnings, ending balance Debits to Retained Earnings Credits to Retained Earnings

$ $ $ $

420 500 110 30

Correct! Correct! Correct! Correct!

$ $ $ $

92 132 16 56

Correct! Correct! Correct! Correct!

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-8A EATON COMPANY Statement of Cash Flows For the Year Ended December 31, 2011 Operating activities: Net income Adjustments needed to convert net income to cash basis: Depreciation Increase in accounts receivable Decrease in inventory Increase in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable Gain on sale of investments Loss on sale of equipment Net cash provided by operating activities Investing activities: Proceeds from sale of long-term investments Proceeds from sale of equipment Additions to plant and equipment Net cash used for investing activities Financing activities: Issuance of bonds payable Decrease in common stock Cash dividends Net cash used in financing activities Net decrease in cash Cash balance, January 1, 2011 Cash balance, December 31, 2011

$ $ 25 (80) 35 (2) 75 (10) 8 (5) 2

56

48 104

Correct!

12 18 (110) (80) Correct!

25 (40) (16) $ (31) (7) 11 4 Correct! Correct!

Given Data P12-8A: EATON COMPANY Comparative Balance Sheet December 31, 2011, and 2010 2011 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, Plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 4 310 160 8 482 500 85 415 31 928 $ 2010 11 230 195 6 442 420 70 350 38 830

300 70 71 441 195 636 160 132 292 928

225 80 63 368 170 538 200 92 292 830

EATON COMPANY Income Statement For the Year Ended December 31, 2011 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income Equipment cost Equipment selling price Accumulated depreciation of equipment Long-term investment purchase Long-term investment sale Paid cash dividend Stock repurchase $ 750 450 300 223 77

5 (2)

$ $ $ $ $ $ ? $ 40 30 18 10 7 12

3 80 24 56

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-14A 1. and 2. Calculation of depreciation to add back to net income: Accumulated Depreciation, beginning balance Accumulated Depreciation, ending balance Debits to Accumulated Depreciation Credits to Accumulated Depreciation Calculation of depreciation to add back to net income: Increase in Account Balance (54,000) 8,000 Decrease in Account Balance 10,000 Correct!

$ $ $ $

190,000 210,000 40,000 60,000

Correct! Correct! Correct! Correct!

Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts Payable Accrued liabilities Income taxes payable Calculation of depreciation to add back to net income:

(55,000) (7,000) 3,000 Correct!

Noncurrent Assets Property, plant, and equipment Long-term investments Liabilities and Stockholders' equity Bonds payable Common stock Property, Plant and Equipment Property, Plant and Equipment, beginning balance Property, Plant and Equipment, ending balance Debits to Property, Plant and Equipment Credits to Property, Plant and Equipment Retained Earnings Retained Earnings, beginning balance Retained Earnings, ending balance Debits to Retained Earnings Credits to Retained Earnings

Increase in Decrease in Account Account Balance Balance (110,000) 30,000

Correct!

100,000 (5,000)

Correct!

$ $ $ $

750,000 860,000 200,000 90,000

Correct! Correct! Correct! Correct!

$ $ $ $

150,000 192,000 28,000 70,000

Correct! Correct! Correct! Correct!

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12-14A

ALLIED COMPANY Statement of Cash Flows For the Year Ended December 31, 2011 Operating activities: Net income Adjustments needed to convert net income to a cash basis: Depreciation Decrease in accounts receivable Increase in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in accrued liabilities Increase in income taxes payable Loss on sale of equipment Gain on sale of investments Net cash provided by operating activities Investing activities: Proceeds from sale of long-term investments Proceeds from sale of equipment Additions to plant and equipment Net cash used for investing activities Financing activities: Issuance of bonds payable Decrease in common stock Cash dividends Net cash provided by financing activities Net decrease in cash Cash balance, beginning of year Cash balance, end of year

$ $ 60,000 10,000 (54,000) 8,000 (55,000) (7,000) 3,000 6,000 (20,000)

70,000

(49,000) 21,000

50,000 44,000 (200,000) (106,000)

100,000 (5,000) (28,000) 67,000 (18,000) 33,000 $ 15,000 Correct!

