Exercise 16-1 Cash flow from operations (indirect) L.O. P2

 

Exercise 16-1 Cash flow from operations (indirect) L.O. P2

Rasheed Company reports net income of $460,000 for the year ended December 31, 2011. It also reports $82,800 depreciation expense and a $7,500 gain on the sale of machinery. Its comparative balance sheets reveal a $36,800 increase in accounts receivable, $18,860 increase in accounts payable, $10,120 decrease in prepaid expenses, and $14,260 decrease in wages payable.

Required:

Prepare only the operating activities section of the statement of cash flows for 2011 using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

2.

award:
2 out of
2.00 points

Exercise 16-4 Cash flows from operating activities (indirect) L.O. P2

Roney Company’s calendar-year 2011 income statement shows the following: Net Income, $422,000; Depreciation Expense, $52,328; Amortization Expense, $10,550; Gain on Sale of Plant Assets, $3,500. An examination of the company’s current assets and current liabilities reveals the following changes (all from operating activities): Accounts Receivable decrease, $13,400; Merchandise Inventory decrease, $38,860; Prepaid Expenses increase, $2,300; Accounts Payable decrease, $5,750; Other Payables increase, $874.

Use the indirect method to compute cash flow from operating activities. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

3.

award:
2 out of
2.00 points

Exercise 16-6 Cash flows from operating activities (indirect) L.O. P2

BEKHAM COMPANY Income Statement For Year Ended December 31, 2011
Sales				$	1,731,000
Cost of goods sold					848,190
Gross profit					882,810
Operating expenses
Salaries expense	$	237,147
Depreciation expense		41,544
Rent expense		46,737
Amortization expenses–Patents		5,193
Utilities expense		19,041			349,662
					533,148
Gain on sale of equipment					6,924
Net income				$	540,072

Changes in current asset and current liability accounts for the year that relate to operations follow.

Accounts receivable	$	18,850	increase	Accounts payable	$	14,325	Decrease
Merchandise inventory		19,975	increase	Salaries payable		5,650	Decrease

Use the above income statement and information about changes in noncash current assets and current liabilities to prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response)

4.

award:
0.80 out of
1.00 point

Exercise 16-8 Cash flows from investing activities L.O. P3

a.	Sold land costing $325,000 for $410,000 cash, yielding a gain of $85,000.
b.	Paid $112,000 cash for a new truck.
c.	Equipment with a book value of $81,000 and an original cost of $170,000 was sold at a loss of $32,000.
d.	Long-term investments in stock were sold for $94,200 cash, yielding a gain of $14,750.

Use the above information to determine this company’s cash flows from investing activities.(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

5.

award:
1 out of
1.00 point

Exercise 16-9 Cash flows from financing activities L.O. P3

a.	Net income was $474,000.
b.	Issued common stock for $72,000 cash.
c.	Paid cash dividend of $11,000.
d.	Paid $100,000 cash to settle a note payable at its $100,000 maturity value.
e.	Paid $118,000 cash to acquire its treasury stock.
f.	Purchased equipment for $86,000 cash.

Use the above information to determine this company’s cash flows from financing activities.(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

Exercise 16-10 Preparation of statement of cash flows (indirect) L.O. P1

[The following information applies to the questions displayed below.]

Use the following financial statements and additional information.

GECKO INC. Comparative Balance Sheets June 30, 2011 and 2010
	2011			2010
Assets
Cash	$	114,000			$	56,900
Accounts receivable, net		69,800				51,200
Inventory		66,500				95,800
Prepaid expenses		5,900				4,500
Equipment		129,600				119,000
Accum. depreciation—Equipment		(28,400	)			(10,500	)
Total assets	$	357,400			$	316,900
Liabilities and Equity
Accounts payable	$	26,400			$	32,200
Wages payable		7,500				16,100
Income taxes payable		2,100				4,300
Notes payable (long term)		56,000				76,000
Common stock, $5 par value		240,000				180,000
Retained earnings		25,400				8,300
Total liabilities and equity	$	357,400			$	316,900

GECKO INC. Income Statement For Year Ended June 30, 2011
Sales				$	672,000
Cost of goods sold					410,000
Gross profit					262,000
Operating expenses
Depreciation expense	$	58,500
Other expenses		66,100
Total operating expenses					124,600
					137,400
Other gains (losses)
Gain on sale of equipment					2,200
Income before taxes					139,600
Income taxes expense					55,840
Net income				$	83,760

Additional Information

a.	A $20,000 note payable is retired at its $20,000 carrying (book) value in exchange for cash.
b.	The only changes affecting retained earnings are net income and cash dividends paid.
c.	New equipment is acquired for $59,600 cash.
d.	Received cash for the sale of equipment that had cost $49,000, yielding a $2,200 gain.
e.	Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
f.	All purchases and sales of merchandise inventory are on credit.

