Corporate Financial Accounting
Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 13, Problem 13.5BPR

Statement of cash flows—direct method applied to PR 13–1B

The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is:

  Dec. 31, 20Y9 Dec. 31, 20Y8
Assets      
Cash $ 70,720 $ 47,940
Accounts receivable (net) 207,230   188,190
Inventories 298,520   289,850
Investments 0   102,000
Land 295,800   0
Equipment 438,600   358,020
Accumulated depreciation—equipment (99,110)   (84,320)
Total assets $ 1,211,760 $ 901,680
Liabilities and Stockholders' Equity      
Accounts payable (merchandise creditors).................. $ 205,700 $ 194,140
Accrued expenses payable (operating expenses) 30,600   26,860
Dividends payable 25,500   20,400
Common stock. $1 par 202,000   102,000
Paid-in capital: Excess of issue price over par—common stock 354,000   204,000
Retained earnings 393,960   354,280
Total liabilities and stockholders' equity $ 1,211,760 $ 901,680
The income statement for the year ended December 31,20Y9, is as fallow s:
Sales   $2,023,898
Cost of goods sold   1,245,476
Gross profit   $ 778,422
Operating expenses:    
Depreciation expense $ 14,790  
Other operating expenses 517,299  
Total operating expenses   532,089
Operating income   $ 246,333
Other expenses:    
Loss on sale of investments   (10,200)
Income before income tax   $ 236,133
Income tax expense   94,453
Net income   $ 141,680

Additional data obtained from an examination of the- accounts in the ledger for 20Y9 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 $91,800 cash.
  4. D. The common stock was issued for cash.
  5. E. There was a $ 102,000 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

Corporate Financial Accounting

Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Adjustments to net incomeindirect method Ripley...Ch. 13 - Prob. 13.3BECh. 13 - Prob. 13.4BECh. 13 - Prob. 13.5BECh. 13 - Common stock transactions on the statement of cash...Ch. 13 - Appendix 2 Cash received from customersdirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Prob. 13.1EXCh. 13 - Effect of transactions on cash flows State the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Prob. 13.4EXCh. 13 - Cash flows from operating activities indirect...Ch. 13 - Prob. 13.6EXCh. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Prob. 13.8EXCh. 13 - Prob. 13.9EXCh. 13 - Prob. 13.10EXCh. 13 - Determining cash payments to stockholders The...Ch. 13 - Prob. 13.12EXCh. 13 - Reporting land acquisition for cash and mortgage...Ch. 13 - Reporting issuance and retirement of long-term...Ch. 13 - Prob. 13.15EXCh. 13 - Prob. 13.16EXCh. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method List the...Ch. 13 - Prob. 13.19EXCh. 13 - Prob. 13.20EXCh. 13 - Prob. 13.21EXCh. 13 - Prob. 13.22EXCh. 13 - Statement of cash flowsindirect method The...Ch. 13 - Prob. 13.2APRCh. 13 - Prob. 13.3APRCh. 13 - Prob. 13.4APRCh. 13 - Statement of cash flows direct method applied to...Ch. 13 - Prob. 13.1BPRCh. 13 - Prob. 13.2BPRCh. 13 - Prob. 13.3BPRCh. 13 - Prob. 13.4BPRCh. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Prob. 13.1ADMCh. 13 - Prob. 13.2ADMCh. 13 - Prob. 13.3ADMCh. 13 - Priceline: Free cash flow Priceline Group, Inc. is...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Prob. 13.3TIF
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  • Statement of cash flows indirect method The comparative balance sheet of Harris Industries Inc. at December 31, 20Y4 and 20Y3, is as follows: Dec. 31, 20Y4 Dec. 31, 20Y3 Assets Cash 443,240 360,920 Accounts receivable {net 665,280 592,200 Inventories 887,880 1,022,560 Prepaid expenses 31,640 25,200 Land 302,400 302,400 Buildings 1,713,600 1,134,000 Accumulated depreciationbuildings (466,200) (414,540) Machinery and equipment 781,200 781,200 Accumulated depreciationmachinery and equipment (214,200) (191,520) Patents 106,960 112,000 Total assets 4,251,800 3,724,420 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors|) 837,480 927,080 Dividends payable 32,760 25,200 Salaries payable 78,960 87,080 Mortgage note payable, due in nine years 224,000 0 Bonds payable 0 390,000 Common stock, 5 par 200,400 50,400 Paid-in capital. Excess of issue price over parcommon stock 366,000 126,000 Retained earnings 2,512,200 2,118,660 Total liabilities and stockholders' equity 4,251,800 3,724,420 An examination of the income statement and the accounting records revealed the following additional information applicable to 20Y4: A. Net income, 524,580. B. Depreciation expense reported on the income statement: buildings, 51,660; machinery and equipment, 22,680. C. Patent amortization reported on the income statement, 5,040. D. A building was constructed for 579,600. E. A mortgage note for 224,000 was issued for cash. F. 30,000 shares of common stock were issued at 13 in exchange for the bonds payable. G. Cash dividends declared, 131,040. Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
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