Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 16, Problem 5PA
To determine
Prepare statement of cash flows using the direct method of presenting cash flows from operating activities.
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The comparative balance sheet of Cromme Inc. for December 31, 2016 and 2015, is shown as follows:
Additional data obtained from an examination of the accounts in the ledger for 2016 are as follows:a. The investments were sold for $280,000 cash.b. Equipment and land were acquired for cash.c. There were no disposals of equipment during the year.d. The common stock was issued for cash.e. There was a $199,540 credit to Retained Earnings for net income.f. There was a $96,000 debit to Retained Earnings for cash dividends declared.InstructionsPrepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
The comparative balance sheet of Pelican Joe Industries Inc. for December 31, 2016 and 2015, is as follows:
The following additional information is taken from the records:1. Land was sold for $125.2. Equipment was acquired for cash.3. There were no disposals of equipment during the year.4. The common stock was issued for cash.5. There was a $325 credit to Retained Earnings for net income.6. There was an $100 debit to Retained Earnings for cash dividends declared. a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.b. Was Pelican Joe Industries Inc. net cash flow from operations more or less than net income? What is the source of this difference?
Flow Company has provided the following information for the year ended December 31, 2016:
• Cash paid for interest, $20,000
• Cash paid for dividends, $6,000
• Cash dividends received, $4,000
• Cash proceeds from bank loan, $29,000
• Cash purchase of treasury stock, $11,000
• Cash paid for equipment purchase, $27,000
• Cash received from issuance of common stock, $37,000
• Cash received from sale of land with a $32,000 book value, $25,000
• Acquisition of land costing $51,000 in exchange for preferred stock issuance
• Payment of a $100,000 note payable by exchanging used machinery with a $77,000 book value and $100,000 fair value
How much was Flow's net cash flow from investing activities?
Chapter 16 Solutions
Financial Accounting
Ch. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - A corporation issued 2,000,000 of common stock in...Ch. 16 - A retail business, using the accrual method of...Ch. 16 - If salaries payable was 100,000 at the beginning...Ch. 16 - Prob. 6DQCh. 16 - A corporation issued 2,000,000 of 20-year bonds...Ch. 16 - Fully depreciated equipment costing 50,000 is...Ch. 16 - Prob. 9DQCh. 16 - Prob. 10DQ
Ch. 16 - Prob. 1PEACh. 16 - Prob. 1PEBCh. 16 - Pearl Corporations accumulated...Ch. 16 - Ya Wen Corporations accumulated...Ch. 16 - Alpenrose Corporations comparative balance sheet...Ch. 16 - Prob. 3PEBCh. 16 - Prob. 4PEACh. 16 - Staley Inc. reported the following data: Prepare...Ch. 16 - Prob. 5PEACh. 16 - IZ Corporation purchased land for 400,000. Later...Ch. 16 - Prob. 6PEACh. 16 - Prob. 6PEBCh. 16 - The cost of merchandise sold reported on the...Ch. 16 - The cost of merchandise sold reported on the...Ch. 16 - Prob. 8PEACh. 16 - Prob. 8PEBCh. 16 - Prob. 1ECh. 16 - State the effect (cash receipt or payment and...Ch. 16 - Prob. 3ECh. 16 - Prob. 4ECh. 16 - Prob. 5ECh. 16 - The net income reported on the income statement...Ch. 16 - Prob. 7ECh. 16 - The board of directors declared cash dividends...Ch. 16 - An analysis of the general ledger accounts...Ch. 16 - An analysis of the general ledger accounts...Ch. 16 - On the basis of the details of the following fixed...Ch. 16 - On the basis of the following stockholders equity...Ch. 16 - Prob. 13ECh. 16 - Prob. 14ECh. 16 - Prob. 15ECh. 16 - Prob. 16ECh. 16 - The comparative balance sheet of Pelican Joe...Ch. 16 - List the errors you find in the following...Ch. 16 - Prob. 19ECh. 16 - Prob. 20ECh. 16 - Prob. 21ECh. 16 - The income statement of Booker T Industries Inc....Ch. 16 - The income statement for Rhino Company for the...Ch. 16 - Prob. 24ECh. 16 - The financial statements for Nike, Inc., are...Ch. 16 - Lovato Motors Inc. has cash flows from operating...Ch. 16 - The comparative balance sheet of Cromme Inc. for...Ch. 16 - The comparative balance sheet of Del Ray...Ch. 16 - The comparative balance sheet of Whitman Co. at...Ch. 16 - The comparative balance sheet of Canace Products...Ch. 16 - Prob. 5PACh. 16 - Prob. 1PBCh. 16 - The comparative balance sheet of Harris Industries...Ch. 16 - Prob. 3PBCh. 16 - The comparative balance sheet of Martinez Inc. for...Ch. 16 - The comparative balance sheet of Merrick Equipment...Ch. 16 - Lucas Hunter, president of Simmons Industries...Ch. 16 - Prob. 2CPCh. 16 - Prob. 3CPCh. 16 - The Commercial Division of Tidewater Inc. provided...
