Professional Documents
Culture Documents
12-1
22
2
5. Since the ending balance of utilities payable exceeded
the beginning balance by $1,900, more utility cost was
used than paid for. The amount of cash paid was
$85,100, the amount of utility expense of $87,000 less
the increase in utilities payable of $1,900.
EXERCISE 12-1A
a. Financing
Activity
b. Operating
Activity
c. Financing
Activity
d. Operating
Activity
e. Financing
Activity
f. Financing
Activity
g. Investing
Activity
h. Investing
Activity
i. Operating
Activity
j. Operating
Activity
k. Non-Cash Item
EXERCISE 12-2A
EXERCISE 12-3A
a.
Accounts Receivable Interest Receivable
1/1 23,000 1/1 5,000
Sales 646,000 Cash 648,000 Int. Earned Cash 22,000
24,000
12/31 21,000 12/31 7,000
b.
Accounts Payable Salaries Payable
1/1 28,000 1/1 10,000
Cash 273,000 Op. Exp. Cash 171,000 Acc. Sal.
270,000 172,000
12/31 25,000 12/31 11,000
EXERCISE 12-5A
EXERCISE 12-7A
Inventory
Bal. 67,000
Pur. 381,000 Sold 376,000
Bal. 72,000
Accounts Payable
Bal. 49,000
Paid383,000 Pur. 381,000
Bal. 47,000
EXERCISE 12-8A
Prepaid Rent
Bal. 1,200
2. 23,600
Exp. 24,000
Bal. 800
b. Indirect Method:
Cash Flow From Operating Activities
Net Income: $43,600
Add: Decrease in Prepaid Rent 400
Increase in Accounts Payable 4,000
Increase in Utilities Payable 3,200
Deduct: Increase in Accounts (2,000)
Receivable
Net Cash Inflow from Operating $49,200
Activities
EXERCISE 12-10A
Note: T-accounts are provided for the instructor’s use.
T-Accounts--Partial:
Cash Bonds Payable No-Par Common
Stock
2. 2,900 1. 23,400 3. 40,000 5. 64,900
3. 40,000 4. 50,000
Mortgage Payable Retained Earnings
Delivery Equipment 4. 130,000 2. 900
1. 23,400 2. 15,000
Accumulated Depr.
2. 13,000
Building
4.180,000
Machinery
5. 64,900
a.
Armstrong Corporation
Statement of Cash Flows
For the Year Ended December 31, 2004
Cash Flows From Investing Activities
Inflow from Sale of Delivery Equipment $ 2,900
Outflow to Purchase Delivery Equipment (23,400
)
Outflow to Purchase Building (50,000
)
Net Cash Flow from Investing Activities $
(70,500)
Cash Flows From Financing Activities
Inflow from Issue of Bonds Payable 40,000
Net Cash Flow from Financing Activities 40,000
Net Decrease in Cash $
(30,500)
Schedule of Noncash Investing and Financing
Activities
Issued Common Stock for Machinery $ 64,900
Purchased Building with Mortgage $130,000
b. If a company has cash on hand at the beginning of an
accounting period or if it produces positive cash flows
from operating activities, it will be able to spend more on
investing activities than it receives from financing
activities.
PROBLEM 12-11A
Effect on
Transactions Cash
Flow
1. Cash Received from Sales:
Sales of $250,000 − Increase in Accts. Rec. of = $242,000
$8,000
2. Salaries Paid:
Salaries Exp. $56,000 + Decrease in Sal. Pay. = (57,500)
$1,500
3. Other Operating Expenses Paid:
Other Operating Exp. $125,000 − Increase in
Operating Expense Payable $5,100 = (119,900
)
4. Non-Cash Item -0-
5. Purchased Equipment = (30,000)
6. Additional Borrowing = 100,000
7. Interest Paid:
Interest Exp. $6,000 + Decrease in Int. Pay. = (6,200)
$200
8. Inventory Paid:
Merchandise Sold $156,000 + Increase in Inv.
