Chapter Review
16-9hProblems: Series B
Statement of Cash Flows
Obj. 2, 3, 4, 5
The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:
Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:
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Equipment and land were acquired for cash.
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There were no disposals of equipment during the year.
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The investments were sold for $91,800 cash.
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The common stock was issued for cash.
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There was a $141,680 credit to Retained Earnings for net income.
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There was a $102,000 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, $154,260
Statement of Cash Flows
Obj. 2, 3, 4, 5
The comparative balance sheet of Harris Industries Inc. at December 31, 20Y4 and 20Y3, is as follows:
An examination of the income statement and the accounting records revealed the following additional information applicable to 20Y4:
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Net income, $524,580.
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Depreciation expense reported on the income statement: buildings, $51,660; machinery and equipment, $22,680.
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Patent amortization reported on the income statement, $5,040.
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A building was constructed for $579,600.
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A mortgage note for $224,000 was issued for cash.
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30,000 shares of common stock were issued at $13 in exchange for the bonds payable.
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Cash dividends declared, $131,040.
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, $561,400
Statement of Cash Flows
Obj. 2, 3, 4, 5
The comparative balance sheet of Coulson, Inc., 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 | 1,386,000 | |||
Apr. | 20 | Realized $456,000 cash from sale | 396,000 | 990,000 |
ACCOUNT Buildings | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 990,000 | |||
Apr. | 20 | Acquired for cash | 990,000 | 1,980,000 |
ACCOUNT Accumulated Depreciation—Buildings | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 366,000 | |||
Dec. | 31 | Depreciation for year | 31,200 | 397,200 |
ACCOUNT Equipment | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 529,800 | |||
26 | Discarded, no salvage | 66,000 | 463,800 | |||
Aug. | 11 | Purchased for cash | 196,800 | 660,600 |
ACCOUNT Accumulated Depreciation—Equipment | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 162,000 | |||
26 | Equipment discarded | 66,000 | 96,000 | |||
Dec. | 31 | Depreciation for year | 37,200 | 133,200 |
ACCOUNT Bonds Payable | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
May | 1 | Issued 20-year bonds | 330,000 | 330,000 |
ACCOUNT Common Stock, $20 par | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 180,000 | |||
Dec. | 7 | Issued 7,000 shares of common stock for $40 per share | 140,000 | 320,000 |
ACCOUNT Paid-In Capital in Excess of Par—Common Stock | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 810,000 | |||
Dec. | 7 | Issued 7,000 shares of common stock for $40 per share | 140,000 | 950,000 |
ACCOUNT Retained Earnings | ACCOUNT NO. | |||||
Balance | ||||||
Date | Item | Debit | Credit | Debit | Credit | |
20Y2 |
||||||
Jan. | 1 | Balance | 2,574,600 | |||
Dec. | 31 | Net income | 326,600 | 2,901,200 | ||
31 | Cash dividends | 79,200 | 2,822,000 |
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, $162,800
Statement of Cash Flows—Direct Method
The comparative balance sheet of Suffridge Inc. for December 31, 20Y4 and 20Y3, is as follows:
The income statement for the year ended December 31, 20Y4, is as follows:
Additional data obtained from an examination of the accounts in the ledger for 20Y4 are as follows:
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Equipment and land were acquired for cash.
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There were no disposals of equipment during the year.
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The investments were sold for $702,000 cash.
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The common stock was issued for cash.
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There was a $630,400 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, $607,790
Statement of Cash Flows—Direct Method Applied to PR 16-1B
The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is as follows:
The income statement for the year ended December 31, 20Y9, is as follows:
Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:
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Equipment and land were acquired for cash.
-
There were no disposals of equipment during the year.
-
The investments were sold for $91,800 cash.
-
The common stock was issued for cash.
-
There was a $102,000 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, $154,260