Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 16, Problem 4BP
To determine
Prepare a complete statement of
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A company uses a spreadsheet to prepare its statement of cash flows. Indicate whether each of the followingitems would be recorded in the Debit column or Credit column of the spreadsheet’s statement of cashflows section. Decrease in accounts payable
Which of the following is the final step in preparing a spreadsheet (work sheet) for the statement of cash flows using the indirect method?
Add the Debit and Credit Transactions columns and verify that the totals are equal.
Analyze all noncash accounts and enter the net increase (decrease) in cash during the period.
Add the Balance column totals, which should total to zero.
After all noncash accounts have been analyzed, enter the net increase (decrease) in cash during the period.
(1) During Year 1, Hardy Merchandising Company purchased $15,000 of inventory on account. (2) Hardy sold inventory on account that
cost $11,300 for $16,900. (3) Cash payments on accounts payable were $9,400. (4) There was $15,000 cash collected from accounts
receivable. (5) Hardy also paid $3,500 cash for operating expenses. Assume that Hardy started the accounting period with $24,500 in
both cash and common stock.
Required:
a. Identify the events described in the preceding paragraph and record them in a horizontal statements model like the following one.
Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing
activities (FA),
b. What is the balance of accounts receivable at the end of Year 1?
c. What is the balance of accounts payable at the end of Year 1?
d. What are the amounts of gross margin and net income for Year 1?
e. Determine the amount of net cash flow from operating activities.
Complete this…
Chapter 16 Solutions
Principles of Financial Accounting.
Ch. 16 - A company uses the indirect method to determine...Ch. 16 - Prob. 2MCQCh. 16 - Prob. 3MCQCh. 16 - Prob. 4MCQCh. 16 - The following information is available for a...Ch. 16 - Prob. 1DQCh. 16 - Prob. 2DQCh. 16 - Prob. 3DQCh. 16 - Prob. 4DQCh. 16 - When a statement of cash flows is prepared using...
Ch. 16 - Prob. 6DQCh. 16 - Prob. 7DQCh. 16 - Prob. 8DQCh. 16 - Prob. 9DQCh. 16 - If a company reports positive net income for the...Ch. 16 - Prob. 11DQCh. 16 - Prob. 12DQCh. 16 - Prob. 13DQCh. 16 - Prob. 14DQCh. 16 - Prob. 15DQCh. 16 - Classify the following cash flows as either...Ch. 16 - Statement of cash flows Label the following...Ch. 16 - Prob. 3QSCh. 16 - Prob. 4QSCh. 16 - Prob. 5QSCh. 16 - Prob. 6QSCh. 16 - Prob. 7QSCh. 16 - Prob. 8QSCh. 16 - Prob. 9QSCh. 16 - The plant assets section of the comparative...Ch. 16 - Prob. 11QSCh. 16 - Prob. 12QSCh. 16 - Prob. 13QSCh. 16 - Prob. 14QSCh. 16 - Prob. 15QSCh. 16 - Prob. 16QSCh. 16 - Prob. 17QSCh. 16 - Prob. 18QSCh. 16 - Prob. 19QSCh. 16 - A company uses a spreadsheet to prepare its...Ch. 16 - Prob. 21QSCh. 16 - Bioware Co. reports cost of goods sold of 42,000....Ch. 16 - Prob. 23QSCh. 16 - Prob. 24QSCh. 16 - Refer to the data in QS 16-7. 1. How much cash is...Ch. 16 - Refer to the data in QS 16-7. 1. How much cash is...Ch. 16 - Prob. 27QSCh. 16 - Prob. 1ECh. 16 - Prob. 2ECh. 16 - Prob. 3ECh. 16 - Prob. 4ECh. 16 - Fitz Company reports the following information....Ch. 16 - Prob. 6ECh. 16 - Prob. 7ECh. 16 - Prob. 8ECh. 16 - Use the following information to determine cash...Ch. 16 - For each of the following separate transactions,...Ch. 16 - Prob. 11ECh. 16 - Use the following information to prepare a...Ch. 16 - Prob. 13ECh. 16 - Complete the following spreadsheet in preparation...Ch. 16 - Prob. 15ECh. 16 - Prob. 16ECh. 16 - Prob. 17ECh. 16 - Prob. 18ECh. 16 - Use the following information about Ferron Company...Ch. 16 - Prob. 20ECh. 16 - Prob. 1APCh. 16 - Refer to the information in Problem 16-1A....Ch. 16 - Forten Companys current-year income statement,...Ch. 16 - Prob. 4APCh. 16 - Prob. 5APCh. 16 - Golden Corp.s current-year income statement,...Ch. 16 - Prob. 7APCh. 16 - Prob. 8APCh. 16 - Prob. 1BPCh. 16 - Prob. 2BPCh. 16 - Gazelle Corporations current-year income...Ch. 16 - Prob. 4BPCh. 16 - Prob. 5BPCh. 16 - Prob. 6BPCh. 16 - Prob. 7BPCh. 16 - Prob. 8BPCh. 16 - Prob. 16SPCh. 16 - Use Apples financial statements in Appendix A to...Ch. 16 - Prob. 2AACh. 16 - Prob. 3AACh. 16 - Prob. 1BTNCh. 16 - COMMUNICATING IN PRACTICE Your friend, Diana Wood,...Ch. 16 - Prob. 3BTNCh. 16 - Prob. 5BTNCh. 16 - Prob. 6BTN