Section Break

Exercise 16-10 Preparation of statement of cash flows (indirect) L.O. P1

6.

award:
2.64 out of
4.00 points

Exercise 16-10 Part 1

1.	Prepare a statement of cash flows for the year ended June 30, 2011, using the indirect method.(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

GECKO, INC. Statement of Cash Flows For Year Ended June 30, 2011
Cash flows from operating activities
Net income	$ 83,760
Adjustments to reconcile net income to net cash provided by operating activities
Increase in accounts receivable
Decrease in merchandise inventory
Increase in prepaid expenses
Decrease in accounts payable
Decrease in wages payable
Decrease in income taxes payable
Depreciation expense
Gain on sale of plant assets
Net cash provided by by operating activities			$ 49,000
Cash flows from investing activities
Cash paid for dividends
Cash received from stock issuance
Net cash used in in investing activities			40,000
Cash flows from financing activities
Cash paid for equipment
Cash paid to retire notes
Cash received from sale of equipment
Net cash used in in financing activities			-28,400
Net increase in cash			$ 65,000
Cash balance at beginning of year			56,900
Cash balance at end of year			$ 121,900

eBook LinkView Hint #1

Worksheet	Difficulty: Hard
Exercise 16-10 Part 1	Learning Objective: 16-P1 Prepare a statement of cash flows.

7.

award:
0 out of
1.00 point

Exercise 16-10 Part 2

2.	Compute the company’s cash flow on total assets ratio for its fiscal year 2011. (Round your answer to 1 decimal place. Omit the “%” sign in your response.)

Cash flow on total assets ratio

31.9 %

8.

award:
2 out of
2.00 points

Exercise 16-14 Reporting cash flows from operations (indirect) L.O. P2

Harold Company reports the following information for its recent calendar year.

Sales	$	73,000
Expenses
Cost of goods sold		41,000
Salaries expense		12,000
Depreciation expense		8,000
Net income	$	12,000
Accounts receivable increase	$	5,000
Inventory decrease		2,000
Salaries payable increase		900

Required:

Prepare the operating activities section of the statement of cash flows for Harold Company using the indirect method.(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

9.

award:
2 out of
2.00 points

Exercise 16-15 Reporting and interpreting cash flows from operations (indirect) L.O. P2

Oregon Company disclosed the following information for its recent calendar year.

Revenues	$	95,000
Expenses
Salaries expense		74,000
Utilities expense		28,000
Depreciation expense		31,400
Other expenses		9,000
Net loss	$	(47,400	)
Accounts receivable decrease	$	28,000
Purchased a machine		21,000
Salaries payable increase		28,000
Other accrued liabilities decrease		13,000

Required:
1.	Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted and loss amounts should be indicated with a minus sign. Omit the “$” sign in your response.)

10.

award:
2.59 out of
3.00 points

Exercise 16-17 Cash flows spreadsheet (indirect method) L.O. P4

a.	Net income for the year was $40,000.
b.	Dividends of $10,000 cash were declared and paid.
c.	Stylish’s only noncash expense was $65,000 of depreciation.
d.	The company purchased plant assets for $60,000 cash.
e.	Notes payable of $60,000 were issued for $60,000 cash.

Complete the following spreadsheet in preparation of the statement of cash flows. Report operating activities under the indirect method. (Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

11.

award:
3 out of
3.00 points

Exercise 16-18 Statement of cash flows under IFRS (indirect) L.O. P1

Peugeot S.A. reports the following financial information for the year ended December 31, 2008 (euros in millions).

Net loss	€	480		Cash from sales of treasury stock and other	€	846
Depreciation and amortization		3,875		Cash paid for dividends		362
Gains on disposals and other		(368	)	Cash from disposal of plant assets and intangibles		68
Net increase in current assets		(413	)	Cash paid for plant assets and intangibles		(3,530	)
Net decrease in current liabilities		(2,228	)	Cash and cash equivalents, December 31, 2007		5,991

Prepare its statement of cash flows under the indirect method.(Enter your answers in millions. Amounts to be deducted and loss amounts should be indicated with a minus sign. Omit the “€” sign in your response.)