acct 212 homework 2 chapter 16

Rasheed Company reports net income of $460,000 for the year ended December 31, 2011. It also reports $82,800 depreciation expense and a $7,500 gain on the sale of machinery. Its comparative balance sheets reveal a $36,800 increase in accounts receivable, $18,860 increase in accounts payable, $10,120 decrease in prepaid expenses, and $14,260 decrease in wages payable.

Required:

Prepare only the operating activities section of the statement of cash flows for 2011 using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

Roney Company’s calendar-year 2011 income statement shows the following: Net Income, $422,000; Depreciation Expense, $52,328; Amortization Expense, $10,550; Gain on Sale of Plant Assets, $3,500. An examination of the company’s current assets and current liabilities reveals the following changes (all from operating activities): Accounts Receivable decrease, $13,400; Merchandise Inventory decrease, $38,860; Prepaid Expenses increase, $2,300; Accounts Payable decrease, $5,750; Other Payables increase, $874.

Use the indirect method to compute cash flow from operating activities. (Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

BEKHAM COMPANY
Income Statement
For Year Ended December 31, 2011

Sales

$

1,731,000

Cost of goods sold

848,190

Gross profit

882,810

Operating expenses

Salaries expense

$

237,147

Depreciation expense

41,544

Rent expense

46,737

Amortization expenses–Patents

5,193

Utilities expense

19,041

349,662

533,148

Gain on sale of equipment

6,924

Net income

$

540,072

Changes in current asset and current liability accounts for the year that relate to operations follow.

Accounts receivable

$

18,850

increase

Accounts payable

$

14,325

Decrease

Merchandise inventory

19,975

increase

Salaries payable

5,650

Decrease

Use the above income statement and information about changes in noncash current assets and current liabilities to prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response)

a.

Sold land costing $325,000 for $410,000 cash, yielding a gain of $85,000.

b.

Paid $112,000 cash for a new truck.

c.

Equipment with a book value of $81,000 and an original cost of $170,000 was sold at a loss of $32,000.

d.

Long-term investments in stock were sold for $94,200 cash, yielding a gain of $14,750.

Use the above information to determine this company's cash flows from investing activities.(Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

a.

Net income was $474,000.

b.

Issued common stock for $72,000 cash.

c.

Paid cash dividend of $11,000.

d.

Paid $100,000 cash to settle a note payable at its $100,000 maturity value.

e.

Paid $118,000 cash to acquire its treasury stock.

f.

Purchased equipment for $86,000 cash.

Use the above information to determine this company's cash flows from financing activities.(Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

Use the following financial statements and additional information.

GECKO INC.
Comparative Balance Sheets
June 30, 2011 and 2010

2011

2010

Assets

Cash

$

114,000

$

56,900

Accounts receivable, net

69,800

51,200

Inventory

66,500

95,800

Prepaid expenses

5,900

4,500

Equipment

129,600

119,000

Accum. depreciation—Equipment

(28,400

)

(10,500

)

Total assets

$

357,400

$

316,900

Liabilities and Equity

Accounts payable

$

26,400

$

32,200

Wages payable

7,500

16,100

Income taxes payable

2,100

4,300

Notes payable (long term)

56,000

76,000

Common stock, $5 par value

240,000

180,000

Retained earnings

25,400

8,300

Total liabilities and equity

$

357,400

$

316,900

GECKO INC.
Income Statement
For Year Ended June 30, 2011

Sales

$

672,000

Cost of goods sold

410,000

Gross profit

262,000

Operating expenses

Depreciation expense

$

58,500

Other expenses

66,100

Total operating expenses

124,600

137,400

Other gains (losses)

Gain on sale of equipment

2,200

Income before taxes

139,600

Income taxes expense

55,840

Net income

$

83,760

Additional Information

a.

A $20,000 note payable is retired at its $20,000 carrying (book) value in exchange for cash.

b.

The only changes affecting retained earnings are net income and cash dividends paid.

c.

New equipment is acquired for $59,600 cash.

d.

Received cash for the sale of equipment that had cost $49,000, yielding a $2,200 gain.

e.

Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

f.

All purchases and sales of merchandise inventory are on credit.

Section Break

Exercise 16-10 Preparation of statement of cash flows (indirect) L.O. P1

1.

Prepare a statement of cash flows for the year ended June 30, 2011, using the indirect method.(Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

GECKO, INC.
Statement of Cash Flows
For Year Ended June 30, 2011

Cash flows from operating activities

Net income

$ 83,760

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

Increase in accounts receivable

Decrease in merchandise inventory

Increase in prepaid expenses

Decrease in accounts payable

Decrease in wages payable

Decrease in income taxes payable

Depreciation expense

Gain on sale of plant assets

Net cash provided by by operating activities

$ 49,000

Cash flows from investing activities

Cash paid for dividends

Cash received from stock issuance

Net cash used in in investing activities

40,000

Cash flows from financing activities

Cash paid for equipment

Cash paid to retire notes

Cash received from sale of equipment

Net cash used in in financing activities

-28,400

Net increase in cash

$ 65,000

Cash balance at beginning of year

56,900

Cash balance at end of year

$ 121,900

Worksheet

Difficulty: Hard

Exercise 16-10 Part 1

Learning Objective: 16-P1 Prepare a statement of cash flows.

2.

Compute the company's cash flow on total assets ratio for its fiscal year 2011. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

Cash flow on total assets ratio

31.9 %

Harold Company reports the following information for its recent calendar year.

Sales

$

73,000

Expenses

Cost of goods sold

41,000

Salaries expense

12,000

Depreciation expense

8,000

Net income

$

12,000

Accounts receivable increase

$

5,000

Inventory decrease

2,000

Salaries payable increase

900

Required:

Prepare the operating activities section of the statement of cash flows for Harold Company using the indirect method.(Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

Oregon Company disclosed the following information for its recent calendar year.

Revenues

$

95,000

Expenses

Salaries expense

74,000

Utilities expense

28,000

Depreciation expense

31,400

Other expenses

9,000

Net loss

$

(47,400

)

Accounts receivable decrease

$

28,000

Purchased a machine

21,000

Salaries payable increase

28,000

Other accrued liabilities decrease

13,000

Required:

1.

Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted and loss amounts should be indicated with a minus sign. Omit the "$" sign in your response.)

a.

Net income for the year was $40,000.

b.

Dividends of $10,000 cash were declared and paid.

c.

Stylish's only noncash expense was $65,000 of depreciation.

d.

The company purchased plant assets for $60,000 cash.

e.

Notes payable of $60,000 were issued for $60,000 cash.

Complete the following spreadsheet in preparation of the statement of cash flows. Report operating activities under the indirect method. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Peugeot S.A. reports the following financial information for the year ended December 31, 2008 (euros in millions).

Net loss

€

480

Cash from sales of treasury stock and other

€

846

Depreciation and amortization

3,875

Cash paid for dividends

362

Gains on disposals and other

(368

)

Cash from disposal of plant assets and intangibles

68

Net increase in current assets

(413

)

Cash paid for plant assets and intangibles

(3,530

)

Net decrease in current liabilities

(2,228

)

Cash and cash equivalents, December 31, 2007

5,991

Prepare its statement of cash flows under the indirect method.(Enter your answers in millions. Amounts to be deducted and loss amounts should be indicated with a minus sign. Omit the "€" sign in your response.)