Chapter 23- Worksheet and Solutions (4)

7/30/2019 Chapter 23- Worksheet and Solutions (4)

1/21

Example 1

1. Worksheet for Cash Flow 12/31/2005 Analysis of Changes in Account Balances 12/31/2006

Debits: Beg. Bal. Entry No. Entry - Dr. Entry No. Entry - Cr. Ending Bal

Cash 300 420

Accounts receivable 100 150

Inventory 200 140Prepaid operating expenses 80 60

Prop. plant & equip. 1,000 1,380

Total Debits 1,680 2,150

Credits:

Accumulated depreciation 100 180

Account payable 300 400

Accrued operating exp. payable 300 210

Income taxes payable 100 130

Common stock 580 580

Retained earnings 300 650Total Credits 1,680 2,150

Cash Flow-Operations

Cash Flow - Investing

Cash Flow - Financing

Non-Cash Invest./Financing

Increase/Decrease in Cash

2. A cash flow statement using the direct method together with a

Reconciliation of net income to cash flows from operating activities


2/21

Ex 2 - Worksheet

Worksheet for Cash Flow Analysis of Changes in Account Balances


Cash 300 420

Accounts receivable 110 165

Inventory 200 140

Prepaid operating expenses 80 60Property plant equipment 1,000 1,380

Total Debits

Credits:

Allowance for doubtful Acct. 10 15


Accounts payable 300 400

Accrued Operating exp. Payable 300 210

Income taxes payable 100 130Common stock 580 580

Retained earnings 300 650

Total Credits






3/21



4/21

Ex 2 - Malmgren Example 2 - Solutions

Worksheet for Cash Flow 2005 Analysis of Changes in Account Bala

Debits: Beg. Bal. Entry No. Entry - Dr. Entry No.

Cash 300 11 120

Accounts receivable 110 2 55

Inventory 200 3

Prepaid operating expenses 80 4Property plant equipment 1,000

Total Debits 1,690

Credits:

Allowance for doubtful Acct. 10 2 30 2


Accounts payable 300 6

Accrued Operating exp. Payable 300 7 90

Income taxes payable 100 8Common stock 580

Retained earnings 300 10 50 1

Total Credits 1,680


Net income 1 400

Increase in accounts rec. (net) 2

Decrease in inventory 3 60

Decrease in prepaid operating expense 4 20Depreciation expense 5 80

Increase in accounts payable 6 100

Decrease in accrued operating exp. payable 7

Increase in income taxes payable 8 30

Net cash flow from operations 690


Purchase of fixed assets 9

Net cash flow from investing


Payment of dividends 10

Net cash flow from financing



5/21

11

2. A cash flow statement using the direct method together with a

Reconciliation of net income to cash flows from operating activities

Ontario Company

Cash Flow Statement - Direct Method

For the Year Ended Dec. 31 2006

Cash Flows from Operating Activities:

Cash Collections From Customers

Cash Payments For Merchandise

Cash Payments For Operating Expenses

Cash Payments For Income Taxes

Net Cash Flows From Operating Activities

Net Cash Flows From Investing Activities

Acquisition Of Fixed Assets

Net Cash Flows From Financing Activities

Payment Of Dividends

Net Increase In Cash

Cash Beginning

Cash Ending

Reconciliation of net income to cash flows from op

Net Income

Add (Deduct) Items Not Affecting Cash

Increase In Accounts Receivable Net

Decrease In Inventory

Decrease In Prepaid Operating Expenses

Depreciation Expense

Increase In Accounts Payable

Decrease In Accrued Expenses Payable

Increase In Income Taxes Payable

Net Cash Flows From Operating Activities

Computations: Cash flows from operations:



6/21

Cash Collections From Customers:

Sales

Less: increase in accounts receiv

Accts receivable - 1/1

Less: write-off of accts rec.(net)Adj. accounts rec. 1/1

Accts receivable - 12/31

Cash Collections From Customers


Cost of sales

Less: decrease in inventory (200-

Purchases

Less: increase in accounts payabl


Cash Payments For Operating Expenses

Operating expenses

Less: Depreciation expense

Bad debt expense

Other operating expenses

Less: decrease in prepaid expens

Add: decrease in operating exp p

Cash Payments For Operating Exp


Income tax expense

Less: increase in income taxes pa

(130-100)



7/21

ces 2006

Entry - Cr. Ending Bal

420

165

60 140

20 601,380

2,165

35 15

80 180

100 400

210

30 130580

400 650

2,165

Notes

50 100 (110-10) - 150 (165-15)

90

140 550

380

(380)

50

(50)


8/21

120 120

$4,923

(2,840)

(1,363)

(170)

550

(380)

(50)

120

300

$420

rating activities

$400

$(50)

60

20

80

100

(90)

30 150

$550


9/21

5,000

ble

110

2288

165 (77)

4,923

3,000

40) (60)

2,940

e (400-300) (100)

2,840

1,400

(80)

(27)

1,293

s (80-60) (20)

yable (300-210) 90

enses 1,363

200

yable

(30)

170


10/21

Problem 23-8

Requirements:

1. Complete the worksheet below.

2. Prepare a Statement of Cash Flow using the indirect method

3 Compute net cash provided by operating activities under the direct method

Hint: Use P23-6 (sol) as a guide)

Prob. 23-8

1. Worksheet for Cash Flow 2011 Analysis of Changes in Account Balances

Debits: Beg. Bal. Entry No. Entry - Dr. Entry No. Entry - Cr.

Cash 51,000

Accounts receivable 130,000

Mdse inventory 61,000

Investment --Avail for sale 85,000

Equipment 48,000

Buildings 145,000

Land 25,000

Total Debits 545,000

Credits:

Allowance for doubtful accts 8,000

Accumulated depr.-equip 14,000

Accumulated depr.-building 28,000

Accounts payable 60,000

Income taxes payable 10,000

L-term notes payable 70,000

Common stock 260,000

Retained earnings 95,000

Total Credits 545,000


Net income

Increase in accts. Rec.(net)

Inc. in inventory

Gain on sale of investments

Depreciation expense

Loss on sale of equipment

Increase in accts payable

Increase in taxes payable

Net cash flow from operations



11/21

Net cash flow provided from investing


Net cash used by financing activities



12/21

2012

Ending Bal

70,000

155,000

75,000

55,000

70,000

145,000

40,000

610,000

10,000

21,000

37,000

66,000

12,000

62,000

310,000

92,000

610,000


13/21


14/21

Problem 23-8

Requirements:

1. Complete the worksheet below.

2. Prepare a Statement of Cash Flow using the indirect method

3 Compute net cash provided by operating activities under the direct method

Hint: Use P23-6 (sol) as a guide)

Prob. 23-8

1. Worksheet for Cash Flow 2011 Analysis of Changes in Account Balances 2012

Debits: Beg. Bal. Entry No. Entry - Dr. Entry No. Entry - Cr. Ending Bal No

Cash 51,000 14 19,000 70,000Accounts receivable 130,000 2 25,000 155,000

Mdse inventory 61,000 3 14,000 75,000

Investment --Avail for sale 85,000 9 5,000 4 35,000 55,000

Equipment 48,000 5 32,000 5 10,000 70,000

Buildings 145,000 145,000

Land 25,000 12 15,000 40,000

Total Debits 545,000 610,000

Credits:

Allowance for doubtful accts 8,000 2 2,000 10,000

Accumulated depr.-equip 14,000 5 6,000 6 13,000 21,000

Accumulated depr.-building 28,000 6 9,000 37,000

Accounts payable 60,000 7 6,000 66,000

Income taxes payable 10,000 8 2,000 12,000L-term notes payable 70,000 10 8,000 62,000

