Loose Leaf For Introduction To Managerial Accounting
8th Edition
ISBN: 9781260190175
Author: Brewer Professor, Peter C.; Garrison, Ray H; Noreen, Eric
Publisher: McGraw-Hill Education
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Chapter 13, Problem 7P
To determine
Cash Flow: In a specific period of time the amount of cash disbursed or received in a particular activity is called cash flow.
Determine the operating
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Prepare a Statement of Cash Flows
Comparative financial statements for Weaver Company follow:
During this year, Weaver sold some equipment for $20 that had cost $40 and on which there was accumulated depreciation of $16. In addition, the company sold long-term investments for $10 that had cost $3 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $40 of its own stock. This year Weaver did not retire any bonds.
Required:
1. Using the indirect method, determine the net cash provided by operating activities for this year.
2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year.
Mini Case: CASH FLOWS AT WARF COMPUTERS, INC.
The following informations are given: During the year the company raised $118,000 in new long-term debt and retired $98,000 in long-term debt. The company also sold $11,000 in new stock and repurchased $40,000 in stock. The company purchased $786,000 in fixed assets and sold $139,000 in fixed assets.
Balance sheet and Income Statement of the company: photos attachedÂ
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THE TASK: Based on the given informations and financial statements prepare the financial statement of cash flows and the accounting statement of cash flows. Also answer the following questions:
How would you describe Warf Computers’ cash flows?
Which cash flow statement more accurately describes the cash flows at the company?
In light of your previous answers, comment on Nick’s expansion plans.
Prepare a Statement of Cash Flows
A comparative balance sheet and an income statement for Burgess Company are given below:
Burgess also provided the following information:
1. The company sold equipment that had an original cost of $13 million and accumulated depreciation of $8 million. The cash proceeds from the sale were $8 million. The gain on the sale was $3 million.
2. The company did not issue any new bonds during the year.
3. The company paid a cash dividend during the year.
4. The company did not complete any common stock transactions during the year.
Required:
1. Using the indirect method, prepare a statement of cash flows for the year.
2. Assume that Burgess had sales of $3,800, net income of $135, and net cash provided by operating activities of $150 in the prior year (all numbers are staled in millions). Prepare a memo that summarizes your interpretations of Burgess’s financial performance.
Chapter 13 Solutions
Loose Leaf For Introduction To Managerial Accounting
Ch. 13.A - Prob. 1ECh. 13.A - Prob. 2ECh. 13.A - Prob. 3ECh. 13.A - Prob. 4ECh. 13.A - Prob. 5PCh. 13.A - Prob. 6PCh. 13.A - Prob. 7PCh. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3Q
Ch. 13 - What general guidelines can you provide for...Ch. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - A business executive once stated, “Depreciation is...Ch. 13 - If the Accounts Receivable balance increases...Ch. 13 - Would a sale of equipment for cash be considered a...Ch. 13 - Prob. 12QCh. 13 - Ravenna Company is a merchandiser that uses the...Ch. 13 - Prob. 2F15Ch. 13 - Prob. 3F15Ch. 13 - Ravenna Company is a merchandiser that uses the...Ch. 13 - Prob. 5F15Ch. 13 - Ravenna Company is a merchandiser that uses the...Ch. 13 - Ravenna Company is a merchandiser that uses the...Ch. 13 - Prob. 8F15Ch. 13 - Prob. 9F15Ch. 13 - Prob. 10F15Ch. 13 - Prob. 11F15Ch. 13 - Ravenna Company is a merchandiser that uses the...Ch. 13 - Ravenna Company is a merchandiser that uses the...Ch. 13 - Prob. 14F15Ch. 13 - Prob. 15F15Ch. 13 - Prob. 1ECh. 13 - Net Cash Provided by Operating Activities For the...Ch. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Net Cash Provided by Operating Activities Changes...Ch. 13 - Prepare a Statement of Cash Flows; Free Cash Flow...Ch. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prepare a Statement of Cash Flows; Free Cash...Ch. 13 - Prob. 11PCh. 13 - Prepare a Statement of Cash Flows A comparative...Ch. 13 - Prob. 13PCh. 13 - Prob. 14P