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- Financial data for Otto Company follow: a. Compute the ratio of cash to monthly cash expenses. b. Interpret the results computed in (a).arrow_forwardSpreadsheet and Statement of Cash Flows The following information was taken from Lambcrson Companys accounting records:arrow_forwardIn which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.) A. collected accounts receivable from customers B. issued common stock for cash C. declared and paid dividends D. paid accounts payable balance E. sold a long-term asset for the same amount as purchasedarrow_forward
- The following shows excerpts from Camole Companys statement of cash flows and other financial records. Compute the following for the company: A. free cash flow B. cash flows to sales ratio C. cash flows to assets ratioarrow_forwardDuring the year, Hepworth Company earned a net income of 61,725. Beginning and ending balances for the year for selected accounts are as follows: There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows. Required: 1. Prepare a schedule of operating cash flows using the indirect method. 2. Suppose that all the data are used in Requirement 1 except that the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was 20,475. What is the ending balance of accounts payable? 3. CONCEPTUAL CONNECTION Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs 25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows? If not, what would you suggest be done?arrow_forwardA company uses a spreadsheet to prepare its statement of cash flows. Indicate whether each of the followingitems would be recorded in the Debit column or Credit column of the spreadsheet’s statement of cashflows section. Increase in accounts receivablearrow_forward
- ent of cash fiows using the uO jpadde pinomA Ua column(s). (More than one column may be used.) Noncash Investing & Financing Activities Statement of Cash Flows Not Reported on Statement or in Notes Operating Activities Investing Activities Financing Activities a. Paid cash to settle long-term notes payable b. Prepaid expenses increased in the year c. Issued common stock for cash d. Accounts receivable decreased in the year e. Inventory increased in the year f. Purchased equipment by issuing a note g. Accounts payable decreased in the year h. Purchased a trademark with cash. i. Income taxes payable increased in the year j. Sold merchandise to customer for casharrow_forwardRequired Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for in activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. every cell will require entry. Enter any decreases to account balances and cash outflows with a minus sign.)arrow_forwardPrepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $ 667,500 Cost of goods sold 302,000 Gross profit 365,500 Operating expenses (excluding depreciation) $ 149,400 Depreciation expense 37,750 187,150 Other gains (losses) Loss on sale of equipment (22,125) Income before taxes 156,225 Income taxes expense 48,050 Net income $ 108,175 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year…arrow_forward
- Classifying transactions on the statement of cash flows—indirect method Consider the following transactions: Identify the category of the statement of cash flows in which each transaction would be reported.arrow_forwardImpact of Transactions Involving Receivables on Statement of Cash Flows From the following list, identify whether the change in the account balance during the year would be added to or deducted from net income when the indirect method is used to determine cash flows from operating activities: Transaction Impact on Cash Flow Statement Increase in accounts receivable Decrease in accounts receivable Increase in notes receivable Decrease in notes receivable Added to net income Deducted from net income No impact on net incomearrow_forwardWhich of the following should be deducted from net income in computing net cash flows from operating activities using the indirect method? a.a decrease in accounts receivable b.preferred dividends declared and paid c.a decrease in accounts payable d.a decrease in inventoryarrow_forward
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