$18,000 = Merchandise Purchases $174,000;
$174,000 – Increase in Accts. Payable $2,000 = (172,000
)
9. Employee Loan = (7,500)
10. Issued Common Stock = 25,000
11. Sold Land = 14,700
12. Taxes Paid:
Taxes Exp. $7,700 + Decrease in Taxes Pay. $75 = (7,775)
13. Purchased Investments = (18,000)
Sold Investments = 9,000
Change in Cash =$
(28,175)
PROBLEM 12-12A (continued)
Store Company
Statement of Cash Flows
For the Period Ended December 31, 2002
Cash Flows From Operating Activities:
Cash Receipts from:
Sales $242,000
Total Cash Inflows $242,000
a.
Computation of Cash Flows from Operating
Activities
Sales $175,000 – $4,000 $171,000
Inventory Purchase $85,000 – $1,000 (84,000)
Insurance Paid $42,000 − $22,000 (20,000)
Salaries Paid $35,000 + $1,400 (36,400)
Other Operating Expense (26,000)
Net Cash Flow from Operating Activities $ 4,600
b.
a.
Computation of Cash Flows from Investing
Activities
Sold Marketable Securities ($112,000 − $ 37,000
$75,000)
Sold Equipment 8,000
Purchased Land ($110,000 − $90,000) (20,000)
Purchased Equipment (110,000
)
Net Cash Flow from Investing Activities $(85,000
)
b.
Chico Company
Statement of Cash Flows
For the Period Ended December 31, 2005
Cash Flows From Investing Activities:
Inflow from Sale of Marketable $37,000
Securities
Inflow from Sale of Equipment 8,000
Outflow to Purchase Land (20,000)
Outflow to Purchase Equipment (110,000)
Net Cash Flow from Investing Activities $(85,000)
PROBLEM 12-15A
a.
Computation of Cash Flows from Financing
Activities
Issued Stock ($50,000 + $50,000) $100,00
0
Repaid Debt (110,000
)
Paid Dividends (45,000)
Net Cash Flow from Financing Activities $(55,000
)
b.
Tiger Company
Statement of Cash Flows
For the Period Ended December 31, 2004
Cash Flows From Financing Activities:
Inflow from the Issue of Capital Stock $100,000
Outflow for the Payment of Dividends (45,000)
Outflow for the Repayment of Debt (110,000)
Net Cash Flow from Financing Activities $(55,000)
PROBLEM 12-16A
Transactions Legend:
a1. Revenue, $35,700.
a2. Collection of Accounts Receivable: $1,200 + $35,700 −
$2,000=$34,900
b1. Cost of Goods Sold, $14,150.
b2. Inventory Purchased: $6,400 + $14,150 − $6,000 = $14,550
b3. Inventory Paid: $4,200 + $14,550 − $2,600 =$16,150
c1. Depreciation Expense, $3,600 (noncash).
d1. Sale of Equipment, $18,500; Cost of Equipment Sold, $30,000;
Accumulated Depreciation on Equipment Sold, $12,000.
d2. Purchase of Equipment, $7,000.
e1. Sale of Land, $3,950; Cost of Land Sold, $4,000.
f1. Purchased Land with Stock, $12,000.
g1. Paid Dividends, $9,200.
h1. Repaid long-term debt, $3,600.
PROBLEM 12-16A (continued)
Blue Mountain, Inc.
T-Accounts
Assets = Liabilities + Equity
Inventory
Bal. 6,000
b2. 14,550 b1.14,150
Bal. 6,400
Land
Bal.10,400
f1. 12,000 e1. 4,000
Bal.18,400
Equipment
Bal.42,000
d2. 7,000 d1.30,000
Bal.19,000
Accumulated
Depreciation
Bal.
