PROBLEM Tugas AKM 2

Tugas Akuntansi Keuangan Menengah 2
Problem (Essay)-Statement of Cash Flow

P23-1 The following is Sullivan corps comparative statement of financial position accounts at December 31, 2010
and 2009, with a column showing the increase (decrease) from 2009 to 2010.
COMPARATIVE STATEMENT OF FINANCIAL POSITION
property, plant and equipment

accumulated depreciation
equity investment (myres co.)
debt investment
inventories
account receivable
cash
Total assets
2010
$ 3,307,000
(1,165,000)
310,000
250,000
1,850,000
1,128,000
815,000
$ 6,495,000
2009
$ 2,967,000
(1,040,000)
275,000
1,715,000
1,168,000
700,000
$ 5,785,000
Increased
(decreased)
$ 340,000
(125,000)
35,000
250,000
135,000
(40,000)
115,000
$ 710,000
Share capital-ordinary, $1 par

Share premium-ordinary
Retained earnings
Finance lease obligation
Accounts payable
Income taxes payable
Dividends payable
Total equity and liabilities
$ 500,000
1,500,000
2,970,000
400,000
1,015,000
30,000
80,000
$ 6,495,000
$ 500,000
1,500,000
2,680,000
955,000
50,000
100,000
$ 5,785,000
290,000
400,000
60,000
(20,000)
(20,000)
$ 710,000
Additional information :
1. On December 31, 2009, Sullivan acquired 25% of myers cos ordinary shares for $275,000. On that date, the
carrying value of myerss assets and liabilities, which approxiamated their fair values, was $ 1,100,000. Myers
reported income of $140,000 for the year ended December 31, 2010. No dividend was paid on myers ordinary shares
during the year.
2. During 2010, Sullivan loaned $300,000 to TLC Co., an unrelated company TLC made the first semiannual principal
repayment of $50,000, plus interest at 10% on December 31, 2010.
3. On January 2, 2010 sullivan sold equipment costing $60,000 with a carrying amount of $ 38,000 for $40,000 cash.
4. On December 31, 2010, Sullivan entered into a finance lease for an office building, the present value of the annual
rental payments is $400,000, which equals the fair value of the building. Sullivan made the first rental payment of
$60,000 when due on January 2, 2011.
5. Net income for 2010 was $370,000
6. Sullivan declared and paid cash dividends for 2010 and 2009 as shown below.
Declared
Paid
Amount
Instruction
2010
Dec. 15, 2010
Feb 28, 2011
$80,000
2009
Dec 15, 2009
feb 28, 2010
$100,000
Prepare a statement of cash flows for Sullivan corp. for the year ended December 31, 2010, using the indirect method.
(sumber : E. kieso, Donald j weygandt, jerry d warfield, terry. Intermediate Accounting IFRS edition Volume 2 )
P23-2 The comparative statements of financial position for Hinckley Corporation show the following information.
December 31
Investments
Building
Equipment
Patent
Inventory
Account receivable
Cash
Share capital-ordinary
Retained earnings
Allowance for doubtful accounts
Accumulated depreciation on equipment
Accumulated depreciation on building
Accounts payable
Dividens payable
Long-term notes payable
Notes payable, short-term (non-trade)
2010
$ -0-045,000
5,000
12,000
12,250
33,500
$ 107,750
$ 43,000
20,750
3,000
2,000
-05,000
-031,000
3,000
$ 107,750
2009
$ 3,000
29,750
20,000
6,250
9,000
10,000
13,000
$ 91,000
$ 33,000
6,000
4,500
4,500
6,000
3,000
5,000
25,000
4,000
$ 91,000
Additional data related to 2010 are as follows.

1. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500
2. $10,000 of the long-term note payable was paid by issuing ordinary shares
3. Cash dividens paid were $5,000
4. On January 1, 2010, the building was completely destroyed by a flood. Insurance proceeds on the building were
$32,000
5. Equity investment (non-trading) were sold at $1,700 above their cost.
6. Cash was paid for the acquisition of equipment
7. A long-term note for $16,000 was issued for the acquisition of equipment
8. Interest of $2,000 and income taxes of $6,500 were paid in cash.
Instruction
Prepare a statement of cash flows using the indirect method.
P23-3 Mortonson company has not yet prepared a formal statement of cash flows for the 2010 fiscal year.
Comparative statement of financial position as of December 31, 2009 and 2010, and a statement of income and
retained earnings for the year ended December 31, 2010, are presented below and on page 1298.
MORTONSON COMPANY
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2010
Sales
Expense
Cost of good sold
Salaries and benefits
Heat, light, and power
Depreciation
Property taxes
Patent amortization
Miscellaneous expense
Interest
Income before income taxes
Income taxes
Net Income
Retained earnings-Jan 1, 2010
Share dividend declared and issued
Retained earnings-Dec 31, 2010
$ 3,800
$ 1,200
725
75
80
19
25
10
30
2,164
1,636
818
818
310
1,128
600
$ 528
MORTONSON COMPANY
COMPARATIVE STATEMENTS OF FINANCIAL POSITION
AS OF DECEMBER 31
Assets
Land
Buildings and equipment
Accumulated depreciation
Patents (less amortization)
Inventory
Equity investments (non-trading)
Accounts receivable
Cash
Total assets
Equity and Liabilities
Retained earnings
Total equity
Long-term notes payable-due 2012
2010
$ 150
910
(200)
105
720
10
780
333
$ 2,808
2009
$ 70
600
(120)
130
560
50
500
100
$ 1,890
$ 1,300
528
1,828
200
$ 700
310
1,010
200
Accounts payable
Notes payable
Total liabilities
420
40
320
980
$ 2,808
330
30
320
880
$ 1,890
Instruction
Prepare a statement of cash flows using the direct method. Changes in accounts receivable and accounts payable relate to
sales and cost of goods sold.
P23-4 Michaels company had available at the end of 2010 the information below and on page 1299.
MICHAELS COMPANY
COMPARATIVE STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2010 AND 2009
2010
2009
Land
Building
Equipment
Patent
Inventory
Prepaid rent
Prepaid insurance
Office supplies
Short-term equity investment
Accounts receivable
Cash
Total assets
$ 125,000
350,000
(105,000)
525,000
(130,000)
45,000
42,000
3,000
2,100
1,000
22,000
20,500
10,000
$ 910,000
$ 175,000
350,000
(87,000)
400,000
(112,000)
50,000
35,000
12,000
900
750
30,000
12,950
4,000
$ 871,000
Share premium-ordinary
Retained earnings
Bonds payable
Accounts payable
Wages payable
Short-term notes payable
$ 240,000
25,000
123,000
60,000
420,303
22,000
5,000
5,000
10,000
$ 910,600
$ 220,000
17,500
88,747
70,000
425,853
32,000
4,000
3,000
10,000
$ 871,100
MICHAELS COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2010
Sales revenue
Cost of goods sold
$ 1,160,000
(748,000)
412,000
Gross margin
Operating expenses
Selling expenses
Administrative expenses
Depreciation/amortization expense
Total operating expense
Income from operations
Other income and expense
Gain on sale of land
Gain on sale of short-term investment
Dividend revenue
Interest expense
Income before taxes
Income tax expense
Net income
Dividends to ordinary shareholders
To retained earnings
$ 79,200
156,700
40,500
(276,400)
135,000
8,000
4,000
2,400
(51,750)
(37,350)
98,250
(39,400)
58,850
(24,300)
$ 34,550
Instruction
Prepare a statement of cash flows for Michaels company using the indirect method. Assume the short-term investment are
non-trading. Bond premium amortized was $ 5,550.
P23-5 Comparative statement of financial position accounts of Marcus Inc. are Presented below:
MARCUS INC.
COMPARATIVE STATEMENT OF FINANCIAL POSITION ACCOUNTS
As Of DECEMBER 31, 2010 and 2009
December, 31
Debit Accounts
2010
2009
Cash
$ 42,00
$ 33,750
Accounts receivable
70,500
60,000
Merchandise Inventory
30,000
24,000
Equity Investment (non-trading)

