Chapter Review
16-9gProblems: Series A
Statement of Cash Flows
Obj. 2, 3, 4, 5
The comparative balance sheet of Iglesias Inc. for December 31, 20Y3 and 20Y2, is shown as follows:
Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:
-
The investments were sold for $210,000 cash.
-
Equipment and land were acquired for cash.
-
There were no disposals of equipment during the year.
-
The common stock was issued for cash.
-
There was a $600,000 credit to Retained Earnings for net income.
-
There was a $108,000 debit to Retained Earnings for cash dividends declared.
Instructions
-
Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities.
AnswerCheck figure: Net cash flows from operating activities, $588,000
Statement of Cash Flows
Obj. 2, 3, 4, 5
The comparative balance sheet of Orange Angel Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:
-
Net income, $359,000.
-
Depreciation reported on the income statement, $218,000.
-
Equipment was purchased at a cost of $750,000, and fully depreciated equipment costing $142,000 was discarded, with no salvage realized.
-
The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
-
76,000 shares of common stock were issued at $15 for cash.
-
Cash dividends declared and paid, $95,000.
Instructions
-
Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities.
AnswerCheck figure: Net cash flows from operating activities, $425,000
Statement of Cash Flows
Obj. 2, 3, 4, 5
The comparative balance sheet of Whitman Co. at December 31, 20Y2 and 20Y1, is as follows:
The noncurrent asset, noncurrent 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 | 479,700 | |||
Apr. | 20 | Realized $151,200 cash from sale | 163,800 | 315,900 |
ACCOUNT Buildings | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 900,900 | |||
Apr. | 20 | Acquired for cash | 561,600 | 1,462,500 |
ACCOUNT Accumulated Depreciation—Buildings | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 382,320 | |||
Dec. | 31 | Depreciation for year | 26,280 | 408,600 |
ACCOUNT Equipment | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 454,680 | |||
26 | Discarded, no salvage | 46,800 | 407,880 | |||
Aug. | 11 | Purchased for cash | 104,400 | 512,280 |
ACCOUNT Accumulated Depreciation—Equipment | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 158,760 | |||
26 | Equipment discarded | 46,800 | 111,960 | |||
Aug. | 31 | Depreciation for year | 29,340 | 141,300 |
ACCOUNT Bonds Payable | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
May | 1 | Issued 20-year bonds | 270,000 | 270,000 |
ACCOUNT Common Stock, $25 par | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 117,000 | |||
Dec. | 7 | Issued 8,000 shares of common stock for $50 per share | 200,000 | 317,000 |
ACCOUNT Paid-In Capital in Excess of Par—Common Stock | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 558,000 | |||
Dec. | 7 | Issued 8,000 shares of common stock for $50 per share | 200,000 | 758,000 |
ACCOUNT Retained Earnings | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 2,585,700 | |||
Dec. | 31 | Net loss | 35,320 | 2,550,380 | ||
31 | Cash dividends | 32,400 | 2,517,980 |
Instructions
-
Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities.
AnswerCheck figure: Net cash flows used for operating activities, $(169,600)
Statement of Cash Flows—Direct Method
The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows:
The income statement for the year ended December 31, 20Y6, is as follows:
Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:
-
Equipment and land were acquired for cash.
-
There were no disposals of equipment during the year.
-
The investments were sold for $176,000 cash.
-
The common stock was issued for cash.
-
There was a $28,000 debit to Retained Earnings for cash dividends declared.
Instructions
-
Prepare a statement of cash flows, using the direct method of presenting cash flows from (used for) operating activities.
AnswerCheck figure: Net cash flows from operating activities, $293,600
Statement of Cash Flows—Direct Method Applied to PR 16-1A
The comparative balance sheet of Iglesias Inc. for December 31, 20Y3 and 20Y2, is as follows:
The income statement for the year ended December 31, 20Y3, is as follows:
Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:
-
The investments were sold for $210,000 cash.
-
Equipment and land were acquired for cash.
-
There were no disposals of equipment during the year.
-
The common stock was issued for cash.
-
There was a $108,000 debit to Retained Earnings for cash dividends declared.
Instructions
-
Prepare a statement of cash flows, using the direct method of presenting cash flows from (used for) operating activities.
AnswerCheck figure: Net cash flows from operating activities, $588,000