17,400
d1. 12,000 c1. 3,600
Bal. 9,000
PROBLEM 12-16A (continued)
Pacific Company
Statement of Cash Flows
For the Period Ended December 31, 2003
Cash Flows From Operating Activities:
Cash Receipts from:
Sales $34,900
Total Cash Inflows $34,900
Transactions Legend:
a1. Revenue $580,000
a2. Collection of Accounts Receivable 589,000
b1. Cost of Goods Sold 288,000
b2. Inventory Purchased 300,000
b3. Inventory Paid 306,600
c1. Salaries Expense 184,000
c2. Salaries Paid 178,000
d1. Depreciation Expense (noncash) 17,740
e1. Utilities Expense 12,200
e2. Utilities Paid 12,800
f1. Interest Expense 3,000
f2. Interest Paid 4,800
g1. Collected Notes Receivable 30,000
h1. Sale of Equipment 22,200
h2. Cost of Equipment Sold 108,000
h3. Accumulated Depreciation on Equipment 84,000
Sold
h4. Loss on Equipment Sold 1,800
i1. Purchased Land 30,000
j1. Repaid Notes Payable 60,000
k1. Issued Stock 60,000
l1. Paid Dividends 13,600
Computations:
a2. $66,000 + $580,000 − $57,000 = $589,000
b2. $288,000 + $126,000 − $114,000 = $300,000
b3. $48,600 + $300,000 − $42,000 = $306,600
c2. $184,000 + $24,000 − $30,000 = $178,000
e2. $1,200 + $12,200 − $600 = $12,800
f2. $1,800 + $3,000 = $4,800
k1. $300,000 − $240,000 = $60,000
PROBLEM 12-17A (continued)
Grace Corp. T-Accounts
Assets = Liabilities + Equity
Cash Accounts Payable Common Stock
Bal. 28,200 Bal.48,600 Bal.240,000
a2.589,000 b3. b3.306,600 b2. k1. 60,000
306,600 300,000
g1. 30,000 c2.178,000 Bal.42,000 Bal.300,000
h1. 22,200 e2. 12,800
k1. 60,000 f2. 4,800 Utilities Payable Retained Earnings
i1. 30,000 Bal. 1,200 Bal.29,100
j1. 60,000 e2. 12,800 e1.12,200 b1. a1.580,000
288,000
l1. 13,600 Bal. 600 c1.
184,000
Bal. d1. 17,740
123,600
Salaries Payable e1. 12,200
Accounts Receivable Bal.24,000 f1. 3,000
Bal. 66,000 c2.178,000 c1. h4. 1,800
184,000
a1.580,000 a2. Bal.30,000 l1. 13,600
589,000
Bal. 57,000 Bal.88,760
Interest Payable
Inventory Bal. 1,800
Bal. f2. 4,800 f1. 3,000
114,000
b2.300,000 b1. Bal. -0-
288,000
Bal.
126,000
Notes Payable
Notes Receivable Bal.60,000
Bal. 30,000 j1. 60,000
g1. 30,000 Bal. -0-
Bal. -0-
Land
Bal. 52,500
i1. 30,000
Bal. 82,500
Equipment
Bal.
255,000
h2.
108,000
Bal.
147,000
Accumulated
Depreciation
Bal.
