PROBLEMSETC

PROBLEM161C
JumpinJimCompany,amerchandiser,recentlycompleteditscalendaryear2008operations.
Fortheyear,(1)allsales arecreditsales,(2)all credits toaccounts receivable reflect cash
receipts fromcustomers, (3)purchases ofinventory areoncredit, (4)all debits toaccounts
payablereflectcashpaymentsforinventory,and(5)otherexpensesarepaidinadvanceandare
initiallydebitedtoPrepaidExpenses.JumpinJimsbalancesheetandincomestatementfollow:
JUMPINJIMCOMPANY
IncomeStatement
ForYearEndedDecember31,2008
$630,700
(278,000)
352,700

Sales
Costofgoodssold
Grossprofit
Operatingexpenses
Depreciationexpense$15,620
Otherexpenses189,000(204,620)
Othergains(losses)
Gainonsaleofequipment 10,200
Incomebeforetaxes
$158,280
Incometaxes
(27,570)
Netincome
$130,710

JUMPINJIMCOMPANY
ComparativeBalanceSheets
December31,
20082007

Assets
Cash$54,400$62,900
Accountsreceivable
70,250 55,500
Merchandiseinventory
210,800204,800
Prepaidexpenses
2501,560
Equipment
102,58088,000
Accum.depreciationEquip.(25,020)(24,200)
Totalassets
$413,260$388,560
LiabilitiesandEquity
Accountspayable
$41,090$98,100
Shorttermnotespayable 5,0000
Longtermnotespayable 26,00040,000
Commonstock,$2parvalue122,000120,000
Contributedcapitalinexcess

ofpar,commonstock
70,50067,500
Retainedearnings
148,67062,960
Totalliabilitiesandequity$413,260$388,560

AdditionalInformationonYear2008Transactions
a. Thegainoncashsaleofequipmentis$10,200(detailsinb).
b. Soldequipmentcosting$21,420,withaccumulateddepreciationof$14,800,for$16,820cash.
c. Purchasedequipmentcosting$36,000bypayingcashof$10,000andsigningalongtermnote
payableforthebalance.
d. Borrowed$5,000cashbysigningashorttermnotepayable.
e. Paid$40,000cashtoreducethelongtermnotespayable.
f. Issued1,000sharesofcommonstockforcashat$5pershare.
g. Declaredandpaidcashdividendsof$45,000.
Required
1.Prepareacompletestatementofcashflows;reportitsoperatingactivitiesusingthe indirect
method.Discloseanynoncashinvestingandfinancingactivitiesinanote.
AnalysisComponent
2.Analyzeanddiscussthecashflow information inyouranswertopart(1),givingspecial
attentiontothewisdomofthecashdividendpayment.
PROBLEM162C
RefertotheinformationreportedaboutJumpinJimCompanyinProblem161C.
Required
PrepareastatementofcashflowsusingaspreadsheetasinExhibit16A.1undertheindirect
methodofreportingcashflowsfromoperatingactivities.Identifythedebitsandcreditsinthe
AnalysisofChangescolumnswithlettersthatcorrespondtothefollowinglistoftransactionsand
events:
a. Netincomeis$130,710.
b. Accountsreceivableincreased.
c. Merchandiseinventoryincreased.
d. Prepaidexpensesdecreased.
e. Accountspayabledecreased.
f. Depreciationexpenseis$15,620.
g. Sold equipment costing $21,420, with accumulated depreciation of $14,800, for $16,820
cash.Thisyieldedagainof$10,200.
h. Purchasedequipmentcosting$36,000bypaying$10,000cashand(i.)bysigningalongterm
notepayableforthebalance.
j. Borrowed$5,000cashbysigningashorttermnotepayable.
k. Paid$40,000cashtoreducethelongtermnotespayable.

l. Issued1,000sharesofcommonstockforcashat$5pershare.
m.Declaredandpaidcashdividendsof$45,000.

PROBLEM163C
RefertoJumpinJimCompanysfinancialstatementsandrelatedinformationinProblem161C.
Required
Prepareacompletestatementofcashflows;reportitsoperatingactivitiesaccordingtothedirect
method.Discloseanynoncashinvestingandfinancingactivitiesinanote.
PROBLEM164C
SteveCorporation,amerchandiser,recentlycompletedits2008operations.Fortheyear,(1)all
salesarecreditsales,(2)allcreditstoaccountsreceivablereflectcashreceiptsfromcustomers,
(3) all purchases of inventory are on credit, (4) all debits to accounts payable reflect cash
paymentsforinventory,(5)otheroperatingexpensesarecashexpenses,and(6)anychangein
incometaxespayablereflectstheaccrualandcashpaymentoftaxes.Stevesbalancesheetand
incomestatementfollow:
STEVECORPORATION
IncomeStatement
ForYearEndedDecember31,2008
Sales
$1,494,000
Costofgoodssold
(895,500)
Grossprofit
508,500
Operatingexpenses
Depreciationexpense
$40,500
Otherexpenses
375,750(416,250)
Incomebeforetaxes
182,250
Incometaxes (31,500)
Netincome
$150,750

STEVECORPORATION
ComparativeBalanceSheets
December31,

20082007
Assets
Cash
$130,500$87,750
Accountsreceivable
69,75060,750
Merchandiseinventory
456,750400,500
Equipment
249,750222,750
Accum.depreciationEquip.(117,000)(76,500)
Totalassets
$789,750$695,250

LiabilitiesandEquity
Accountspayable
$51,750$72,000
Incometaxespayable
20,25018,000
Commonstock,$1parvalue436,500418,500
Contributedcapitalinexcess
ofparvalue,commonstock148,500121,500
Retainedearnings
132,75065,250
Totalliabilitiesandequity$789,750$695,250

AdditionalInformationonYear2008Transactions
a. Purchasedequipmentfor$27,000cash.
b. Issued18,000sharesofcommonstockforcashat$2.50pershare.
c. Declaredandpaid$83,250ofcashdividends.
Required
Prepareacomplete statementofcashflows;reportits cashinflowsandcashoutflowsfrom
operatingactivitiesaccordingtotheindirectmethod.

PROBLEM165C
RefertotheinformationreportedaboutSteveCorporationinProblem164C.
Required
PrepareastatementofcashflowsusingaspreadsheetasinExhibit16A.1undertheindirect
methodofreportingcashflowsfromoperatingactivities.Identifythedebitsandcreditsinthe
AnalysisofChangescolumnswithlettersthatcorrespondtothefollowinglistoftransactionsand
events:
a. Netincomeis$150,750.
f. Depreciationexpenseis$40,500.
b. Accountsreceivableincreased.
g. Purchasedequipmentfor$27,000cash.
c. Merchandiseinventoryincreased.h.Issued18,000sharesat$2.50pershare.
d. Accountspayabledecreased.
i. Declaredandpaid$83,250ofcashdividends.

e. Incometaxespayableincreased.
PROBLEM166C
RefertoSteveCorporationsfinancialstatementsandrelatedinformationinProblem164C.
Required
Prepare a complete statement of cash flows; report its cash flows from operating activities
accordingtothedirectmethod.