Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 21, Problem 21.8BYP
To determine
Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.
Free cash flows: Free cash flows represent the net income of a company from the operations, to which the
The free cash flows for Company K, for the given three years and compare the amount with the net income of each year.
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Q 23.28:
When preparing its statement of cash flows, a firm discovers that its accounts receivable balance has decreased over the course of the period. Given this information, which of the following statements is accurate?
A :
If the firm is using the direct method, this discovery should lead to an upward adjustment when calculating cash receipts for customers. If it is using the indirect method, this discovery should lead to an upward adjustment when calculating cash flow from operating activities.
B :
If the firm is using the direct method, this discovery should lead to an upward adjustment when calculating cash receipts for customers. If it is using the indirect method, this discovery should lead to a downward adjustment when calculating cash flow from operating activities.
C :
If the firm is using the direct method, this discovery should lead to a downward adjustment when calculating cash receipts for customers. If it is using the indirect method, this…
Q. 12. Consider a Financial Institution with the following assets and liabilities. Asset A has a maturity of 2 years and a market value of $50,000 and asset B has a maturity of 7 years and a market value of $80,000. Liability A has a maturity of 3 years and a market value of $40,000 and liability B has a maturity of 9 years and a market value of $10,000. What is the maturity gap of this FI (round your answer to two decimals)?
a. 0.88 years.
b. - 5 years.
c. 5 years.
d. 3.88 years.
e. -1.47 years
Q 11
Compounding with Different Interest Rates A deposit of $390 earns interest rates of 7.9 percent in the first year and 10.9 percent in the second year. What would be the second year future value?
Multiple Choice
$466.68
$853.32
$463.32
$834.56
Chapter 21 Solutions
Intermediate Accounting
Ch. 21 - Effects of all cash flows affect the balances of...Ch. 21 - Prob. 21.2QCh. 21 - Prob. 21.3QCh. 21 - Prob. 21.4QCh. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 21 - The sale of stock and the sale of bonds are...Ch. 21 - Does the statement of cash flows report only...Ch. 21 - Prob. 21.10Q
Ch. 21 - Perhaps the most noteworthy item reported on an...Ch. 21 - Prob. 21.12QCh. 21 - Given sales revenue of 200,000, how can it be...Ch. 21 - Prob. 21.14QCh. 21 - When determining the amount of cash paid for...Ch. 21 - Prob. 21.16QCh. 21 - When using the indirect method of determining net...Ch. 21 - Prob. 21.18QCh. 21 - Prob. 21.19QCh. 21 - Where can we find authoritative guidance for the...Ch. 21 - U.S. GAAP designates cash outflows for interest...Ch. 21 - Prob. 21.1BECh. 21 - Prob. 21.2BECh. 21 - Prob. 21.3BECh. 21 - Prob. 21.4BECh. 21 - Prob. 21.5BECh. 21 - Prob. 21.6BECh. 21 - Prob. 21.7BECh. 21 - Prob. 21.8BECh. 21 - Investing activities LO215 Carter Containers sold...Ch. 21 - Financing activities LO216 Refer to the situation...Ch. 21 - Prob. 21.11BECh. 21 - Prob. 21.12BECh. 21 - Classification of cash flows LO213 through LO216...Ch. 21 - Determine cash paid to suppliers of merchandise ...Ch. 21 - Determine cash received from customers LO213...Ch. 21 - Prob. 21.4ECh. 21 - Prob. 21.5ECh. 21 - Prob. 21.6ECh. 21 - Determine cash paid for bond interest LO213...Ch. 21 - Determine cash paid for bond interest LO213 For...Ch. 21 - Determine cash paid for income taxes LO213...Ch. 21 - Prob. 21.10ECh. 21 - Prob. 21.11ECh. 21 - Installment note; statement of cash flow effects ...Ch. 21 - Prob. 21.13ECh. 21 - Identifying cash flows from investing activities...Ch. 21 - Prob. 21.15ECh. 21 - Prob. 21.16ECh. 21 - Indirect method; reconciliation of net income to...Ch. 21 - Spreadsheet entries from statement of retained...Ch. 21 - Prob. 21.19ECh. 21 - Prob. 21.20ECh. 21 - Cash flow s from operating activities (direct...Ch. 21 - Indirect method; reconciliation of net income to...Ch. 21 - Prob. 21.23ECh. 21 - Cash flows from operating activities (indirect...Ch. 21 - Prob. 21.25ECh. 21 - Cash flow s from operating activities (indirect...Ch. 21 - Prob. 21.27ECh. 21 - Prob. 21.28ECh. 21 - Prob. 21.29ECh. 21 - Prob. 21.30ECh. 21 - Prob. 21.31ECh. 21 - Prob. 21.32ECh. 21 - Prob. 21.1PCh. 21 - Statement of cash flows; direct method LO213,...Ch. 21 - Prob. 21.3PCh. 21 - Statement of cash flows; direct method LO213,...Ch. 21 - Statement of cash flows; direct method LO213,...Ch. 21 - Cash flows from operating activities (direct...Ch. 21 - Prob. 21.7PCh. 21 - Cash flows from operating activities (direct...Ch. 21 - Cash flows from operating activities (direct...Ch. 21 - Prob. 21.10PCh. 21 - Prepare a statement of cash flows; direct method ...Ch. 21 - Prob. 21.12PCh. 21 - Prob. 21.13PCh. 21 - Statement of cash flows; indirect method; limited...Ch. 21 - Integrating problem; bonds; lease transactions;...Ch. 21 - Statement of cash flows; indirect method LO214,...Ch. 21 - Prob. 21.17PCh. 21 - Statement of cash flows; indirect method LO214,...Ch. 21 - Prob. 21.19PCh. 21 - Prob. 21.20PCh. 21 - Prob. 21.21PCh. 21 - Prob. 21.1BYPCh. 