141,000
h3. 84,000 d1. 17,740
Bal.74,740
PROBLEM 12-17A (continued)
Raceway Sports
Statement of Cash Flows
For the Period Ended December 31, 2002
Cash Flows From Operating Activities:
Cash Receipts from:
Sales $589,000
Total Cash Inflows $589,00
0
Cash Payments for:
Inventory Purchased (306,600)
Salaries (178,000)
Utilities (12,800)
Interest (4,800)
Total Cash Outflows (502,200
)
Net Cash Flow from Operating Activities 86,800
Cash Flows From Investing Activities:
Inflow from Sale of Equipment 22,200
Inflow from Note Collection 30,000
Outflow to Purchase Land (30,000)
Net Cash Flow from Investing Activities 22,200
Cash Flows From Financing Activities:
Inflow from Stock Issue 60,000
Outflow for Repayment of Debt (60,000)
Outflow for Dividends (13,600)
Net Cash Flow from Financing Activities (13,600)
Net Increase in Cash 95,400
Plus: Beginning Cash Balance 28,200
Ending Cash Balance $123,60
0
PROBLEM 12-18A
Redwood Corporation
Statement of Cash Flows
For the Period Ended December 31, 2004
Cash Flows From Operating Activities:
Net Income $142,000
Plus: Decreases in Current Assets
and
Increases in Current Liabilities:
Decrease in Inventory 16,000
Decrease in Prepaid Rent 2,400
Increase in Salaries Payable 4,000
LessIncreases in Current Assets and
Decreases in Current Liabilities:
Increase in Accounts (8,000)
Receivable
Decrease in Accounts Payable (9,000)
Plus: Noncash Charges
Depreciation Expense 22,800
Net Cash Flow from Operating Activities $170,200
Cash Flows From Investing Activities:
Inflow from Sale of Equipment 20,000
Outflow to Purchase Equipment (100,000)
Outflow to Purchase Land (112,000)
Net Cash Flow from Investing Activities (192,000
)
Cash Flows From Financing Activities:
Inflow from Stock Issue 50,000
Net Cash Flow from Financing Activities 50,000
Net Decrease in Cash 28,200
Plus: Beginning Cash Balance 40,600
Ending Cash Balance $68,800
EXERCISE 12-1B
a. Operating
Activity
b. Operating
Activity
c. Financing
Activity
d. Financing
Activity
e. Investing
Activity
f. Operating
Activity
g. Financing
Activity
h. Financing
Activity
i. Investing
Activity
j. Operating
Activity
EXERCISE 12-2B
a.
Accounts Receivable Interest Receivable
2002 2002
1/1 40,000 1/1 5,000
Sales 275,000 Cash 269,000 Int. Earned Cash 27,000
25,000
12/31 46,000 12/31 3,000
Inflow from
Operations
From Sales $269,000
Interest 27,000
Total $296,000
b.
Accounts Payable Salaries Payable
2002 2002
1/1 30,000 1/1 12,000
Cash 193,000 Op. Exp. Sal. Paid 76,500 Acc. Sal.75,000
196,000
12/31 33,000 12/31 10,500
Outflow from
Operations
Payment of Oper. $193,000
Exp.
Payment of Salaries 76,500
Total $269,500
EXERCISE 12-4B
EXERCISE 12-5B
EXERCISE 12-7B
Inventory
Bal. 41,000
Pur. 144,000 Sold 120,000
Bal. 65,000
Accounts Payable
Bal. 42,000
Paid134,000 Pur. 144,000
Bal. 52,000
EXERCISE 12-8B
f. Indirect Method:
Cash Flow From Operating
Activities:
Net Income: $49,800
Add: Increase in Accounts Payable 5,000
Deduct: Increase in Accounts (1,800)
Receivable
Increase in Prepaid Rent (2,600)
Decrease in Utilities Payable (3,600)
Net Cash Inflow from Operating $46,800
Activities
EXERCISE 12-10B
Note: The T-accounts are provided for the use of the instructor.
T-Accounts - Selected Information:
Cash Notes Payable, Bank No-Par Common
Stock
2. 2,000 1. 9,800 3. 20,000 5. 26,500
3. 20,000 4. 50,000
Notes Payable, Land Retained Earnings
Office Equipment 4. 75,000 2. 1,000
1. 9,800 2. 12,000
Accumulated Depr.
2. 11,000
Land
4.125,000
Automobile
5. 26,500
a.
