ACTG 3000 Lecture 2: Beechy5e_V1_Student_Solutions_Ch05
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Erroneous Statement of Cash Flows
Ryan Company's bookkeeper prepared the following 2016 statement of cash flows:
Flows of Cash Statement December 31, 2016 | |||
Sources (Inflows) of Cash | |||
Net Source from Operations | |||
Net income | $47,800 | ||
Add: Cash receipt from sale of land | 6,500 | ||
Inflow from issuing 10% bonds payable | 25,000 | ||
Depreciation expense | 13,200 | ||
Reduction in inventory | 1,900 | ||
Less: Outflow to buy equipment | (16,400) | ||
Increase in prepaid expenses | (700) | ||
Cash (principal) paid on long-term note | (9,500) | ||
ordinary gain | (2,000) | ||
Total source from operations | $65,800 | ||
Other Sources (Inflows) of Cash | |||
Loss on sale of land | $2,300 | ||
Increase in accounts payable | 1,000 | ||
Cash from issuing preferred stock | 38,700 | ||
Patent amortization expense | 2,100 | ||
Total other sources of cash | 44,100 | ||
Sources (Financing) Not Affecting Cash | |||
Issuance of common stock for patent | 11,000 | ||
Total inflows of cash | $120,900 | ||
Uses (Outflows) of Cash | |||
To purchase building | $(62,000) | ||
Increase in accounts receivable | (7,800) | ||
For acquiring marketable securities | (7,100) | ||
Decrease in income taxes payable | (1,400) | ||
Total uses of cash | (78,300) | ||
Uses (Investing) Not Affecting Cash | |||
Acquisition of patent by issuing common stock | (11,000) | ||
Net inflow before dividends | $ 31,600 | ||
Less: Cash dividends | (24,000) | ||
Net increase in cash | $7,600 | ||
Cash, January 1, 2016 | 15,300 | ||
Cash, December 31, 2016 | $22,900 |
After a thorough investigation, you have determined that the amounts of the items listed on the statement are correct. However, you notice several items that are incorrectly classified and reported.
Required
Prepare a corrected 2016 statement of cash flows for the Ryan Company. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.
Operating Activities
________________ __________
Adjustment for non cash income items:
________________ __________
________________ __________
________________ __________
________________ __________
Adjustments for cash flow effects from working capital items:
________________ __________
________________ __________
________________ __________
________________ __________
________________ __________
Net cash provided by operating activities ____________
Investing Activities:
________________ __________
________________ __________
________________ __________
________________ __________
Net cash used for investing activities _________
Financing Activities:
________________ __________
________________ __________
________________ __________
________________ __________
Net cash provided by financing activies _________
Net increase in cash _________
Cash, january 1, 2016 _________
Cash, december 31, 2016 _________
Investing and Financing Activities not Affecting Cash
Investing Activities:
Acquistion of patent by issuing commons stock ______________
Financing Activities:
Issuance of common stock for patent ____________
Sorry about these values, this thing is kind of messed up. Ihope this can be understood.
The following is the Choco Companyâs balance sheet and incomestatement as of 12/31/2016.
Balance Sheet | 2015 | 2016 |
Cash Accounts receivable Inventory Long-term investments Total assets Liabilities and stockholdersâ equity: (no value) Accounts payable Salary payable Bonds payable Common stock Retained earnings Total liabilities and stockholdersâ equity | $ 120,000 105,000 225,000 60,000 510,000 120,000 15,000 100,000 125,000 150,000 510,000 | 21,500 195,000 180,000 -0- 396,500 75,000 24,000 70,000 125,000 102,500 396,500 |
Income statement | ||
Revenue:(no value) Sales Loss on sales of long-term investment Expenses: (no value) Cost of goods sold Salary expense Net income (loss) | 560,000 (7,500) (375,000) (180,000) (2,500) |
During 2016, following transactions were made:
Sold long-term investment for a loss of $7,500 (sold for$52,500).
$30,000 of bonds payable matured in 2016.
Paid cash dividends of $45,000.
What is the amount of cash inflow/outflow/ from their customers?(assume Sales are all credit sales)
What is the amount of cash inflow/outflow from the loss on thesales of long-term investment?
What is the amount of cash inflow/outflow from theirsuppliers?