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- Missing Data; Statement of Cash Flows Yoric Company listed the net changes in its balance sheet accounts for the past year as follows: The following additional information is available about last year’s activities: a. Net income for the year was $ ? b. The company sold equipment during the year for $15,000. The equipment originally cost $50,000 and it had $37,000 in accumulated depreciation at the time of sale. c. Cash dividends of $20,000 were declared and paid during the year. d. The beginning and ending balances in the Plant and Equipment and Accumulated Depreciation accounts are given below: e. The balance in the Cash account at the beginning of the year was $23,000; the balance at the end of the year was $ ? f. If data are not given explaining the change in an account, make the most reasonable assumption as to the cause of the change. Required: Using the indirect method, prepare a statement of cash flows for the year.arrow_forwardDuring 20X1, Craig Company had the following transactions: a. Purchased 300,000 of 10-year bonds issued by Makenzie Inc. b. Acquired land valued at 105,000 in exchange for machinery. c. Sold equipment with original cost of 810,000 for 495,000; accumulated depreciation taken on the equipment to the point of sale was 270,000. d. Purchased new machinery for 180,000. e. Purchased common stock in Lemmons Company for 82,500. Required: 1. Prepare the net cash from investing activities section of the statement of cash flows. 2. CONCEPTUAL CONNECTION Usually, the net cash from investing activities is negative. How can Craig cover this negative cash flow? What other information would you like to have to make this decision?arrow_forwardStatement of Cash Flows The following are Mueller Companys cash flow activities: a. Net income, 68,000 b. Increase in accounts receivable, 4,400 c. Receipt from sale of common stock, 12,300 d. Depreciation expense, 11,300 e. Dividends paid, 24,500 f. Payment for purchase of building, 65,000 g. Bond discount amortization, 2,700 h. Receipt from sale of long-term investments at cost, 10,600 i. Payment for purchase of equipment, 8,000 j. Receipt from sale of preferred stock, 20,000 k. Increase in income taxes payable, 3,500 l. Payment for purchase of land, 9,700 m. Decrease in accounts payable, 2,900 n. Increase in inventories, 10,300 o. Beginning cash balance, 18,000 Required: Prepare Mueller Company's statement of cash flows.arrow_forward
- Statement of Cash Flows A list of Fischer Companys cash flow activities is presented here: a. Patent amortization expense, 3,500 b. Machinery was purchased for 39,500 c. At year-end, bonds payable with a face value of 20,000 were issued for 17,000 d. Net income, 47,200 k. Inventories increased by 15,400 e. Dividends paid, 16,000 f. Depreciation expense, 12,900 g. Preferred stock was issued for 13,600 h. Investments were acquired for 21,000 i. Accounts receivable increased by 4,300 j. Land was sold at cost, 11,000 k. Inventories increased by 15,400 l. Accounts payable increased by 2,700 m. Beginning cash balance, 19,400 Required: Prepare Fischers statement of cash flows.arrow_forwardFour years ago, Sulu Corporation purchased a $75,000 long-term investment in bonds of another corporation. During the current year, this investment was sold for $80,000. Sulu uses the indirect method to prepare its statement of cash flows. What effect will the above transaction have on the investing activities section of Sulu's statement of cash flows for the current year? a.$75,000 increase b.$80,000 increase c.$5,000 increase d.$5,000 decreasearrow_forwardState the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows: Retired $400,000 of bonds, on which there was $3,000 of unamortized discount, for $411,000. Sold 20,000 shares of $5 par common stock for $22 per share. Sold equipment with a book value of $55,800 for $60,000. Purchased land for $650,000 cash. Purchased a building by paying $50,000 cash and issuing a $450,000 mortgage note payable. Sold a new issue of $500,000 of bonds at 98. Purchased 10,000 shares of $40 par common stock as treasury stock at $50 per share. Paid dividends of $1.50 per share. There were 1,000,000 shares issued and 120,000 shares of treasury stock.arrow_forward