3. Free cash flow computation Net cash provided by operating activities Capital expenditures Dividends Free cash flow

$ $ 200,000 28,000 $

21,000 228,000 (207,000) Correct!

Correct! Correct!

Correct! Correct!

Correct!

Correct!

Correct!

Correct!

Correct!

Given Data P12-14A: Minimum cash balance $ ALLIED COMPANY Comparative Balance Sheet December 31, 2011, and 2010 2011 Assets Current assets: Cash Accounts receivable Inventory Prepaid expenses Total current assets Long-term investments Plant and equipment Less accumulated depreciation Net plant and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 2010 20,000

15,000 200,000 250,000 7,000 472,000 90,000 860,000 210,000 650,000 $ 1,212,000

33,000 210,000 196,000 15,000 454,000 120,000 750,000 190,000 560,000 $ 1,134,000

175,000 8,000 42,000 225,000 200,000 425,000

230,000 15,000 39,000 284,000 100,000 384,000

595,000 192,000 787,000 $ 1,212,000

600,000 150,000 750,000 $ 1,134,000

Given Data P12-14A: ALLIED COMPANY Income Statement For the Year Ended December 31, 2011 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sales of equipment Income before taxes Income taxes Net income Additional information: Long-term investment cost Long-term investment sale Equipment cost Equipment accumulated depreciation Equipment selling price Dividends declared and paid Stock was repurchased for cash $ $ $ $ $ 30,000 50,000 90,000 40,000 44,000 ? ? $ 800,000 500,000 300,000 214,000 86,000

20,000 (6,000)

14,000 100,000 30,000 70,000

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 12A-5A EATON COMPANY Adjusted Income Statement For the Year Ended December 31, 2011 Sales Adjustments to a cash basis: Increase in accounts receivable Cost of goods sold Adjustments to a cash basis: Decrease in inventory Increase in accounts payable Selling and administrative expenses Adjustments to a cash basis: Increase in prepaid expenses Decrease in accrued liabilities Depreciation Income taxes Adjustments to a cash basis: Increase in income taxes payable Net cash provided by operating activities $ 750 (80) 450 (35) (75) 223 2 10 (25) 24 (8) $ 16 104 Correct!
- Correct!

670

- Correct!

340

- Correct!

210

- Correct!

EATON COMPANY Statement of Cash Flows For the Year Ended December 31, 2011 Operating activities: Cash received from customers Less cash disbursements for: Cost of merchandise sold Selling and administrative expenses Income taxes Total cash disbursements Net cash provided by operating activities Investing activities: Proceeds from sale of long-term investments Proceeds from sale of equipment Additions to plant and equipment Net cash used in investing activities Financing activities: Issuance of bonds payable Decrease in common stock Cash dividends Net cash used in financing activities Net decrease in cash Cash balance, beginning Cash balance, ending

$ $ 340 210 16

670

566 104

Correct!

12 18 (110) (80) Correct!

25 (40) (16) (31) (7) 11 $ 4 Correct! Correct!

Given Data P12A-5A: EATON COMPANY Comparative Balance Sheet December 31, 2011, and 2010 2011 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, Plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 4 310 160 8 482 500 85 415 31 928 $ 2010 11 230 195 6 442 420 70 350 38 830

300 70 71 441 195 636 160 132 292 928

225 80 63 368 170 538 200 92 292 830

EATON COMPANY Income Statement For the Year Ended December 31, 2011 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income Equipment cost Equipment selling price Accumulated depreciation of equipment Long-term investment purchase $ 750 450 300 223 77

5 (2)

$ $ $ $ $ 30 18 10 7

3 80 24 56

Long-term investment sale Paid cash dividend Stock repurchase

$ ? $

12 40