What is the amount of cash inflow/outflow from theiremployees?
What is the amount of cash inflow/outflow from their long-terminvestment?
What is the amount of cash inflow/outflow regarding the maturityof their bonds payable?
What is the amount of cash inflow/outflow regarding the cashdividends?
Using the above balance sheet, income statement and informationfrom a to g, prepare the entire cash flow statement using thedirect method.
Choco Company Statement of Cash Flows For the year ended December 31, 2016 | |
Cash flows from operating activities: Cash inflows: Cash outflows: Net cash flows from operating activities | |
Cash flows from investing activities: Net cash flows from investing activities | |
Cash flows from financing activities: Net cash flows from financing activities | |
Cash balance, 12/31/2016 |
The comparative balance sheet of Cromme Inc. for December 31,2016 and 2015, is shown as follows:
Question not attempted.
1 | Dec. 31, 2016 | Dec. 31, 2015 | |
2 | Assets | ||
3 | Cash | $626,640.00 | $585,760.00 |
4 | Accounts receivable (net) | 226,900.00 | 208,390.00 |
5 | Inventories | 641,350.00 | 616,130.00 |
6 | Investments | 0.00 | 239,300.00 |
7 | Land | 328,730.00 | 0.00 |
8 | Equipment | 705,940.00 | 553,530.00 |
9 | Accumulated depreciation-equipment | (166,970.00) | (148,000.00) |
10 | Total assets | $2,362,590.00 | $2,055,110.00 |
11 | Liabilities and Stockholdersâ Equity | ||
12 | Accounts payable (merchandise creditors) | $425,140.00 | $404,540.00 |
13 | Accrued expenses payable (operating expenses) | 42,020.00 | 52,750.00 |
14 | Dividends payable | 23,580.00 | 19,500.00 |
15 | Common stock, $4 par | 154,000.00 | 100,000.00 |
16 | Paid-in capital: Excess of issue price over parâcommon stock | 416,600.00 | 279,400.00 |
17 | Retained earnings | 1,301,250.00 | 1,198,920.00 |
18 | Total liabilities and stockholdersâ equity | $2,362,590.00 | $2,055,110.00 |
Additional data obtained from an examination of the accounts inthe ledger for 2016 are as follows:
A. | The investments were sold for $279,880 cash. |
B. | Equipment and land were acquired for cash. |
C. | There were no disposals of equipment during the year. |
D. | The common stock was issued for cash. |
E. | There was a $198,010 credit to Retained Earnings for netincome. |
F. | There was a $95,680 debit to Retained Earnings for cashdividends declared. |
Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities
The section of the statement of cash flows that reports the cashtransactions affecting the determination of net income.
. Refer to the Labels and Amount Descriptions list provided forthe exact wording of the answer choices for text entries. Be sureto complete the heading of the statement. In the operatingactivities section, use the minus sign to indicate cash outflows,decreases in cash and a net cash outflow, if required. In theinvesting and financing activities section, use a minus sign onlyto indicate a NET cash outflow for the section.
Labels In CengageNOW, a Label is a text entry that does not have anamount associated with it. and Amount DescriptionsIn CengageNOW, an Amount Description is a text entry other thanan Account that has an amount associated with it. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Cash paid for dividends | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash paid for merchandise | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash paid for purchase of equipment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash paid for purchase of land | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash received from customers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash received from sale of common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash received from sale of investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Decrease in accounts payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Decrease in accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Decrease in accrued expenses payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Decrease in inventories | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Decrease in cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase in accounts payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase in accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase in accrued expenses payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase in cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Increase in inventories | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss on sale of investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flow from operating activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flow used for operating activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flow from investing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flow used for investing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flow from financing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flow used for financing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities The section of the statement of cash flows that reports the cashtransactions affecting the determination of net income. . Refer to the Labels and Amount Descriptions list provided forthe exact wording of the answer choices for text entries. Be sureto complete the heading of the statement. In the operatingactivities section, use the minus sign to indicate cash outflows,decreases in cash and a net cash outflow, if required. In theinvesting and financing activities section, use a minus sign onlyto indicate a NET cash outflow for the section. Question not attempted.
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