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Chapter 23: Q19E (page 1381)
Data for Anita Baker Company are presented in E23-18.
Instructions
Prepare entries in journal form for all adjustments that should be made on a worksheet for a statement of cash flows.
The journal entries are recorded in Step 2.
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Hendrickson Corporation reported net income of \(50,000 in 2017. Depreciation expense was \)17,000. The following working capital accounts changed.
Accounts receivable $11,000 increase
Available-for-sale debt securities 16,000 increase
Inventory 7,400 increase
Nontrade note payable 15,000 decrease
Accounts payable 12,300 increase
Compute net cash provided by operating activities.
Question:Mortonson Company has not yet prepared a formal statement of cash flows for the 2017 fiscal year. Comparative balance sheets as of December 31, 2016 and 2017, and a statement of income and retained earnings for the year ended December 31, 2017, are presented as follows.
MORTONSON COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2017 (\(000 OMITTED) | ||
Sales revenue | \)3,800 | |
Expenses | ||
Cost of goods sold | \(1,200 | |
Salaries and benefits | 725 | |
Heat, light and power | 75 | |
Depreciation | 80 | |
Property tax | 19 | |
Patent amortization | 25 | |
Miscellaneous expenses | 10 | |
Interest | 30 | 2,164 |
Income before taxes | 1,636 | |
Income tax | 818 | |
Net income | 818 | |
Retained earnings 鈥� Jan 1, 2017 | 310 | |
1,128 | ||
Stock dividend declared and issued | 600 | |
Retained earnings Dec 31, 2017 | \)528 | |
MORTONSON COMPANY COMPARATIVE BALANCE SHEETS AS OF DECEMBER 31 (\(000 OMITTED) | ||
Assets | 2017 | 2016 |
Current assets | ||
Cash | \)333 | \(100 |
U.S treasury notes (available for sale) | 10 | 50 |
Accounts receivables | 780 | 500 |
Inventory | 720 | 560 |
Total current assets | 1,843 | 1,210 |
Long-term assets | ||
Land | 150 | 70 |
Building and equipment | 910 | 600 |
Accumulated depreciation 鈥� building and equipment | (200) | (120) |
Patent (less: amortization) | 105 | 130 |
Total long-term assets | 965 | 680 |
Total assets | \)2,808 | \(1,890 |
Liabilities and stockholder鈥檚 equity | ||
Current liabilities | ||
Account payable | \)420 | \(330 |
Income tax payable | 40 | 30 |
Notes payable | 320 | 320 |
Total current liabilities | 780 | 680 |
Long-term note payable | 200 | 200 |
Total liabilities | 980 | 880 |
Stockholder鈥檚 equity | ||
Common stock | 1,300 | 700 |
Retained earnings | 528 | 310 |
Total stockholder鈥檚 equity | 1,828 | 1,010 |
Total liabilities and stockholder鈥檚 equity | \)2,808 | $1,890 |
Instructions
Prepare a statement of cash flows using the direct method. Changes in accounts receivable and accounts payable relate to sales and the cost of goods sold. Do not prepare a reconciliation schedule.
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.
(Computation of Operating Activities鈥擠irect Method) Presented below are two independent situations.
Situation A: Annie Lennox Co. reports revenues of \(200,000 and operating expenses of \)110,000 in its first year of operations, 2017. Accounts receivable and accounts payable at year-end were \(71,000 and \)29,000, respectively. Assume that the accounts payable related to operating expenses. (Ignore income taxes.)
Instructions
Using the direct method, compute net cash provided by operating activities.
Situation B: The income statement for Blues Traveler Company shows cost of goods sold \(310,000 and operating expenses (exclusive of depreciation) \)230,000. The comparative balance sheet for the year shows that inventory increased \(26,000, prepaid expenses decreased \)8,000, accounts payable (related to merchandise) decreased \(17,000, and accrued expenses payable increased \)11,000.
Instructions
Compute (a) cash payments to suppliers and (b) cash payments for operating expenses.
Dingel Corporation has contracted with you to prepare a statement of cash flows. The controller has provided the following information.
| December 31 | ||
2017 | 2016 | |
Buildings | \( 鈥�0鈥� | \)29,750 |
Equipment | 45,000 | 20,000 |
Patents | 5,000 | 6,250 |
Investments | 鈥�0鈥� | 3,000 |
Inventory | 12,000 | 9,000 |
Accounts receivable | 12,250 | 10,000 |
Cash | 33,500 | 13,000 |
\(107,750 | \)91,000 | |
Share capital鈥攐rdinary | \( 43,000 | \)33,000 |
Retained earnings | 20,750 | 6,000 |
Allowance for doubtful accounts | 3,000 | 4,500 |
Accumulated depreciation on equipment | 2,000 | 4,500 |
Accumulated depreciation on buildings | 鈥�0鈥� | 6,000 |
Accounts payable | 5,000 | 3,000 |
Dividends payable | 鈥�0鈥� | 5,000 |
Long-term notes payable | 31,000 | 25,000 |
Notes payable, short-term (non-trade) | 3,000 | 4,000 |
\(107,750 | \)91,000 | |
Additional data related to 2017 are as follows.
Instructions Prepare a statement of cash flows using the indirect method.
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