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Chapter 23: Q6E (page 1376)
Data for Krauss Company are presented in E23-5.
Instructions
Prepare the operating activities section of the statement of cash flows using the indirect method.
The net cash provided by operating activities is computed as $198,500.
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Jobim Inc. had the following condensed balance sheet at the end of operations for 2016.
JOBIM INC.
BALANCE SHEET
DECEMBER 31, 2016
Cash \( 8,500 Current liabilities \) 15,000
Current assets other than cash 29,000 Long-term notes payable 25,500
Equity investments 20,000 Bonds payable 25,000
Plant assets (net) 67,500 Common stock 75,000
Land 40,000 Retained earnings 24,500
\(165,000 \)165,000
During 2017, the following occurred.
1. A tract of land was purchased for \(9,000.
2. Bonds payable in the amount of \)15,000 were redeemed at par.
3. An additional \(10,000 in common stock was issued at par.
4. Dividends totaling \)9,375 were paid to stockholders.
5. Net income was \(35,250 after allowing depreciation of \)13,500.
6. Land was purchased through the issuance of \(22,500 in bonds.
7. Jobim Inc. sold part of its investment portfolio for \)12,875. This transaction resulted in a gain of $2,000 for the company. No unrealized gains or losses were recorded on these investments in 2017.
8. Both current assets (other than cash) and current liabilities remained at the same amount.
Instructions
(a) Prepare a statement of cash flows for 2017 using the indirect method.
(b) Prepare the condensed balance sheet for Jobim Inc. as it would appear at December 31, 2017
Accounting, Analysis, and Principles The income statement for the year ended December 31, 2017, for Laskowski Manufacturing Company contains the following condensed information.
LASKOWSKI CO. INCOME STATEMENT | |
Revenues | \(6,583,000 |
Operating expenses (excluding depreciation) \)4,920,000 | |
Depreciation expense 880,000 | 5,800,000 |
Income before income tax | 783,000 |
Income tax expense | 353,000 |
Net income | \( 430,000 |
Included in operating expenses is a \)24,000 loss resulting from the sale of machinery for \(270,000 cash. The company purchased machinery at the cost of \)750,000.
Laskowski reports the following balances on its comparative balance sheets on December 31.
LASKOWSKI CO. COMPARATIVE BALANCE SHEETS (PARTIAL) | ||
2017 | 2016 | |
Cash | \(672,000 | \)130,000 |
Accounts receivable | 775,000 | 610,000 |
Inventory | 834,000 | 867,000 |
Accounts payable | 521,000 | 501,000 |
Income tax expense of \(353,000 represents the amount paid in 2017. Dividends declared and paid in 2017 totalled \)200,000.
Accounting
Prepare the statement of cash flows using the indirect method.
Analysis
Laskowski has an aggressive growth plan, which will require significant investments in plant and equipment over the next several years. Preliminary plans call for an investment of over $500,000 in the next year. Compute Laskowski鈥檚 free cash flow (from Chapter 5) and use it to evaluate the investment plans with the use of only internally generated funds.
Principles
How does the statement of cash flows contribute to achieving the objective of financial reporting?
Springsteen Co. had the following activity in its most recent year of operations.
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 non-cash investing and financing activities. Use the indirect method.
Stan Conner and Mark Stein were discussing the statement of cash flows of Bombeck Co. In the notes to the statement of cash flows was a schedule entitled 鈥淣on-cash investing and financing activities.鈥� Give three examples of significant non-cash transactions that would be reported in this schedule.
Briefly describe some of the similarities and differences between GAAP and IFRS with respect to cash flow reporting.
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