Barcamone only 9.0
Problem 1
To compare statement of cash flow reporting under the direct and indirect methods, enter a check mark to indicate which items are used with each method.
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Statement of Cash Flows Method
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(and related changes)
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Direct
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Indirect
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1.
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Salaries payable increase or decrease
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2.
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Payments to employees
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3.
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Cash collections from customers
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4.
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Prepaid rent increase or decrease
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5.
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Payments to suppliers
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6.
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Inventory increase or decrease
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7.
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Utilities payable, increase or decrease
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8.
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Depreciation expense
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9.
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Net income
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10.
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Cash flows from operating activities
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11.
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Cash flows from investing activities
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12.
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Cash flows from financing activities
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13.
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Net increase or decrease in cash during the period
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Problem 2
A company completed its income statement and balance sheet for the year and provided the following information:
Income Statement
Service Revenue $55,000
Expenses:
Salaries 42,500
Rent 7,200
Depreciation 6,800
Amortization of copyrights 1,000
Total Expenses 57,500
Net loss $(2,500)
Partial Balance Sheet
Current Year Prior Year
Accounts receivable $ 7,000 $16,000
Salaries Payable 14,000 7,200
Prepaid rent 6,200 2,400
In addition, the company bought a small piece of equipment costing $6,500.
Required:
- Prepare the operating activities section of the statement of cash flows using the indirect method.
- Explain why the company was able to report positive operating cash flow despite having a net loss for the year.
Problem 3
For the most recent accounting year, a company reported the following operating and cash activities:
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Investments in other companies
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(8,628)
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Increase in inventories
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(2,685)
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Depreciation and amortization
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35,254
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Long-term debt repayment
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(165,243)
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Net income
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28,961
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Proceeds from issuance of common stock
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13,485
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Proceeds from sale of property and equipment
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3,590
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Payment of dividends
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(6,255)
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Proceeds from long-term debt issuance
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61,785
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Purchases of property and equipment
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(25,400)
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Decrease in accounts receivable
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5,291
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Decrease in accounts payable
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(8,466)
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Requirements:
- Prepare the operating, investing and financing sections of the cash flow statement.
- Explain the major sources and uses of cash for the year.
Problem 4
The balance sheet and income statement for a company are provided below, along with selected additional financial information.
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Current Year
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Prior Year
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Balance Sheet
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Cash
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79,250
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73,840
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Accounts Receivable
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18,820
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24,185
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Merchandise Inventory
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15,354
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6,976
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Property and equipment
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285,735
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175,000
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Accumulated Depreciation
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(89,000)
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(72,630)
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Total Assets
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310,159
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207,371
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Accounts Payable
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8,500
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18,200
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Wages Payable
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3,208
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2,194
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Notes payable, long-term
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72,840
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86,100
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Contributed capital
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84,255
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65,980
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Retained earnings
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141,356
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34,897
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Total Liabilities and Stockholders’ Equity
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310,159
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207,371
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Income Statement
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Sales
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284,955
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Cost of goods sold
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91,357
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Wages
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32,187
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Depreciation expense
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16,370
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Other Expense
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22,358
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