21 - Prob. 21.2BYPCh. 21 - Research Case 213 Information from cash flow...Ch. 21 - Analysis Case 215 Smudged ink; find missing...Ch. 21 - Real World Case 216 Analyze cash flow activities;...Ch. 21 - Prob. 21.7BYPCh. 21 - Prob. 21.8BYPCh. 21 - Research Case 219 FASB codification; locate and...Ch. 21 - IFRS Case 2110 Statement of cash flows...Ch. 21 - Prob. CCTC
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- Investment reporting O'Brien Industries Inc. is a hook publisher. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 follow. Selected missing balances are shown by letters. Brien Industries Inc. Balance Sheet December 31, Year 2 and Year 1 Dec. 31, Year 2 Dec 31, Year 1 cash 233,000 220,000 Accounts receivable (net) 136,530 138,000 Available for sale investments (at cost)Note 1 a 103,770 Less valuation allowance for available-for-sale investments b. 2,500 Available for-sale investments (fair value) c 101,270 Interest receivable d Investment in Jolly Roger Co. stockNote 2 e. 77,000 Office equipment (net) 115,000 130,000 Total assets f. 666,270 Accounts payable 69.400 65,000 Common stock 70.000 70,000 Excess of issue price over par 225,000 225,000 Retained earnings g 308,770 Unrealized gain (loss) on available for-sale investments h. (2,500) Total liabilities and Stockholders equity i. 666,270 Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: No. of Shares Cost per Share Total Cost Total Fair Value Bernard Co. stock 2,250 17 38,250 37,500 Chadwick Co. stock 1,260 52 65,520 63,770 103,770 101,270 Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding .shares of Jolly Roger Co. The following selected investment transactions occurred during Year 2: May 5. Purchased 3,080 shares of Gozar Inc. at 30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security. Oct. 1. Purchased 40,000 of Nightline co. 6%, 10-Year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. 9. Dividends of 12,500 are received on the Jolly Roger co. investment. Dec. 31 Jolly Roger co. reported a total net income of 112,000 for year 2. O'Brien industries Inc. recorded equity earnings for its share of Jolly Roger co. net income. 31. Accrued three months of interest on the Nightline bonds. 31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts: Available-for-Sale Investments Fair Value Bernard Co. stock 15,40 per share Chadwick Co. stock 46,00 per share Gozar Inc. stock 32,00 per share Nightline Co. bonds 98 per 100 of face amount Dec. 31. Closed the OBrien Industries Inc. net income of 146,230. O'Brien Industries Inc. paid no dividends during the year. Instructions Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.arrow_forwardStatement of cash flows direct method The comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows: Dec. 31, 20Y4 Dec. 31, 20Y3 Assets Cash 661,920 683,100 Accounts receivable (net) 992,640 914,400 Inventories 1,394,400 1,363,800 Investments 0 432,000 Land 960,000 0 Equipment 1,224,000 984,000 Accumulated depreciationequipment (481,500) (368,400) Total assets 4,751,460 4,008,900 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) 1,080,000 966,600 Accrued expenses payable (operating expenses) 67,800 79,200 Dividends payable 100,800 91,200 Common stock, 5 par 130,000 30,000 Paid in capital: Excess of issue price over parcommon stock 950,000 450,000 Retained earnings 2,422,860 2,391,900 Total liabilities and stockholders' equity 4,751,460 4,008,900 The income Statement for the year ended December 51. 20Y3. is as follows: Sales 4,512,000 Cost of goods sold 2,352,000 Gross profit 2,160,000 Operating expenses: Depredation expense 113,100 Other operating expenses 1,344,840 Total operating expenses 1,457,940 Operating income 702,060 Other income: Gain on sale of investments 156,000 Income before income tax 858,060 Income tax expense 299,100 Net income 558,960 Additional data obtained from an examination of the accounts in the ledger for 20Y3 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. Instructions Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.arrow_forwardStatement of cash flowsdirect method The comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows: Dec 31, 20Y4 Dec. 31,20Y3 Assets Cash.................................. 661,920 683,100 Accounts receivable (net).................................. 