Johnston Company
Statement of Cash Flows
For the Year Ended December 31, 2003
Cash Flows From Investing Activities:
Inflow from Sale of Office Equipment $ 2,000
Outflow to Purchase Office (9,800)
Equipment
Outflow to Purchase Land (50,000
)
Net Cash Flow from Investing Activities $(57,800)
Cash Flows From Financing Activities:
Inflow from Loan 20,000
Net Cash Flow from Financing 20,000
Activities
Net Decrease in Cash (37,800)
Schedule of Noncash Investing and
Financing Activities:
Issued Common Stock for $ 26,500
Automobile
Purchased Land with Note $ 75,000
Effect on
Transactions Cash Flow
1. Cash Received from Sales:
Sales of $548,000 + Decrease in Accts. Rec. of = $ 586,000
$38,000
2. Salaries Paid:
Salaries Exp. $232,000 + Decrease in Sal. Pay. = (240,000)
$8,000
3. Other Operating Expenses Paid:
Other Operating Exp. $236,000 + Decrease in
Operating Expense Payable $6,000 = (242,000)
4. Non-Cash Item -0-
5. Purchased Equipment = (12,000)
6. Repayment of Debt = (8,000)
7. Interest Paid:
Interest Exp. $4,600 + Decrease in Int. Pay. $900 = (5,500)
8. Inventory Paid:
Merchandise Sold $83,600 + Increase in Inv.
$7,400 =
Merchandise Pur. $91,000 = (92,600)
$91,000 + Decrease in Accts. Payable $1,600
9. Collected Note = 40,000
10. Issued Common Stock = 40,000
11. Sold Land = 6,000
12. Taxes Paid:
Taxes Exp. $6,600 + Decrease in Taxes Pay. $200 = (6,800)
13. Purchased Investments = (50,000)
Sold Investments = 22,000
Change in Cash = $ 37,100
PROBLEM 12-12B (continued)
Greenstein Company
Statement of Cash Flows
For the Period Ended December 31, 2003
Cash Flows From Operating Activities:
Cash Receipts from:
Sales $586,000
Total Cash Inflows $586,000
Cash Payments for:
Inventory Purchased (92,600)
Salaries (240,000)
Other Operating Expenses (242,000)
Interest (5,500)
Taxes (6,800)
Total Cash Outflows (586,900
)
Net Cash Flow from Operating (900)
Activities
Cash Flows From Investing Activities:
Inflow from Sale of Land 6,000
Inflow from Sale of Investments 22,000
Inflow from Note Receivable 40,000
Outflow to Purchase Equipment (12,000)
Outflow to Purchase Investments (50,000)
Net Cash Flow from Investing Activities 6,000
Cash Flows From Financing Activities:
Inflow from Stock Issue 40,000
Outflow to Repay Debt (8,000)
Net Cash Flow from Financing 32,000
Activities
Net Increase in Cash 37,100
Plus: Beginning Cash Balance 86,000
Ending Cash Balance $123,100
PROBLEM 12-13B
a.
Computation of Cash Flows from Operating
Activities
Sales $248,000 − $3,200 $244,80
0
Inventory Purchase $186,000 − $800 (185,200
)
Insurance Paid $8,000 − $400 (7,600)
Salaries Expense $42,600 + $600 (43,200)
Other Operating Expense (27,400)
Net Cash Flow from Operating Activities $(18,600
)
b.
Gables Auto Supplies
Statement of Cash Flows
For the Period Ended December 31, 2003
Cash Flows From Operating Activities:
Cash Receipts from:
Sales $244,800
Total Cash Inflows $244,800
Cash Payments for:
Inventory Purchased (185,200)
Insurance (7,600)
Salaries (43,200)
Other operating Expense (27,400)
Total Cash Outflows (263,400)
Net Cash Flow from Operating $
Activities (18,600)
PROBLEM 12-14B
a.
Computation of Cash Flows from Investing
Activities
Sold Marketable Securities ($66,000 − $ 14,800
$51,200)
Sold Trucks 11,000
Sold Land 10,000
Purchased Machinery (40,000)
Net Cash Flow from Investing Activities $
(4,200)
b.
Tony’s Flea Markets, Inc.
Statement of Cash Flows
For the Period Ended December 31, 2001
Cash Flows From Investing Activities:
Inflow from Sale of Marketable $14,800
Securities
Inflow from Sale of Machinery 11,000
Inflow from Sale of Land 10,000
Outflow to Purchase Machinery (40,000)
Net Cash Flow from Investing $(4,200)
Activities
PROBLEM 12-15B
a.