Common stock 260,000 13 35,000 310,000

12 15,000

Retained earnings 95,000 11 70,000 1 67,000 92,000

Total Credits 545,000 610,000

No


Net income 1 67,000

Increase in accts. Rec.(net) 2 23,000

Inc. in inventory 3 14,000

Gain on sale of investments 4 15,000

Depreciation expense 6 22,000

Loss on sale of equipment 5 3,000

Increase in accts payable 7 6,000

Increase in taxes payable 8 2,000

Net cash flow from operations 100,000 52,000 48,000


Sale of investments 4 50,000

Sale of equipment 5 1,000

Purchase of equipment 5 32,000

Purchase of investments 9 5,000

Net cash flow provided from investing 51,000 37,000 14,000


Payment on L-T notes 10 8,000

Payment of dividends 11 70,000Issuance of common stock 13 35,000

Net cash used by financing activities 35,000 78,000 (43,000)

Non Cash Invest /Financing


15/21

Problem 23-6

Worksheet for Cash Flow 2011 Analysis of Changes in Account Balances 2012


Cash 33,750 42,000

Accounts receivable 60,000 70,500

Mdse inventory 24,000 30,000

Investment --Avail for sale 38,500 22,250Equipment 18,575 30,000

Buildings 56,250 67,500

Land 7,500 7,500

Total Debits 238,575 269,750

Credits:

Allowance for doubtful accts 1,500 2,250

Accumulated depr.-equip 2,250 5,625

Accumulated depr.-building 9,000 13,500

Accounts payable 24,750 35,000

Income taxes payable 2,625 3,375L-term notes payable 31,000 21,000

Common stock 125,000 150,000

Retained earnings 42,625 39,000








16/21

Problem 23-6

Worksheet for Cash Flow 2011 Analysis of Changes in Account Balances 2012Debits: Beg. Bal. Entry No. Entry - Dr. Entry No. Entry - Cr. Ending Bal

Cash 33,750 15 8,250 42,000

Accounts receivable 60,000 3 10,500 70,500

Mdse inventory 24,000 7 6,000 30,000

Investment --Avail for sale 38,500 10 8,750 9 25,000 22,250

Equipment 18,575 12 15,000 4 3,750 30,000

Buildings 56,250 13 11,250 67,500

Land 7,500 7,500

Total Debits 238,575 269,750

Credits:

Allowance for doubtful accts 1,500 3 4,650 3 5,400 2,250

Accumulated depr.-equip 2,250 4 750 5 4,125 5,625

Accumulated depr.-building 9,000 5 4,500 13,500Accounts payable 24,750 6 10,250 35,000

Income taxes payable 2,625 8 750 3,375

L-term notes payable 31,000 11 10,000 21,000

Common stock 125,000 14 25,000 150,000

Retained earnings 42,625 2 21,125 1 42,500 39,000

14 25,000



Net income 1 42,500

Increase in accts rec (net) 3 9,750

Gain on sale of mach. 4 800

Depreciation expense 5 8,625

Increase in accts payable 6 10,250

Increase in inventory 7 6,000

Increase in accrued payable 8 750

Gain on sale of investments 9 3,750

Net cash flow from operations 62,925 19,500 43,425


Sale of machine 4 2,200

Sale of investments 9 28,750

Purchase of investments 10 8,750

Purchase of machine 12 15,000

Addition to building 13 11,250

Net cash flow from investing 30,950 35,000 (4,050)


Payment of dividends 2 21,125

Payment on L-T note 11 10,000

Net cash flow from financing 31,125 (31,125)


15 8,250 8,250

P-23-6

Part b

Marcus Inc

Statement of Cash Flows

For the year ended December 31, 2012

Cash flows provided from operating activities

Net income $42,500

Ajustments to reconcile net income to net cashprovided by operating activities:

Increase in accts rec (net) (9,750)