Machinery
Buildings
Land
Credit Accounts
Allowance dor doubtful Accounts
Accumulated depreciation-Machinery
Accumulated depreciation-Buildings
Accounts payable
Accrued Payable
Long-Term Note payable
Share capital-Ordinary, no par
Retained Earnings
22,250
30,000
67,500
7,500
38,500
18,750
56,250
7,500
$269,750
$238,750
$ 2,250
5,625
13,500
35,000
3,375
21,000
150,000
39,000
$ 1,500
2,250
9,000
24,750
2,625
31,000
125,000
42,625
$ 269, 750
$ 238, 750
Additional data (ignoring taxes) :

1. Net Income for the year was $42,500
2. Cash dividens declared and paid during the year were $21,125
3. A 20% share dividens was declared during the year. $25,000 of retained earnings was capitalized.
4. Equity investments that cost $25,000 were sold during the year for $28,750
5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200.
Marcuss 2010 income statement follows (ignoring taxes) :
Sales
Less : Cost of good sold
Gross margin
Less : operating expenses (includes $8,625
Depreciation and $5,400 bad debts)
Income from operations
Other : gain on sale of equity investments (non-trading)
Loss on sale of machinery
$ 540,000
380,000
160,000
120,450
39,550
$3,750
(800)
Net Income
2,950
$ 42,500
Instructions
a. Compute net cash flow operating, activities using the direct method
b. Prepare a statement of cash flows using the indirect method
P23-7 Comparative statement of financial position accounts of sharpe Company are presented below.
SHARPE COMPANY
COMPARATIVE STATEMENT OF FINANCIAL POSITION ACCOUNTS
As Of DECEMBER 31
Debit balances
Cash
Accounts receivable
Merchandise inventory
Equity investments (non-trading)
Equipment
Buildings
Land
Totals
2010
$ 70,000
155,000
75,000
55,000
70,000
145,000
40,000
$ 610,000
2009
$ 51,000
130,000
61,000
85,000
48,000
145,000
25,000
$ 545,000
Credit balances
Accumulated depreciation-Equipment
Accumulated depreciation-Building
Accounts payable
Long-Term Notes payable
Retained earnings-ordinary
Totals
$ 10,000
21,000
37,000
66,000
12,000
62,000
310,000
92,000
$ 610,000
$ 8,000
14,000
28,000
60,000
10,000
70,000
260,000
95,000
$ 545,000
Additional data :
1. Equipment that cost $10,000 and was 60% depreciated was sold in 2010
2. Cash dividens were declared and paid during the year
3. Ordinary shares were issued in exchange for land
4. Equity investments that cost $35,000 were sold during the year
5. There were no write-offs of uncollectible accounts during the year
Sharpes 2010 income statement is a follows.
Sales
Less : Cost of good sold
Gross profit
Less : operating expenses (includes Depreciation and bad debts)
operations
Other income and expense
Gain on sale of investment
$ 15,000
Loss on sale of equipment
(3,000)
Income before taxes
Income taxes
Net Income
Instructions
$ 950,000
600,000
350,000
250,000
100,000
12,000
112,000
45,000
$ 67,000
Income from
a. Compute net cash provide by operating, activities under the direct method
b. Prepare a statement of cash flows using the indirect method.
P23-8 Dingel corporation has contracted with you to prepare a statement of cash flows. The controller has provided
the following information :
December 31
Cash
Account receivable
Inventory
Equity investment (non-trading)
Building
Equipment
Copyright
Totals
Accumulated depreciation on equipmnent
Accumulated depreciation on building
Accounts payable
Dividends payable
Notes payable, short-term (non-trade)
Retained earnings
2010
$ 38,500
12,250
12,000
-0-040,000
5,000
$ 107,750
2009
$ 13,000
10,000
10,000
3,000
29,750
20,000
5,520
$ 91,000
$ 3,000
2,000
-05,000
-03,000
36,000
38,000
20,750
$ 107,750
$ 4,500
4,500
6,000
4,000
5,000
4,000
25,000
33,000
5,000
$ 91,000
Additional data related to 2010 are as follows :

1. Equipment that had cost $11,000 and was 30% depreciated at time of disposal was sold for $2,500
2. $5,000 of the long-term note payable was paid by issuing ordinary shares
3. Cash dividends paid were $5,000
4. On January 1, 2010 the building was completely by a flood. Insurance proceeds on the building were $33,000 (net of
$4,000 taxes)
5. Equity investments (non-trading) were sold at $1,500 above their cost. The company has made similar sales
investments in the past.
6. Cash and a long-term note for $16,000 were given for the acquisition of equipment
7. Interest of $2,000 and income taxes of $5,000 were paid in cash
Instruction
a) Use the indirect method to analyzed thye above information and prepare a statement of cash flows for Dingel.
b) What would you expect to observe in the operating, investing, and financing sections of a statement of cash flows
of :
1) A severely financially troubled firm?
2)
A recently formed firm that is experiencing rapid growth?
Pr. 23-128Statement of cash flows (indirect method).