Computation of Cash Flows from Financing
Activities
Issued Stock ($70,000 + $32,000) $102,000
Borrowed Funds 40,000
Repaid Debt ($170,000 + $40,000 − (30,000)
$180,000)
Paid Dividends (28,000)
Net Cash Flow from Financing Activities $84,000
b.
Engineered Components
Statement of Cash Flows
For the Year Ended December 31, 2002
Cash Flows From Financing Activities:
Inflow from the Issue of Capital $102,000
Stock
Inflow from New Debt 40,000
Outflow for the Payment of (28,000)
Dividends
Outflow for the Repayment of Debt (30,000)
Net Cash Flow from Financing $84,000
Activities
PROBLEM 12-16B
Transactions Legend:
Inventory
Bal. 2,600
b2. 5,600 b1. 6,200
Bal. 2,000
Land
Bal. 8,000
e2. 7,000 e1. 2,000
Bal.
13,000
Equipment
Bal.
17,100
d2. 5,000 d1. 8,400
Bal.
13,700
Accumulated
Depreciation
Bal.
12,950
d1. 3,400 c1. 1,750
Bal.
11,300
PROBLEM 12-16B (continued)
Transactions Legend:
Effect on
Transactions Cash Flow
Cash Received from Sales:
Sales of $1,050,000 − Increase in Accts. Rec. of = $1,031,800
$18,200
Merchandise Sold $766,500 + Increase in Inv.
$14,600= Merchandise Purchases $781,100
$781,100 + Decrease in Accts. Payable $29,800 = (810,900)
Other Operating Expenses Paid = (112,400)
Interest Paid = (16,000)
1. Sold Land = 44,000
2. Sold Equipment = 18,000
3. Purchased Equipment = (190,000)
4. Sold Marketable Securities = 70,000
5. Purchased Marketable Securities = (104,000)
6. Paid Loan = (20,000)
7. Paid off Bond Issue = (100,000)
Issue New Bonds = 200,000
8. Sold Treasury Stock = 10,000
9. Issued Common Stock = 40,000
10. Issued Preferred Stock = 17,600
11. Paid Dividends = (38,500)
Change in Cash =$ 39,600
ATC 12-2 (continued)
a.
Blythe Industries, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2001
Cash Flows From Operating Activities:
Cash Receipts from:
Sales $1,031,800
Total Cash Inflows $1,031,800
Cash Payments for:
Inventory Purchased (810,900)
Operating Expenses (112,400)
Interest (16,000)
Total Cash Outflows (939,300)
Net Cash Flow from Operating Activities 92,500
Cash Flows From Investing Activities:
Inflow from Sale of Land 44,000
Inflow from Sale of Equipment 18,000
Inflow from Sale of Marketable 70,000
Securities
Outflow to Purchase Marketable (104,000)
Securities
Outflow to Purchase Equipment (190,000)
Net Cash Flow from Investing Activities (162,000)
Cash Flows From Financing Activities:
Inflow from Common Stock Issue 40,000
Inflow from Preferred Stock Issue 17,600
Inflow from Sale of Treasury Stock 10,000
Inflow from the Issuance of Bonds 200,000
Outflow for Payment of Loan (20,000)
Outflow for Payment of Bonds (100,000)
Outflow for Payment of Dividends (38,500)
Net Cash Flow from Financing Activities 109,100
Net Increase in Cash 39,600
Plus: Beginning Cash Balance 120,600
Ending Cash Balance $160,200
ATC 12-2 (continued)
ATC 12-3
ATC 12-4
The other item worth noting is the fact that the company has
purchased almost $400,000 worth of equipment. This may or
may not have been a necessary purchase. More information
is needed to make this determination.
Investing Activities:
Outflow to Purchase Computer (24,000)
Financing Activities:
Outflow for Loan Payment (150,000)
Outflow for Distribution (20,000)
Net Outflow from Financing Act. (170,000)
Net Change in Cash $ 58,000