ACC 110 Chapter Notes - Chapter 5: Accounts Receivable, Net Income, Netbook
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Statement of Cash Flows
The following is a list of the items to be included in thepreparation of Warrick Company's 2016 statement of cash flows:
Net income, $59,200
Payment for purchase of building, $98,000
Increase in accounts receivable, $7,400
Proceeds from issuance of common stock, $37,100
Increase in accounts payable, $4,500
Proceeds from sale of land, $7,000
Depreciation expense, $12,600
Payment of dividends, $36,000
Gain on sale of land, $5,300
Decrease in inventory, $3,700
Payment for purchase of long-term investments, $9,600
Amortization of discount on bonds payable, $1,900
Proceeds from issuance of note, $18,000
Increase in deferred taxes payable, $5,000
Equipment acquired by capital lease, $19,500
Decrease in salaries payable, $2,300
Beginning cash balance, $20,300
Required
1. Prepare the statement of cash flows.
WARRICK COMPANY | ||
Statement of Cash Flows | ||
For Year Ended December 31, 2016 | ||
Operating Activities: | ||
Net income | $ | |
Adjustment for noncash income items: | ||
Add: Depreciation expense | ||
Add: Amortization of discount on bonds payable | ||
Add: Accumulated depreciation | ||
Less: Gain on sale of land | ||
Adjustments for cash flow effects from working capital items: | ||
Increase in accounts receivable | ||
Decrease in inventory | ||
Increase in accounts payable | ||
Decrease in salaries payable | ||
Net cash provided by operating activities | $ | |
Investing Activities: | ||
Payment for purchase of building | $ | |
Proceeds from sale of land | ||
Payment for purchase of long-term investments | ||
Net cash used for investing activities | ||
Financing Activities: | ||
Proceeds from issuance of common stock | $ | |
Payment of accounts payable | ||
Proceeds from issuance of note | ||
Net cash provided by financing activities | ||
Net Decrease in Cash | $ | |
Cash, January 1, 2016 | ||
Cash, December 31, 2016 | $ | |
Investing and Financing Activities Not Affecting Cash | ||
Investing Activities: | ||
Acquisition of equipment under capital lease | $ | |
Financing Activities: | ||
Incurrence of capital lease obligation for equipment |
IKIBAN INC. | ||||||||
2013 | 2012 | |||||||
Assets | ||||||||
Cash | $ | 87,500 | $ | 44,000 | ||||
Accounts receivable, net | 65,000 | 51,000 | ||||||
Inventory | 63,800 | 86,500 | ||||||
Prepaid expenses | 4,400 | 5,400 | ||||||
Equipment | 124,000 | 115,000 | ||||||
Accum. depreciationâEquipment | (27,000 | ) | (9,000 | ) | ||||
Total assets | $ | 317,700 | $ | 292,900 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 25,000 | $ | 30,000 | ||||
Wages payable | 6,000 | 15,000 | ||||||
Income taxes payable | 3,400 | 3,800 | ||||||
Notes payable (long term) | 30,000 | 60,000 | ||||||
Common stock, $5 par value | 220,000 | 160,000 | ||||||
Retained earnings | 33,300 | 24,100 | ||||||
Total liabilities and equity | $ | 317,700 | $ | 292,900 | ||||
IKIBAN INC. Income Statement For Year Ended June 30, 2013 | ||||||
Sales | $ | 678,000 | ||||
Costof goods sold | 411,000 | |||||
Gross profit | 267,000 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 58,600 | ||||
Other expenses | 67,000 | |||||
Total operating expenses | 125,600 | |||||
141,400 | ||||||
Other gains (losses) | ||||||
Gain on sale ofequipment | 2,000 | |||||
Income before taxes | 143,400 | |||||
Income taxes expense | 43,890 | |||||
Netincome | $ | 99,510 | ||||
Additional Information |
a. | A $30,000 notepayable is retired at its $30,000 carrying (book) value in exchangefor cash. |
b. | The only changesaffecting retained earnings are net income and cash dividendspaid. |
c. | New equipment isacquired for $57,600 cash. |
d. | Received cashfor the sale of equipment that had cost $48,600, yielding a $2,000gain. |
e. | Prepaid Expensesand Wages Payable relate to Other Expenses on the incomestatement. |
f. | All purchasesand sales of merchandise inventory are on credit. |
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[The following information applies to thequestions displayed below.]
The followingfinancial statements and additional information are reported. |
IKIBAN INC. Comparative Balance Sheets June 30, 2015 and 2014 | ||||||||
2015 | 2014 | |||||||
Assets | ||||||||
Cash | $ | 111,800 | $ | 69,700 | ||||
Accounts receivable, net | 69,100 | 51,200 | ||||||
Inventory | 65,900 | 96,200 | ||||||
Prepaid expenses | 5,000 | 5,600 | ||||||
Total current assets | 251,800 | 222,700 | ||||||
Equipment | 125,800 | 115,000 | ||||||
Accum. depreciationâEquipment | (28,700 | ) | (10,700 | ) | ||||
Total assets | $ | 348,900 | $ | 327,000 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 26,500 | $ | 32,200 | ||||
Wages payable | 7,900 | 16,900 | ||||||
Income taxes payable | 2,800 | 3,600 | ||||||
Total current liabilities | 37,200 | 52,700 | ||||||
Notes payable (long term) | 50,000 | 77,000 | ||||||
Total liabilities | 87,200 | 129,700 | ||||||
Equity | ||||||||
Common stock, $5 par value | 237,000 | 189,000 | ||||||
Retained earnings | 24,700 | 8,300 | ||||||
Total liabilities and equity | $ | 348,900 | $ | 327,000 | ||||
IKIBAN INC. Income Statement For Year Ended June 30, 2015 | ||||||
Sales | $ | 677,000 | ||||
Costof goods sold | 411,000 | |||||
Gross profit | 266,000 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 58,600 | ||||
Other expenses | 66,900 | |||||
Total operating expenses | 125,500 | |||||
140,500 | ||||||
Other gains (losses) | ||||||
Gain on sale ofequipment | 2,700 | |||||
Income before taxes | 143,200 | |||||
Income taxes expense | 57,280 | |||||
Netincome | $ | 85,920 | ||||
Additional Information |
a. | A $27,000 notepayable is retired at its $27,000 carrying (book) value in exchangefor cash. |
b. | The only changesaffecting retained earnings are net income and cash dividendspaid. |
c. | New equipment isacquired for $59,500 cash. |
d. | Received cashfor the sale of equipment that had cost $48,700, yielding a $2,700gain. |
e. | Prepaid Expensesand Wages Payable relate to Other Expenses on the incomestatement. |
f. | All purchasesand sales of inventory are on credit. |
(1) Prepare a statement of cash flows for the year ended June30, 2015, using the indirect method. (Amounts to bededucted should be indicated with a minus sign.)
(2) Compute the company's cash flow on total assets ratio forits fiscal year 2015.
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