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- The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. Open the file CASHFLOW from the website for this book at cengagebrain.com. First, enter the formulas. Then, complete the worksheet in the manner described next. According to the problem, cash increased from 39,600 to 67,210 during the year. This is a 27,610 increase. To record this increase on the worksheet, move to row 17. Since this is the first account you are analyzing, enter the letter a in column C. Then enter 27610 in column D (a debit since cash increased). This brings the year-end balance (column G) to 67,210, its proper balance. Now move to the bottom part of the statement where you see the categories Operating Activities, Investing Activities, and so on. The credit side of the entry has to be entered here. The proper space for this cash entry is on row 59. Enter the letter a in cell E59 and 27610 in cell F59. Notice the totals at the bottom of the page (row 60) now agree. The next account balance that changed is accounts receivable. It increased by 9,035. To enter this change on the worksheet, enter the letter b in cell C18 and 9035 in cell D18 (again, a debit since accounts receivable increased). This brings the year-end balance in column G to 121,250, its proper balance. The change in accounts receivable balance is an operating activity adjustment (as explained in your textbook). Enter the credit side of this entry in cells E34 and F34, and enter the explanation Increase in accounts receivable in cell A34. Note: Your textbook probably shows Net income as the first item under Operating Activities. We will get to that later. The sequence in which you enter items on this worksheet is not important. All other balance sheet accounts must be analyzed in the same manner, placing appropriate debit or credit entries in the top part of the worksheet to obtain the proper balances in column G, and then entering the second side of the entry in the appropriate row on the bottom part of the worksheet. You should use letter references to identify all entries. Also, you must enter a description of the entry in column A under the appropriate activity category. Although a sequence of analyzing the balance sheet from top to bottom is suggested here, this order is not necessary. As mentioned earlier, your textbook may specify a different sequence. Also, note that some accounts may have both debit and credit adjustments to them. The worksheet is not a substitute for a statement of cash flows, but it does provide you with all the numbers you need to properly prepare one. You will be done with your analysis when: a. The individual account balances at December 31, 2013, as shown on the worksheet (column G) equal those shown in the given problem data. b. The transaction column totals are equal (cells D60 and F60). c. The sum of the operating, investing, and financing activities (cell G59) equals the change in cash (cell D59 or F59). When you are finished, enter your name in cell A1. Save your completed file as CASHFLOW2. Print the worksheet when done. Also print your formulas. Check figure: Total credits at 12/31/2013 (cell G31), 860,460.arrow_forwardThe comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. You have been asked to prepare a statement of cash flows for Prime Sports Gear for 2013. Review the worksheet called CASHFLOW that has been provided to assist you in preparing the statement. The worksheet has been designed so that as you make entries in columns D and F, column G will be automatically updated. For example, FORMULA1 should be entered as =B17+D17F17. Columns C and E are to be used to enter letter references for each of the debit and credit entries on the worksheet.arrow_forwardThe comparative balance sheet of Whitman Co. at December 31, 2016 and 2015, is as follows: The noncurrent asset, noncurrent liability, and stockholders equity accounts for 2016 are as follows: Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.arrow_forward
- Mahoney Company has the following financial statements for 2017 and 2018. Assume that the purchase of equipment and the withdrawals were in the form of cash. Required Prepare a statement of cash flows for the year ended December 31, 2018. Check Figure Net cash flows from operating activities, 76,800arrow_forwardThe comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows:Please see the attachment for details:Additional data obtained from an examination of the accounts in the ledger for 20Y4 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 $588,000 cash.d. The common stock was issued for cash.e. There was a $528,000 debit to Retained Earnings for cash dividends declared.InstructionsPrepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.arrow_forwardThe comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is as follows: Please see the attachment for details: Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:a. The investments were sold for $175,000 cash.b. Equipment and land were acquired for cash.c. There were no disposals of equipment during the year.d. The common stock was issued for cash.e. There was a $90,000 debit to Retained Earnings for cash dividends declared. Instructions Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.arrow_forward
- The comparative balance sheets for 2016 and 2015 and the statement of income for 2016 are given below for Wright Company. Additional information from Wright's accounting records is provided also. WRIGHT COMPANYComparative Balance SheetsDecember 31, 2016 and 2015($ in 000s) 2016 2015 Assets Cash $ 125 $ 110 Accounts receivable 151 155 Short-term investment 56 20 Inventory 155 150 Land 114 140 Buildings and equipment 740 560 Less: Accumulated depreciation (211) (155) $ 1,130 $ 980 Liabilities Accounts payable $ 46 $ 51 Salaries payable 4 7 Interest payable 5 4 Income tax payable 9 13 Notes payable 0 36 Bonds payable 332 260 Shareholders' Equity Common stock 435 360 Paid-in capital—excess of par 200 180 Retained earnings 99…arrow_forwardThe comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is shown as follows: Please see the attachment for details: Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:a. The investments were sold for $175,000 cash.b. Equipment and land were acquired for cash.c. There were no disposals of equipment during the year.d. The common stock was issued for cash.e. There was a $500,000 credit to Retained Earnings for net income.f. There was a $90,000 debit to Retained Earnings for cash dividends declared. InstructionsPrepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.arrow_forwardPresented below is a condensed version of the comparative balance sheets for Bramble Corporation for the last two years at December 31. 2017 2016 Cash $178,500 $49,000 Accounts receivable 115,900 76,800 Investments 68,900 98,300 Equipment 350,900 177,300 Accumulated depreciation—equipment (95,100) (65,700) Current liabilities 135,300 91,900 Common stock 142,500 62,500 Retained earnings 333,700 173,700 Additional information:Investments were sold at a gain of $10,300; no investments were purchased; no equipment was sold; cash dividends paid were $43,500; and net income was $203,500. Prepare a statement of cash flows for 2017 for Bramble Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)arrow_forward
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