17/21

E23-11



Cash 1,100 13 700 1,800

Receivables 1,300 2 450 1,750Inventory 1,900 3 300 1,600

Plant asset 1,700 8 70 1,900

9 130

L-T investments 1,470 7 170 1,300


Credits:

Accumulated deprec. 1,170 4 30 1,200

Accounts payable 800 5 400 1,200

Accrued liabilities 250 6 50 200

Bonds payable 1,650 10 250 1,400

Capital stock 1,700 11 130 1,9008 70

Retained earnings 1,900 12 260 1 810 2,450



Net income 1 810

Increase in accounts rec (net) 2 450

Decrease in inventory 3 300

Depreciation expense 4 30

Increase in accounts payable 5 400

Decrease in accrued liab. 6 50

Gain on sale of investments 7 80

Net cash provided by operations 1540 580 960


Sale of investments 7 250

Purchase of plant assets 9 130

Net cash provided by investing activities 250 130 120


Retirement of bonds payable 10 250

Issuance of capital stock 11 130

Payment of cash dividends 12 260Net cash used by financing activities 130 510 (380)


Common stock for plant assets 8 70 8 70

13 700 700

E23-11 Fairchild Company

Statement of Cash Flows

For the Year Ended December 31, 2012

(Indirect Method)

Cash flows from operating activities

Net income $810

Adjustment to reconcile net income to

net cash provided by operating activities:

Increase in accounts rec (net) (450)Decrease in inventory 300

Depreciation expense 30

I i t bl 400



18/21

E23-11



Cash 1,100 1,800

Receivables 1,300 1,750

Inventory 1,900 1,600

Plant asset 1,700 1,900L-T investments 1,470 1,300


Credits:

Accumulated deprec. 1,170 1,200

Accounts payable 800 1,200

Accrued liabilities 250 200

Bonds payable 1,650 1,400

Capital stock 1,700 1,900Retained earnings 1,900 2,450








19/21

E23-12 Direct Method


Cash collected from customers 6,450

Less: Cash paid for merchandise 4,000

Cash paid for selling &

administrative expenses 950

Cash paid for income taxes 540 5,490

Net cash provided by operating activities 960

Cash collected from customers

Less increase in accounts receivable (adj. for write-off of A/R) 6,900

Accts. Receivable, 1/1 1,300

Less: Write-off of accts rec. 0

Total 1,300

Less: Accts. Receivable, 12/31 1,750 (450)

Cash collected from customers: 6,450

Cash paid for merchandise

Cost of goods sold 4,700

Less: Decrease in inventory (1,900-1,600) (300)

Purchases 4,400

Less: Increase in accounts payable (1,200-800) ###

Cash paid for merchandise 4,000

Cash paid for selling/administrative expenses

Selling and adminstrative expense 930

Less: depreciation expense 30

Add: decrease in accrued liabilities (250-200) 50 20

Cash paid for selling/administrative expenses 950

Cash paid for income taxes

Income tax expense 540

Increase or decrease in income taxes payable 0

Cash paid for income taxes 540

E23-12 Fairchild Company

Statement of Cash FlowsFor the Year Ended December 31, 2012

(Direct Method)


Cash collected from customers $6,450

Less: Cash paid for merchandise 4,000

Cash paid for selling &

administrative expenses 950

Cash paid for income taxes 540 5,490

Net cash provided by operating activities 960

Cash flows from investing activities

Sale of investments 250

Purchase of plant assets (130)

Net cash provided by investing activities 120

Cash flows from investing activities

Retirement of bonds payable (250)

Issuance of capital stock 130

Payment of cash dividends (260)

Net cash used by financing activities (380)

Net increase in cash 700

Cash, January 1, 2012 1,100

Cash, December 31, 2012 $1,800

Noncash Investing and financing activities

Issuance of common stock for plant assets $70


20/21

Worksheet for Cash Flow Analysis of Changes in Account Balances


Total Debits

Credits:

Total Credits






21/21


Documents

Chapter 23- Worksheet and Solutions (4)