Statement of cash flows—direct method The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, as follows: Dec. 31, 20Y6 Dec. 31, 20Y5 Assets Cash $ 643,400 $ 679,400 Accounts receivable (net) 566,800 547,400 Inventories 1,011,000 982,800 Investments 0 240,000 Land 520,000 0 Equipment 880,000 680,000 Accumulated depreciation (244,400) (200,400) Total assets $33,76,800 $2,929,200 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors] $ 771,800 $ 748,400 Accrued expenses payable (operating expenses) 63,400 70,800 Dividends payable 8,800 6,400 Common stock. $2 par 56,000 32,000 Paid-in capital: Excess of issue price over par—common stock 408,000 192,000 Retained earnings 2,068,800 1,879,600 Total liabilities and stockholders' Equity $3,376,800 $2,929,200 The income .statement for the year ended December 31, 20Y6, is as follows Sales $5,980,000 Cost of goods sold 2,452,000 Gross profit $3,328,000 Operating expenses: Depreciation expense $ 44,000 Other operating expenses 3,100,000 Total operating expenses 3,144,000 Operating income $ 384,000 Other expense: Loss on sale of investments (64,000) Income before income tax $ 320,000 Income tax expense 102,800 Net income $ 217,200 Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows: A. Equipment and land were acquired for cash. B. There were no disposals of equipment during the year. C. The investments were sold for $176,000 cash. D. The common stock was issued for cash. E. There was a $28,000 debit to Retained Earnings for cash dividends declared. Instructions Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.

BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Solutions

Chapter
Section
Chapter 13, Problem 13.4APR
Textbook Problem

Statement of cash flows—direct method

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, as follows:

Dec. 31, 20Y6 Dec. 31, 20Y5
Assets
Cash $ 643,400 $ 679,400
Accounts receivable (net) 566,800 547,400
Inventories 1,011,000 982,800
Investments 0 240,000
Land 520,000 0
Equipment 880,000 680,000
Accumulated depreciation (244,400) (200,400)
Total assets $33,76,800 $2,929,200
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors] $ 771,800 $ 748,400
Accrued expenses payable (operating expenses) 63,400 70,800
Dividends payable 8,800 6,400
Common stock. $2 par 56,000 32,000
Paid-in capital: Excess of issue price over par—common stock 408,000 192,000
Retained earnings 2,068,800 1,879,600
Total liabilities and stockholders' Equity $3,376,800 $2,929,200
The income .statement for the year ended December 31, 20Y6, is as follows
Sales $5,980,000
Cost of goods sold 2,452,000
Gross profit $3,328,000
Operating expenses:
Depreciation expense $ 44,000
Other operating expenses 3,100,000
Total operating expenses 3,144,000
Operating income $ 384,000
Other expense:
Loss on sale of investments (64,000)
Income before income tax $ 320,000
Income tax expense 102,800
Net income $ 217,200

Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:

  1. A. Equipment and land were acquired for cash.
  2. B. There were no disposals of equipment during the year.
  3. C. The investments were sold for $176,000 cash.
  4. D. The common stock was issued for cash.
  5. E. There was a $28,000 debit to Retained Earnings for cash dividends declared.

Instructions

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.

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Chapter 13 Solutions

Financial & Managerial Accounting
Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Adjustments to net incomeindirect method Ripley...Ch. 13 - Changes in current operating assets and...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Land transactions on the statement of cash flows...Ch. 13 - Common stock transactions on the statement of cash...Ch. 13 - Cash received from customersdirect method Sales...Ch. 13 - Cash payments for merchandisedirect method The...Ch. 13 - Cash flows from operating activitiesnet loss...Ch. 13 - Effect of transactions on cash flows State the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activities indirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting land transactions on statement of cash...Ch. 13 - Determining cash payments to stockholders The...Ch. 13 - Reporting stockholders' equity items on statement...Ch. 13 - Reporting land acquisition for cash and mortgage...Ch. 13 - Reporting issuance and retirement of long-term...Ch. 13 - Determining net income from net cash flow from...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method List the...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Determining selected amounts for cash flows from...Ch. 13 - Cash flows from operating activities direct method...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsdirect method The...Ch. 13 - Statement of cash flows direct method applied to...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows indirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows direct method The...Ch. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Continuing Company AnalysisAmazon, Best Buy, and...Ch. 13 - RadioShack: Free cash flow RadioShack Corporation...Ch. 13 - ATT and Facebook: Free cash flow ATT Inc. is a...Ch. 13 - Priceline: Free cash flow Priceline Group, Inc. is...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Communication Tidewater Inc., a retailer, provided...

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