The net changes in the balance sheet accounts of Keating Corporation for the year 2011 are shown below.
Account
Debit
Credit
Cash
$ 82,000
Short-term investments
$121,000
Accounts receivable
83,200
13,300
Inventory
74,200
Prepaid expenses
17,800
Investment in subsidiary (equity method)
20,000
Plant and equipment
210,000
130,000
Accounts payable
80,700
Accrued liabilities
21,500
Deferred tax liability
15,500
8% serial bonds
80,000
Common stock, $10 par
90,000
Additional paid-in capital
150,000
Retained earningsAppropriation for bonded indebtedness
60,000
Retained earningsUnappropriated
38,000
$643,600
$643,600
An analysis of the Retained EarningsUnappropriated account follows:
Retained earnings unappropriated, December 31, 2010
Add: Net income
Transfer from appropriation for bonded indebtedness
Total
Deduct: Cash dividends
Stock dividend
Retained earnings unappropriated, December 31, 2011
$1,300,000
327,000
60,000
$1,687,000
$185,000
240,000
425,000
$1,262,000
1. On January 2, 2011 short-term investments (classified as available-for-sale) costing $121,000 were sold for $155,000.
2. The company paid a cash dividend on February 1, 2011.
3. Accounts receivable of $16,200 and $19,400 were considered uncollectible and written off in 2011 and 2010,
respectively.
4. Major repairs of $33,000 to the equipment were debited to the Accumulated Depreciation account during the year. No
assets were retired during 2011.
5. The wholly owned subsidiary reported a net loss for the year of $20,000. The loss was recorded by the parent.
6. At January 1, 2011, the cash balance was $166,000.
Instructions
Prepare a statement of cash flows (indirect method) for the year ended December 31, 2011. Keating Corporation has no
securities which are classified as cash equivalents.
(sumber : E. kieso, Donald j weygandt, jerry d warfield, terry. Intermediate accounting Thirteenth edition)
Pr. 23-129Statement of cash flows (direct and indirect methods).

Hartman, Inc. has prepared the following comparative balance sheets for 2010 and 2011:
Cash
Receivables
Inventory
Prepaid expenses
Plant assets
Patent
Accounts payable
Accrued liabilities
Mortgage payable
Preferred stock
Additional paid-in capitalpreferred
Common stock
Retained earnings
2011
297,000
159,000
150,000
18,000
1,260,000
(450,000)
153,000
$1,587,000
2010
$ 153,000
117,000
180,000
27,000
1,050,000
(375,000)
174,000
$1,326,000
153,000
60,000
525,000
120,000
600,000
129,000
$1,587,000
$ 168,000
42,000
450,000
600,000
66,000
$1,326,000
1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period.
2. The Retained Earnings account has been charged for dividends of $138,000 and credited for the net income for the year.
The income statement for 2011 is as follows:
Sales
Cost of sales
Gross profit
Operating expenses
Net income
$1,980,000
1,089,000
891,000
690,000
$ 201,000
Instructions
(a) From the information above, prepare a statement of cash flows (indirect method) for Hartman, Inc. for the year ended
December 31, 2011.
(b)
From the information above, prepare a schedule of cash provided by operating activities using the direct method
(sumber : E. kieso, Donald j weygandt, jerry d warfield, terry. Intermediate accounting Thirteenth edition).
Pr. 23-130A complex statement of cash flows (indirect method).