- Norbury Corporation's net income last year was $36,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below: Asset and Contra-Asset Accounts: Accounts receivable Inventory Prepaid expenses Accumulated depreciation Liability Accounts: Accounts payable Accrued liabilities Income taxes payable Multiple Choice $53,600 Based solely on this information, the net cash provided by (used in) operating activities under the indirect method on the statement of cash flows would be: $47,500 $24,500 Increases (Decreases) $81,700 $ 12,500 $ (3,400) $ 8,000 $ 22,000 $ 12,000 $ (7,900) $ 2,500arrow_forwardThe Net Profit of LSLS Corporation for the year is $ 2,515,250. Using the following information in the table and find out the Net Cash Flows from Operating Activities by Indirect Method SI. No : Particulars Amount ($) 1 Depreciation Expense 25,565.00 Decrease in Current Liabilities 57,677.00 3 Increase in Prepaid Insurance 67,076.00 4 Loss on Sale of Machinery 322,387.00 Gain on sale of Non Current Asset 377,553.00 6 Increase in Salaries Payable 64,704.00 7 Provision for Taxation 123,321.00 $ 2,584,921 O $ 2,548,921 O $ 2,544,921 O $ 2,458,921arrow_forwardMoore Company is preparing its statement of cash flows for the current year. During the year, the company retired two issuances of debt and properly recorded the transactions. These transactions were as follows: Paid cash of $12,700 to retire bonds payable with a face value of $15,000 and a book value of $13,300. Paid cash of $48,000 to retire bonds payable with a face value of $45,000 and a book value of $47,000. Required: Record, in journal entry form, the entries that Moore would make for the preceding transactions on its spreadsheet to prepare its statement of cash flows. If an amount box does not require an entry, leave it blank.arrow_forward
- Burgess also provided the following information: 1. The company sold equipment for $8 million that originally cost $13 million with accumulated depreciation of $8 million. The gain on the sale was $3 million. 2. The company did not issue any new bonds, pay a dividend, or complete any common stock transactions during the year. Required: 1. Using the indirect method, prepare a statement of cash flows. Note: Enter your answers in millions not in dollars. List any deduction in cash and cash outflows as negative amounts. Operating activities: Investing activities: Financing activities: Burgess Company Statement of Cash Flowsarrow_forwardState the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows: a. Retired $290,000 of bonds, on which there was $2,900 of unamortized discount, for $302,000. b. Sold 12,000 shares of $25 par common stock for $57 per share. c. Sold equipment with a book value of $49,400 for $71,100. d. Purchased land for $327,000 cash. e. Purchased a building by paying $49,000 cash and issuing a $90,000 mortgage note payable. f. Sold a new issue of $260,000 of bonds at 98. g. Purchased 4,500 shares of $40 par common stock as treasury stock at $73 per share. h. Paid dividends of $1.90 per share. There were 20,000 shares issued and 3,000 shares of treasury stock. Effect Amount а. b. Cash payment C. $4 Cash receipt d. е. f. $ g. 2$ h. $4arrow_forwardState the effect (cash receipt or payment and amount) of each of the following transactions, considered individually, on cash flows: a. Retired $320,000 of bonds, on which there was $3,200 of unamortized discount, for $333,000.b. Sold 7,000 shares of $30 par common stock for $53 per share.c. Sold equipment with a book value of $59,700 for $86,000.d. Purchased land for $339,000 cash.e. Purchased a building by paying $64,000 cash and issuing a $90,000 mortgage note payable.f. Sold a new issue of $300,000 of bonds at 97.g. Purchased 3,600 shares of $20 par common stock as treasury stock at $37 per share.h. Paid dividends of $1.90 per share. There were 24,000 shares issued and 4,000 shares of treasury stock.arrow_forward
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