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1. EX.16-03
2. EX.16-06.ALGO (Algorithmic)
Classifying Cash Flows
Identify the type of cash flow activity for each of the following events (operating, investing, or financing):
a. Redeemed bonds
. Issued prefe
ed stock
c. Paid cash dividends
d. Net income
e. Sold equipment
f. Purchased treasury stock
g. Purchased patents
h. Purchased buildings
i. Sold long-term investments
j. Issued bonds
k. Issued common stock
Cash Flows from Operating Activities—Indirect Method
The net income reported on the income statement for the cu
ent year was $222,500. Depreciation recorded on
equipment and a building amounted to $66,500 for the year. Balances of the cu
ent asset and cu
ent liability
accounts at the beginning and end of the year are as follows:
End of Year Beginning of Yea
Cash $61,410 $65,090
Accounts receivable (net) 77,870 80,320
Inventories 153,530 138,380
Prepaid expenses 8,540 9,180
Accounts payable (merchandise creditors) 68,590 72,640
Salaries payable 9,890 9,050
a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect
method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative
adjustments.
Statement of Cash Flows (partial)
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operating activities:
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3. EX.16-10
4. EX.16-14.ALGO (Algorithmic)
Changes in cu
ent operating assets and liabilities:
Net cash flow from operating activities $
. If the direct method had been used, would the net cash flow from operating activities have been the same?
Reporting changes in Equipment on Statement of Cash Flows
An analysis of the general ledger accounts indicates that delivery equipment, which cost $200,000 and on
which accumulated depreciation totaled $60,000 on the date of sale, was sold for $132,500 during the year.
Using this information, indicate the items to be reported on the statement of cash flows.
Transaction Section of Statement of Cash Flows Added or Deducted
$200,000 cost of equipment
$60000 accumulated depreciation
$132,500 sales price
$7,500 loss on sale of equipment
(assume the indirect method is used)
Reporting Issuance and Retirement of Long-Term Debt
On the basis of the details of the following bonds payable and related discount accounts, indicate the items to
e reported in the Financing Activities section of the statement of cash flows, assuming no gain or loss on
etiring the bonds:
ACCOUNT Bonds Payable ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
Jan. 1 Balance 320,000
2 Retire bonds 64,000 256,000
June 30 Issue bonds 192,000 448,000
ACCOUNT Discount on Bond Payable ACCOUNT NO.
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5. PR.16-01.ALGO (Algorithmic)
Balance
Date Item Debit Credit Debit Credit
Jan. 1 Balance 14,400
2 Retire bonds 5,120 9,280
June 30 Issue bonds 12,900 22,180
Dec. 31 Amortize discount 1,110 21,070
Item Section of Statement of Cash Flows Added or Deducted Amount
Retire bonds $
Issue bonds $
Amortization of discount $
Statement of Cash Flows—Indirect Method
The comparative balance sheet of Me
ick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:
Dec. 31, 20Y9 Dec. 31, 20Y8
Assets
Cash $272,310 $254,480
Accounts receivable (net) 98,650 91,400
Inventories 278,470 270,610
Investments 0 104,840
Land 142,840 0
Equipment 307,250 239,250
Accumulated depreciation—equipment (71, XXXXXXXXXX,520)
Total assets $1,027,590 $896,060
Liabilities and Stockholders' Equity
Accounts payable $185,990 $176,520
Accrued expenses payable 18,500 23,300
Dividends payable 10,280 8,060
Common stock, $10 par 55,490 43,910
Paid-in capital: Excess of issue price over par-common stock 208,600 121,860
Retained earnings 548,730 522,410
Total liabilities and stockholders’ equity $1,027,590 $896,060
Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:
a. Equipment and land were acquired for cash.
. There were no disposals of equipment during the year.
c. The investments were sold for $94,360 cash.
d. The common stock was issued for cash.
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6. PR.16-03.ALGO (Algorithmic)
e. There was a $68,430 credit to Retained Earnings for net income.
f. There was a $42,110 debit to Retained Earnings for cash dividends declared.
Required:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
Me
ick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in cu
ent operating assets and liabilities:
Net cash flow from operating activities $
Cash flows from (used for) investing activities:
$
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Net cash flow from financing activities
$
Cash at the beginning of the yea
Cash at the end of the year $
Statement of Cash Flows—Indirect Method
The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows:
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Dec. 31, 20Y2 Dec. 31, 20Y1
Assets
Cash $ 931,500 $ 1,006,120
Accounts receivable (net) 847,670 773,150
Inventories 1,285,470 1,183,010
Prepaid expenses 29,810 35,400
Land 320,440 484,380
Buildings 1,481,080 912,870
Accumulated depreciation-buildings (419, XXXXXXXXXX,230)
Equipment 521,640 461,090
Accumulated depreciation-equipment (143, XXXXXXXXXX,150)
Total assets $4,854,980 $4,303,640
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors) $ 922,450 $ 973,420
Bonds payable 271,880 0
Common stock, $20 par 318,000 118,000
Paid-in capital: Excess of issue price over par-common
stock
766,000 566,000
Retained earnings 2,576,650 2,646,220
Total liabilities and stockholders’ equity $4,854,980 $4,303,640
The noncu
ent asset, noncu
ent liability, and stockholders' equity accounts for 20Y2 are as follows:
ACCOUNT Land ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 484,380
Apr. 20 Realized $152,500 cash from sale 163,940 320,440
ACCOUNT Buildings ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 912,870
Apr. 20 Acquired for cash 568,210 1,481,080
ACCOUNT Accumulated Depreciation-Buildings ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 391,230
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Dec. 31 Depreciation for year 27,950 419,180
ACCOUNT Equipment ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 461,090
Jan. 26 Discarded, no salvage 50,700 410,390
Aug. 11 Purchased for cash 111,250 521,640
ACCOUNT Accumulated Depreciation-Equipment ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 161,150
Jan. 26 Equipment discarded 50,700 110,450
Dec. 31 Depreciation for year 33,000 143,450
ACCOUNT Bonds Payable ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
May 1 Issued 10-year bonds 271,880 271,880
ACCOUNT Common Stock, $20 par ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 118,000
Dec. 7 Issued 10,000 shares of common
stock for $40 per share
200,000 318,000
ACCOUNT Paid-in Capital in Excess of Par-Common Stock ACCOUNT NO.
Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 566,000
Dec. 7 Issued 10,000 shares of common
stock for $40 per share
200,000 766,000
ACCOUNT Retained Earnings ACCOUNT NO.
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Balance
Date Item Debit Credit Debit Credit
20Y2
Jan. 1 Balance 2,646,220
Dec. 31 Net loss 33,500 2,612,720
Dec. 31 Cash dividends 36,070 2,576,650
Required:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
Whitman Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y2
Cash flows from operating activities:
$
Adjustments to reconcile net loss to net cash flow from operating activities:
Changes in cu
ent operating assets and liabilities:
Net cash flow used for operating activities $
Cash flows from (used for) investing activities:
$
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
$
Net cash flow from financing activities
$
Cash at the beginning of the yea
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Cash at the end of the year $
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