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Chapter 23: Q11BE (page 1374)

In 2017, Wild Corporation reported a net loss of \(70,000. Wild鈥檚 only net income adjustments were depreciation expense \)81,000, and increase in accounts receivable $8,100. Compute Wild鈥檚 net cash provided (used) by operating activities.

Short Answer

Expert verified

The net cash provided by operating activities is computed as $2,900.

Step by step solution

01

Definition of Accounts Receivables

Accounts Receivables are defined as the balance sheet items which show the balance of money due to business for goods or services sold.

02

Computation of net cash provided by operating activities

Particulars

Amount ($)

Amount ($)

Cash flows from Operating Activities

Net Loss

-$70,000

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation Expense

81,000

Increase in accounts receivables

-8,100

72,900

Net cash provided by operating activities

$2,900

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Most popular questions from this chapter

The balance sheet data of Brown Company at the end of 2017 and 2016 follow.

2017 2016

Cash \( 30,000 \) 35,000

Accounts receivable (net) 55,000 45,000

Inventory 65,000 45,000

Prepaid expenses 15,000 25,000

Equipment 90,000 75,000

Accumulated depreciation鈥攅quipment (18,000) (8,000)

Land 70,000 40,000

\(307,000 \)257,000

Accounts payable \( 65,000 \) 52,000

Accrued expenses 15,000 18,000

Notes payable鈥攂ank, long-term 鈥�0鈥� 23,000

Bonds payable 30,000 鈥� 0鈥�

Common stock, \(10 par 189,000 159,000

Retained earnings 8,000 5,000

\)307,000 \(257,000

Land was acquired for \)30,000 in exchange for common stock, par \(30,000, during the year; all equipment purchased was for cash. Equipment costing \)10,000 was sold for \(3,000; book value of the equipment was \)6,000. Cash dividends of $10,000 were declared and paid during the year.

Instructions

Compute net cash provided (used) by:

(a) Operating activities.

(b) Investing activities.

(c) Financing activities.

Question:The comparative balance sheets for Hinckley Corporation show the following information.


December 31

2017

2016

Cash

\(33,500

\)13,000

Accounts receivable

12,250

10,000

Inventory

12,000

9,000

Available-for-sale debt investment

0

3,000

Building

0

29,750

Equipment

45,000

20,000

Patents

5,000

6,250

\(107,750

\)91,000

Allowance for doubtful accounts

\(3,000

\)4,500

Accumulated depreciation 鈥� equipment

2,000

4,500

Accumulated depreciation 鈥� building

0

6,000

Accounts payable

5,000

3,000

Dividend payable

0

5,000

Notes payable, short-term (non-trade)

3,000

4,000

Long-term note payable

31,000

25,000

Common stock

43,000

33,000

Retained earnings

20,750

6,000

\(107,750

\)91,000

Additional data related to 2017 are as follows.

1. Equipment that had cost \(11,000 and was 40% depreciated at time of disposal was sold for \)2,500.

2. \(10,000 of the long-term note payable was paid by issuing common stock.

3. Cash dividends paid were \)5,000.

4. On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were \(30,000 (net of \)2,000 taxes).

5. Investments (available-for-sale) were sold at \(1,700 above their cost. The company has made similar sales and investments in the past.

6. Cash was paid for the acquisition of equipment.

7. A long-term note for \)16,000 was issued for the acquisition of equipment.

8. Interest of \(2,000 and income taxes of \)6,500 were paid in cash.

Instructions

Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country

The following data are taken from the records of Alee Company

December 31, December 31,

2017 2016

Cash \( 15,000 \) 8,000

Current assets other than cash 85,000 60,000

Long-term debt investments 10,000 53,000

Plant assets 335,000 215,000

\(445,000 \)336,000

December 31, December 31,

2017 2016

Accumulated depreciation \( 20,000 \) 40,000

Current liabilities 40,000 22,000

Bonds payable 75,000 鈥�0鈥�

Common stock 254,000 254,000

Retained earnings 56,000 20,000

\(445,000 \)336,000

Additional information:

1. Held-to-maturity securities carried at a cost of \(43,000 on December 31, 2016, were sold in 2017 for \)34,000. The loss (not unusual) was incorrectly charged directly to Retained Earnings.

2. Plant assets that cost \(50,000 and were 80% depreciated were sold during 2017 for \)8,000. The loss was incorrectly charged directly to Retained Earnings.

3. Net income as reported on the income statement for the year was \(57,000.

4. Dividends paid amounted to \)10,000.

5. Depreciation charged for the year was $20,000.

Instructions

Prepare a statement of cash flows for the year 2017 using the indirect method

Red Hot Chili Peppers Co. had the following activity in its most recent year of operations.

(a) Purchase of equipment. (g) Amortization of intangible assets.

(b) Redemption of bonds payable. (h) Purchase of treasury stock.

(c) Sale of building. (i) Issuance of bonds for land.

(d) Depreciation. (j) Payment of dividends.

(e) Exchange of equipment for the furniture. (k) Increase in interest receivable on notes receivable.

(f) Issuance of common stock. (l) Pension expense exceeds the amount funded.

Instructions

Classify the items as (1) operating鈥攁dd to net income; (2) operating鈥攄educt from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method.

Question: . Classify the following items as (1) operating, (2) investing, (3) financing, or (4) significant noncash investing and financing activities, using the direct method.

(a) Cash payments to employees.

(b) Redemption of bonds payable.

(c) Sale of building at book value.

(d) Cash payments to suppliers.

(e) Exchange of equipment for furniture.

(f) Issuance of preferred stock.

(g) Cash received from customers.

(h) Purchase of treasury stock.

(i) Issuance of bonds for land.

(j) Payment of dividends.

(k) Purchase of equipment.

(l) Cash payments for operating expenses.
See all solutions

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