992,640 0 914,400 Inventories............................................... 1,394,40 1,363,800 Investments.............................................. 0 432,000 Land..................................................... 960,000 0 Equipment................................................ 1,224,000 984,000 Accumulated depreciationequipment.................... (481,500) (368,400) Total assets............................................ 4,751,460 4,008,900 Liabilities and Stockholders' Equity Accounts payable......................................... 1,080,000 966,600 Accrued expenses payable................................ 67,800 79,200 Dividends payable.................................. 100,800 91,200 Common stock. S par .................................... 130,000 30,000 Paid in capital: Excess of issue price over parcommon stock...... 950,000 450,000 Retained earnings......................................... 2,422,860 2,391,900 Total liabilities and stockholders' equity.................. 4,751,460 4,008,900 The income statement for the year ended December 31, 20Y4, is as follows: Sales.......................................... 4,512,000 Cost of merchandise sold....................... 2,352,000 Gross profit.................................... 2,160,000 Operating expenses: Depreciation expense....................... 113,100 Other operating expenses................... 1,344,840 Total operating expenses................. 1,457,940 Operating income.............................. 702,060 Other income: Gain on sale of investments.................. 156,000 Income before income tax...................... 858,060 Income tax expense............................ 299,100 Net income.................................... 558,960 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. Instructions Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.arrow_forward
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Teasdale recorder equity earnings for its share of Wright Co. net income. 31. Accrued interest for three months on the Toon Co. bonds purchased on October 1. 31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts: Available for Sale Investments Fair Value Alvarez Inc. stock 41,50 per share Hirsch Inc stock 26,00 per share Richter Inc. stock 48,00 per share Toon Co. bonds 101 per 100 of face amount 31. Closed the Teasdale Inc. net income of 51,240. Teasdale Int. paid no dividends during the year. Instructions Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.arrow_forwardContingent liabilities Altria Group, Inc., has more than 12 pages dedicated to describing contingent liabilities in the notes to recent financial statements. These pages include extensive descriptions of multiple contingent liabilities. Use the Internet to research Altria Group, Inc., at www.altria.com. a. What are the major business units of Altria Group? b. Based on your understanding of this company, why would Altria Group require more than 12 pages of contingency disclosure?arrow_forwardMeasures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Marshall Inc. 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Comparative Balance Sheet December 31,20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash 1,050,000 950,000 Marketable securities 301,000 420,000 Accounts receivable (net) 585,000 500,000 Inventories 420,000 380,000 Prepaid expenses 108,000 20,000 Total current assets 2,464,000 2,270,000 Long-term investments 800,000 800,000 Property, plant, and equipment (net) 5,760,000 5,184,000 Total assets 9,024,000 8,254,000 Liabilities Current liabilities 880,000 800,000 Long-term liabilities: Mortgage note payable. 6% 200,000 0 Bonds payable. 4%, 3,000,000 3,000,000 Total long term liabilities 3,200,000 3,000,000 Total liabilities 4,080,000 3,800,000 Stockholders' Equity Preferred 4% stock, 5 par 250,000 250,000 Common stock. 5 par 500,000 500,000 Retained earnings 4,194,000 3,704,000 Total stockholders' equity 4,944,000 4,454,000 Total liabilities and stockholders' equity 9,024,000 8,254,000 Instructions Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts): 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders' equity 14. Return on common stockholders' equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forward
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