Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Textbook Question
Chapter 15.A, Problem 7P
PROBLEM 14A-7 Prepare and Interpret a Statement of
Refer to the financial statement data for Joyner Company in Problem 14-10. Sam Conway, president of the company; considers $15,000 to be the minimum cash balance for operating purposes. As can be seen from the balance sheet data, only $4,000 in cash was available at the end of the current year. The sharp decline is puzzling to Mr. Conway, particularly because sales and profits are at a record high.
Required:
- Using the direct method, adjust the company s income statement to a cash basis for Year 2.
- Using the data from (1) above and other data from the problem as needed, prepare a statement of cash flows for Year 2.
- Explain why cash declined so sharply during the year.
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E12-7 Preparlng and Evaluating a Slimple Statement of Cash Flows (Indirect Method) [LO 12-1, LO
12-2, LO 12-5]
Suppose the income statement for Goggle Company reports $131 of net income, after deducting depreciation of $26. The
company bought equipment costing $105 and obtained a long-term bank loan for $106. The company's comparative balance
sheet, at December 31, is presented here.
Requlred:
1. Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and.
financing activities (+ for increase and - for decrease).
2. Prepare a statement of cash flows using the indirect method.
6. Are the cash flows typical of a start-up, healthy, or troubled company?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 6
Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus
sign.)
GOGGLE COMPANY
Statement of Cash Flows
For the…
Problem 13-7 (Algo) Prepare a Statement of Cash Flows [LO13-1, LO13-2]
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[The following information applies to the questions displayed below.]
Comparative financial statements for Weaver Company follow:
Weaver CompanyComparative Balance Sheetat December 31
This Year
Last Year
Assets
Cash
$ 15
$ 11
Accounts receivable
291
228
Inventory
152
195
Prepaid expenses
8
5
Total current assets
466
439
Property, plant, and equipment
514
435
Less accumulated depreciation
(83)
(71)
Net property, plant, and equipment
431
364
Long-term investments
25
32
Total assets
$ 922
$ 835
Liabilities and Stockholders' Equity
Accounts payable
$ 302
$ 225
Accrued liabilities
70
79
Income taxes payable
75
63
Total current liabilities
447
367
Bonds payable
199
171
Total liabilities
646
538
Common stock
162
202
Retained earnings
114
95
Total stockholders’ equity
276
297
Total liabilities and stockholders' equity
$ 922
$ 835…
Required information
Problem 13-7 (Algo) Prepare a Statement of Cash Flows [LO13-1, LO13-2]
Skip to question
[The following information applies to the questions displayed below.]
Comparative financial statements for Weaver Company follow:
Weaver CompanyComparative Balance Sheetat December 31
This Year
Last Year
Assets
Cash
$ 15
$ 11
Accounts receivable
291
228
Inventory
152
195
Prepaid expenses
8
5
Total current assets
466
439
Property, plant, and equipment
514
435
Less accumulated depreciation
(83)
(71)
Net property, plant, and equipment
431
364
Long-term investments
25
32
Total assets
$ 922
$ 835
Liabilities and Stockholders' Equity
Accounts payable
$ 302
$ 225
Accrued liabilities
70
79
Income taxes payable
75
63
Total current liabilities
447
367
Bonds payable
199
171
Total liabilities
646
538
Common stock
162
202
Retained earnings
114
95
Total stockholders’ equity
276
297
Total liabilities and stockholders' equity
$…
Chapter 15 Solutions
Managerial Accounting
Ch. 15.A - Prob. 1ECh. 15.A - EXERCISE 14A-2 Net Cash Provided by Operating...Ch. 15.A - Prob. 3ECh. 15.A - Prob. 4ECh. 15.A -
PROBLEM 14A-5 Prepare and Interpret a Statement...Ch. 15.A - Prob. 6PCh. 15.A - PROBLEM 14A-7 Prepare and Interpret a Statement of...Ch. 15 - Prob. 1QCh. 15 - Prob. 2QCh. 15 - Prob. 3Q
Ch. 15 - Prob. 4QCh. 15 - Prob. 5QCh. 15 - Prob. 6QCh. 15 - Prob. 7QCh. 15 - Prob. 8QCh. 15 - Prob. 9QCh. 15 -
14-10 If the Accounts Receivable balance...Ch. 15 - Prob. 11QCh. 15 - Prob. 12QCh. 15 - Prob. 1F15Ch. 15 - Ravenna Company is a merchandiser that uses the...Ch. 15 - Prob. 3F15Ch. 15 - Prob. 4F15Ch. 15 - Prob. 5F15Ch. 15 - Prob. 6F15Ch. 15 - Ravenna Company is a merchandiser that uses the...Ch. 15 - Prob. 8F15Ch. 15 - Prob. 9F15Ch. 15 - Prob. 10F15Ch. 15 - Prob. 11F15Ch. 15 - Prob. 12F15Ch. 15 - Prob. 13F15Ch. 15 - Prob. 14F15Ch. 15 - Prob. 15F15Ch. 15 - Prob. 1ECh. 15 - EXERCISE 14-2 Net Cash Provided by Operating...Ch. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Prob. 5ECh. 15 - Prob. 6ECh. 15 - Prob. 7PCh. 15 - Prob. 8PCh. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 12PCh. 15 - Prob. 13PCh. 15 - Prob. 14P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Prepare and Interpret a Statement of Cash Flows; Free Cash Flow Mary Walker, president of Rusco Company, considers $14,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $8,000 in cash was available at the end of this year. Since the company reported a large net income for the year, and also issued both bonds and common stock, the sharp decline in cash is puzzling to Ms. Walker. The following additional information is available for this year. a. The company declared and paid a cash dividend. b. Equipment was sold during the year for $8,000. The equipment originally cost $20,000 and had accumulated depreciation of $10,000. c. Long-term investments that cost $20,000 were sold during the year for $30,000. d. The company did not retire any bonds payable or repurchase any of its common stock. Required: 1. Using the indirect method, compute the net cash provided by operating activities for this year. 2. Using the data from (1) above,…arrow_forwardhi, just an fyi your answers to this question are both wrong. here is the correct solution Apex Company prepared the statement of cash flows for the current year that is shown below: Apex CompanyStatement of Cash Flows—Indirect Method Operating activities: Net income $ 40,000 Adjustments to convert net income to cash basis: Depreciation $ 22,000 Increase in accounts receivable (60,000 ) Increase in inventory (25,000 ) Decrease in prepaid expenses 9,000 Increase in accounts payable 55,000 Decrease in accrued liabilities (12,000 ) Increase in income taxes payable 5,000 (6,000 ) Net cash provided by (used in) operating activities 34,000 Investing activities: Proceeds from the sale of equipment 14,000 Loan to Thomas Company (40,000 ) Additions to plant and equipment (110,000 ) Net cash provided by (used in)…arrow_forwardMC Qu. 12-85 Harlow Industries reported net income of... Harlow Industries reported net Income of $29,500 for the current year. During the year, Inventory decreased by $8,800, Accounts Payable decreased by $8,900, Depreclation Expense was $11,800, and Accounts Recelvable Increased by $8,30o. If the Indirect method is used, what is the net cash provided by operating activitles? Multiple Choice $12,300 $67,300 $32,900 $50.700arrow_forward
- 2. Provide the missing piece of information for the following statement of cash flows puzzle. Cash flows from operating activities $75,000 Cash flows from ivesting activities 13,300 Cash flows from financing activities (33,000) Cash at the beginning of the year ? Cash at the end of the year 65,000 PLEASE NOTE: All whole dollar amounts will be with "$" and commas as needed (i.e. $12,345). Cash at the beginning of the year?arrow_forwardUsing the Exhibit below, assume that the balance of Accounts Receivable was $61,000 at the beginning of the current year. Furthermore, assume that the balance of Accounts Receivable is $62,000 at the end of the current year. When preparing the Statement of Cash Flow using the indirect method for the current year, which of the following statements would describe the proper presentation of accounts receivable on the Cash flow from operating activities section? EXHIBIT Increase (Decrease) Net Income (loss) $XXX Adjustments to reconcile net income to net cash flow from operating activities: Depreciation of fixed assets XXX Losses on disposal of assets XXX Gains on…arrow_forward13...new A company borrows $10,000 and signs a 90-day nontrade note payable. In preparing a statement of cash flows (indirect method), this event would be reflected as a(n) addition adjustment to net income in the cash flows from operating activities section. cash outflow from investing activities. cash inflow from financing activities. cash inflow from investing activities.arrow_forward
- E12-13 Preparing and Evaluating a Statement of Cash Flows (Indirect Method) from Comparative Balance Sheets and Income Statements [LO 12-1, LO 12-2, LO 12-3, LO 12-4, LO 12-5] Consultex, Inc., was founded in 2015 as a small financial consulting business. The company had done reasonably well in 2015- 2017 but started noticing its cash dwindle early in 2018. In January 2018, Consultex had paid $15.000 to purchase land and repaid $3.000 principal on an existing promissory note. In March, the company paid $1.800 cash for dividends and $1,000 to repurchase and eliminate Consultex stock that had previously been issued for $1.000. To improve its cash position, Consultex borrowed $4.800 by signing a new promissory note in May and also issued stock to a new private investor for $1,800 cash. Year-end comparative balance sheets and income statements are presented below. CONSULTEX, INC. Balance Sheet October 31 2018 2017 Assets Cash $18,330 $13,600 13,600 Accounts Receivable Prepaid Rent Land…arrow_forwardPreparing a Statement of Cash Flows Monon Cable Television Company reported the following financial statements for 20l9: Required: 1. Prepare a statement of cash flows using the indirect method to compute net cash flow from operating activities. 2. CONCEPTUAL CONNECTION Explain what has been responsible for the decrease in cash.arrow_forward
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