Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
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Chapter 16, Problem 16.18EX
Statement of
The following statement of cash flows for Shasta Inc. was not correctly prepared:
| Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 20Y9 |
||
| Cash flows from operating activities: | ||
| Net income............................................. | $ 360,000 | |
| Adjustments to reconcile net income to net cash flow from operating activities: | ||
| Depreciation......................................... | 100,800 | |
| Gain on sale of investments........................... | 17,280 | |
| Changes in current operating assets are liabilities: | ||
| Increase in |
27,360 | |
| Increase in inventories.............................. | (36,000) | |
| Increase in accounts payable........................ | (3,600) | |
| Decrease in accrued expenses payable............... | (12,400) | |
| Net cash flow from operating activities................... | $463,440 | |
| Cash flows from (used for) investing activities: | ||
| Cash from sale of investments............................ | $ 240,000 | |
| Cash used for purchase of land........................... | (259,200) | |
| Cash used for purchase of equipment..................... | (432,000) | |
| Net cash flow used for investing activities................. | (415,200) | |
| Cash flows from (used for) financing activities: | ||
| Cash from sale of common stock......................... | $ 312,000 | |
| Cash used for dividends................................. | (132,000) | |
| Net cash flow from financing activities.................... | 180,000 | |
| Increase (decrease) in cash.................................. | $ 47,760 | |
| Cash at the end of the year.................................. | 192,240 | |
| Cash at the beginning of the year............................ | $240,000 | |
a. List the errors you find in the statement of cash flows. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year.
b. Prepare a corrected statement of cash flows.
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Apex Company prepared the statement of cash flows for the current year that is shown below:Apex CompanyStatement of Cash Flows—Indirect MethodOperating activities:Net income ........................................................................................ $ 40,000Adjustments to convert net income to cash basis:Depreciation charges .................................................................... $ 22,000Increase in accounts receivable .................................................... (60,000)Increase in inventory ..................................................................... (25,000)Decrease in prepaid expenses ...................................................... 9,000Increase in accounts payable ........................................................ 55,000Decrease in accrued liabilities ....................................................... (12,000)Increase in deferred income taxes ................................................ 5,000 (6,000)Net cash provided…
Statement of Cash Flows
Partial balance sheet data and additional information for Ernst Company are listed
below:
Ernst Company
Partial Balance Sheet
December 31, 2002 and 2001
Assets 2002 2001
Cash ......................................................................... $ 22,000 $ 16,000
Accounts receivable.................................................. 218,000 260,000
Inventory.................................................................... 85,000 95,000
Liabilities
Accounts payable...................................................... $ 105,000 $ 135,000
Additional Information:
(a) Net income for 2002 was $15,000.
(b) Depreciation expense for 2002 was $30,000.
(c) Sales for 2002 totaled $490,000; cost of goods sold was $350,000.
Requirements:
a) Prepare the operating activities section of the statment of cash flows using INDIRECT METHOD.
b) Prepare the operating activities section of the statment of cash flows using DIRECT METHOD.
Use the following information for VPI Co. to prepare a statement of cash flows for the year ended December 31 using the indirect method. Cash balance at prior year-end. . . . . . . . . . . . . . $40,000 Gain on sale of machinery. . . . . . . . . . . . . . . . . . $ 2,000 P2 P3 Increase in inventory. . . . . . . . . . . . . . . . . . . . . . 5,000 Cash received from sale of machinery. . . . . . . . 9,500 Depreciation expense . . . . . . . . . . . . . . . . . . . . . 4,000 Increase in accounts payable. . . . . . . . . . . . . . . 1,500 Cash received from issuing stock. . . . . . . . . . . . 8,000 Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000 Cash paid for dividends. . . . . . . . . . . . . . . . . . . . 1,000 Decrease in accounts receivable . . . . . . . . . . . . 3,000
Chapter 16 Solutions
Accounting
Ch. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - A corporation issued 2,000,000 of common stock in...Ch. 16 - A retail business, using the accrual method of...Ch. 16 - Prob. 5DQCh. 16 - A long-term investment in bonds with a cost of...Ch. 16 - A corporation issued 2,000,000 of 20-year bonds...Ch. 16 - Fully depreciated equipment costing 50,000 is...Ch. 16 - Prob. 9DQCh. 16 - Name five common major classes of operating cash...
Ch. 16 - Prob. 16.1APECh. 16 - Prob. 16.1BPECh. 16 - Adjustments to net incomeindirect method Ripley...Ch. 16 - Prob. 16.2BPECh. 16 - Changes in current operating assets and...Ch. 16 - Changes in current operating assets and...Ch. 16 - Prob. 16.4APECh. 16 - Prob. 16.4BPECh. 16 - Land transactions on the statement of cash flows...Ch. 16 - Land transactions on the statement of cash flows...Ch. 16 - Prob. 16.6APECh. 16 - Prob. 16.6BPECh. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Prob. 16.8APECh. 16 - Prob. 16.8BPECh. 16 - Prob. 16.1EXCh. 16 - Effect of transactions on cash flows State the...Ch. 16 - Classifying cash flows Identify the type of cash...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Prob. 16.6EXCh. 16 - Prob. 16.7EXCh. 16 - Determining cash payments to stockholders The...Ch. 16 - Reporting changes in equipment on statement of...Ch. 16 - Prob. 16.10EXCh. 16 - Reporting land transactions on statement of cash...Ch. 16 - Prob. 16.12EXCh. 16 - Reporting land acquisition for cash and mortgage...Ch. 16 - Reporting issuance and retirement of longterm debt...Ch. 16 - Prob. 16.15EXCh. 16 - Prob. 16.16EXCh. 16 - Prob. 16.17EXCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.19EXCh. 16 - Prob. 16.20EXCh. 16 - Determining selected amounts for cash flows from...Ch. 16 - Prob. 16.22EXCh. 16 - Cash flows from operating activitiesdirect method....Ch. 16 - Prob. 16.24EXCh. 16 - Free cash flow The financial statement for Nike,...Ch. 16 - Free cash flow Lovato Motors Inc. has cash flows...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.2APRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.4APRCh. 16 - Prob. 16.5APRCh. 16 - Prob. 16.1BPRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsdirect method The...Ch. 16 - Statement of cash flowsdirect method applied to PR...Ch. 16 - Ethics in Action Lucas Hunter, president of...Ch. 16 - Prob. 16.3CPCh. 16 - Using the statement of cash flows You are...Ch. 16 - Dillip Lachgar is the president and majority...
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