Chapter 23- Worksheet and Solutions (4)
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Transcript of Chapter 23- Worksheet and Solutions (4)
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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
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Ex 2 - Worksheet
Worksheet for Cash Flow Analysis of Changes in Account Balances
Debits: Beg. Bal. Entry No. Entry - Dr. Entry No. Entry - Cr. Ending Bal
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
Accumulated depreciation 100 180
Accounts payable 300 400
Accrued Operating exp. Payable 300 210
Income taxes payable 100 130Common stock 580 580
Retained earnings 300 650
Total Credits
Cash Flow-Operations
Cash Flow - Investing
Cash Flow - Financing
Non-Cash Invest./Financing
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Increase/Decrease in Cash
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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
Accumulated depreciation 100 5
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
Cash Flow-Operations
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
Cash Flow - Investing
Purchase of fixed assets 9
Net cash flow from investing
Cash Flow - Financing
Payment of dividends 10
Net cash flow from financing
Non-Cash Invest./Financing
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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:
Increase/Decrease in Cash
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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
Cash Payments For Merchandise
Cost of sales
Less: decrease in inventory (200-
Purchases
Less: increase in accounts payabl
Cash Payments For Merchandise
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
Cash Payments For Income Taxes
Income tax expense
Less: increase in income taxes pa
(130-100)
Cash Payments For Income Taxes
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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)
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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
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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
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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
Cash Flow-Operations
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
Cash Flow - Investing
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Net cash flow provided from investing
Cash Flow - Financing
Net cash used by financing activities
Increase/Decrease in Cash
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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
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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
Cash Flow-Operations
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
Cash Flow - Investing
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
Cash Flow - Financing
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
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Problem 23-6
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
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
Total Credits 238,750 269,750
Cash Flow-Operations
Cash Flow - Investing
Cash Flow - Financing
Non-Cash Invest./Financing
Increase/Decrease in Cash
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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
Total Credits 238,750 269,750
Cash Flow-Operations
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
Cash Flow - Investing
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)
Cash Flow - Financing
Payment of dividends 2 21,125
Payment on L-T note 11 10,000
Net cash flow from financing 31,125 (31,125)
Non-Cash Invest./Financing
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)
Increase/Decrease in Cash
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E23-11
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
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
Total Debits 7,470 8,350
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
Total Credits 7,470 8,350
Cash Flow-Operations
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
Cash Flow - Investing
Sale of investments 7 250
Purchase of plant assets 9 130
Net cash provided by investing activities 250 130 120
Cash Flow - Financing
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)
Non-Cash Invest./Financing
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
Increase/Decrease in Cash
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E23-11
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
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
Total Debits 7,470 8,350
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
Total Credits 7,470 8,350
Cash Flow-Operations
Cash Flow - Investing
Cash Flow - Financing
Non-Cash Invest./Financing
Increase/Decrease in Cash
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E23-12 Direct Method
Cash flows from operating activities
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 flows from operating activities
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
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Worksheet for Cash Flow Analysis of Changes in Account Balances
Debits: Beg. Bal. Entry No. Entry - Dr. Entry No. Entry - Cr. Ending Bal
Total Debits
Credits:
Total Credits
Cash Flow-Operations
Cash Flow - Investing
Cash Flow - Financing
Non-Cash Invest./Financing
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Increase/Decrease in Cash