College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 23A, Problem 7SPB
EXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional information relevant to cash flows during the period are given below and on the next page.
Additional information:
1. Office equipment was sold in 20-2 for $35,000. Additional information on the office equipment sold is provided below.
2. Depreciation expense for the year was $70,000.
3. The following purchases were made for cash:
4. Declared and paid cash dividends of $40,000.
5. Issued 10,000 shares of $10 par common stock for $22 per share.
6. Acquired additional office equipment by issuing a note payable for $8,000.
REQUIRED
Prepare a statement of cash flows explaining the change in cash and cash equivalents for the year ended December 31, 20-2.
STATEMENT OF CASH FLOWS UNDER THE DIRECT METHOD Using the information provided in Problem 23-12B for McGinnis Company, prepare the following:
1. A schedule for the calculation of cash generated from operating activities for McGinnis Company for the year ended December 31, 20-2.
2. A statement of cash flows for McGinnis Company prepared under the direct method for the year ended December 31, 20-2.
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Net Cash Provided by Operating Activities
Wiley Company’s income statement for Year 2 follows:
The company’s selling and administrative expense for Year 2 includes $7,500 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years 1 and 2 are as follows:
Required:
1. Using the direct method, convert the company’s income statement to a cash basis.
2. Assume that during Year 2 Wiley had a $9,000 gain on sale of investments and a $3,000 loss on the sale of equipment. Explain how these two transactions would affect your computations in (1) above.
Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from operating activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable $ 7,700Decrease in inventories 19,140Depreciation 29,480Gain on sale of investments 13,200Increase in accounts payable 5,280Increase in prepaid expenses 2,970Increase in accounts receivable 14,300a. Determine the net income reported by Curwen Inc. for the year ended December 31.b. Briefly explain why Curwen’s net income is different from net cash flow from operating activities.
Chapter 23A Solutions
College Accounting, Chapters 1-27
Ch. 23A - Describe the direct method of reporting cash flows...Ch. 23A - Prob. 2RQCh. 23A - Prob. 3RQCh. 23A - Under the direct method of preparing a statement...Ch. 23A - Under the direct method of preparing a statement...Ch. 23A - CASH RECEIVED FROM CUSTOMERS Potts Companys sales...Ch. 23A - Prob. 2SEACh. 23A - Prob. 3SEACh. 23A - Prob. 4SEACh. 23A - Prob. 5SPA
Ch. 23A - COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Horn...Ch. 23A - EXPANDED STATEMENT OF CASH FLOWS Financial...Ch. 23A - CASH RECEIVED FROM CUSTOMERS Boyd Companys sales...Ch. 23A - Prob. 2SEBCh. 23A - Prob. 3SEBCh. 23A - Prob. 4SEBCh. 23A - Prob. 5SPBCh. 23A - COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES...Ch. 23A - EXPANDED STATEMENT OF CASH FLOWS Financial...
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- Statement of Cash Flows The following are Mueller Companys cash flow activities: a. Net income, 68,000 b. Increase in accounts receivable, 4,400 c. Receipt from sale of common stock, 12,300 d. Depreciation expense, 11,300 e. Dividends paid, 24,500 f. Payment for purchase of building, 65,000 g. Bond discount amortization, 2,700 h. Receipt from sale of long-term investments at cost, 10,600 i. Payment for purchase of equipment, 8,000 j. Receipt from sale of preferred stock, 20,000 k. Increase in income taxes payable, 3,500 l. Payment for purchase of land, 9,700 m. Decrease in accounts payable, 2,900 n. Increase in inventories, 10,300 o. Beginning cash balance, 18,000 Required: Prepare Mueller Company's statement of cash flows.arrow_forwardEXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional information relevant to cash flows during the period are given below and on the next page. Additional information: 1. Office equipment was sold in 20-2 for 35,000. Additional information on the office equipment sold is provided below. 2. Depreciation expense for the year was 70,000. 3. The following purchases were made for cash: 4. Declared and paid cash dividends of 40,000. 5. Issued 10,000 shares of 10 par common stock for 22 per share. 6. Acquired additional office equipment by issuing a note payable for 8,000. REQUIRED Prepare a statement of cash flows explaining the change in cash and cash equivalents for the year ended December 31, 20-2.arrow_forwardThe following balance sheets and income statement were taken from the records of Rosie-Lee Company: Additional transactions were as follows: a. Sold equipment costing 21,600, with accumulated depreciation of 16,200, for 3,600. b. Issued bonds for 90,000 on December 31. c. Paid cash dividends of 36,000. d. Retired mortgage of 108,000 on December 31. Required: 1. Prepare a schedule of operating cash flows using (a) the indirect method and (b) the direct method. 2. Prepare a statement of cash flows using the indirect method.arrow_forward
- EXPANDED STATEMENT OF CASH FLOWS Financial statements for McDowell Company as well as additional information relevant to cash flows during the period are given below and on the next page. Additional information: 1. Store equipment was sold in 20-2 for 35,000. Additional information on the store equipment sold is provided below. 2. Depreciation expense for the year was 112,000. 3. The following purchases were made for cash: 4. Declared and paid cash dividends of 60,000. 5. Issued 10,000 shares of 10 par common stock for 142 per share. 6. Acquired additional office equipment by issuing a note payable for 16,000. REQUIRED Prepare a statement of cash flows explaining the change in cash and cash equivalents for the year ended December 31, 20-2. SCHEDULE FOR CALCULATION OF CASH GENERATED FROM OPERATING ACTIVITIES Using the information provided in Problem 23-12A for McDowell Company, prepare the following: 1. A schedule for the calculation of cash generated from operating activities for McDowellCompany for the year ended December 31, 20-2. 2. A partial statement of cash flows for McDowell Company reporting cash from operating activities under the direct method for the year ended December 31, 20-2.arrow_forwardIn the current year, Harrisburg Corporation had net income of 35,000, a 9,000 decrease in accounts receivable, a 7,000 increase in inventory, an 8,000 increase in salaries payable, a 13,000 decrease in accounts payable, and 10,000 in depreciation expense. Using the indirect method, prepare the operating activities section of its statement of cash flows based on this information.arrow_forwardReporting changes in equipment on statement of cash flows An analysis of the general ledger accounts indicates that delivery equipment, which cost 75,000 and on which accumulated depreciation totaled 58,000 on the date of sale, was sold for 20,200 during the year. Using this information, indicate the items to be reported on the statement of cash flows.arrow_forward
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