The net changes in the balance sheet accounts of Eusey, Inc. for the year 2011 are shown below:
Account
Debit
Credit
Cash
Accounts receivable
Inventory
Prepaid expenses
Long-term investments
Land
Buildings
Machinery
Office equipment
Accumulated depreciation:
Buildings
Machinery
Office equipment
Accounts payable
Accrued liabilities
Dividends payable
Premium on bonds
Bonds payable
Preferred stock ($50 par)
Common stock ($10 par)
Additional paid-in capitalcommon
Retained earnings
$ 125,600
$ 64,000
14,000
217,200
20,000
144,000
300,000
600,000
100,000
28,000
24,000
20,000
12,000
183,200
72,000
128,000
32,000
800,000
60,000
156,000
223,200
87,200
$1,705,200
Additional information:
1.
Income Statement Data for Year Ended December 31, 2011
Income before extraordinary item
Extraordinary loss: Condemnation of land
Net income
$1,705,200
$272,000
132,000
$140,000
2. Cash dividends of $128,000 were declared December 15, 2011, payable January 15, 2012. A 5% stock dividend was
issued March 31, 2011, when the market value was $22.00 per share.
3. The long-term investments were sold for $140,000.
4. A building and land which cost $480,000 and had a book value of $300,000 were sold for $400,000. The cost of the
land, included in the cost and book value above, was $20,000.
5.
The following entry was made to record an exchange of an old machine for a new one:
Machinery .............................................................................
160,000
Accumulated DepreciationMachinery .................................
40,000
Machinery ..................................................................
60,000
Cash ..........................................................................
140,000
6. A fully depreciated copier machine which cost $28,000 was written off.
7. Preferred stock of $60,000 par value was redeemed for $80,000
8. The company sold 12,000 shares of its common stock ($10 par) on June 15, 2011 for $25 a share. There were 87,600
shares outstanding on December 31, 2011.
9. Bonds were sold at 104 on December 31, 2011.
10. Land that was condemned had a book value of $240,000.
Instructions
Prepare a statement of cash flows (indirect method). Ignore tax effects.
(sumber : E. kieso, Donald j weygandt, jerry d warfield, terry. Intermediate accounting Thirteenth edition)
SOLUTION :
P23-1
SULLIVAN CORP.
Statement of Cash Flows
For the Year Ended December 31, 2010
Cash flows from operating activities
Net income .....................................................
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation ...........................................
Gain on sale of equipment ....................
Equity in earnings of Myers Co. ...........
Decrease in accounts receivable .........
Increase in inventories ..........................
Increase in accounts payable ...............
Decrease in income taxes payable ......
$370,000
$147,000 (a)
(2,000) (b)
(35,000) (c)
40,000
(135,000)
60,000
(20,000)
Net cash provided by operating

activities .....................................
Cash flows from investing activities:
Proceeds from sale of equipment ................
Loan to TLC Co. .............................................
Principal payment of loan receivable ..........
425,000
40,000
(300,000)
50,000
Net cash used by investing

activities .....................................
Cash flows from financing activities:
Dividends paid ...............................................
Net cash used by financing
activities .....................................
Net increase in cash ...............................................
Cash, January 1, 2010 ............................................
Cash, December 31, 2010 ......................................
55,000
(210,000)
(100,000)
(100,000)
115,000
700,000
$815,000
PROBLEM 23-1 (Continued)

Separate schedule presented in the notes:
Non-cash investing and financing activities:
Issuance of lease liability for finance lease ........
$400,000*
Explanation of Amounts
(a) Depreciation
Net increase in accumulated
depreciation for the year ended
December 31, 2010 ...................................
Accumulated depreciation on equipment sold:
Cost .................................................................
Carrying value ................................................
$125,000
$60,000
38,000
22,000
............................................Depreciationfor2010
$147,000
(b) Gain on sale of equipment

Proceeds ........................................................
Carrying value ................................................
Gain ...........................................................
(c) Equity in earnings of Myers Co.

Myerss net income for 2010 ........................
Sullivans ownership .....................................
Undistributed earnings of Myers Co. ...
$ 40,000
(38,000)
2,000
$140,000
X
25%
$ 35,000
P23-2
HINCKLEY CORPORATION
Net income ......................................................
activities:
Loss on sale of equipment ....................
Gain from flood damage ........................
Depreciation expense ............................
Patent amortization ................................
Gain on sale of investments ..................
$14,750 (a)
$ 4,100 (b)
(8,250)*
1,900 (c)
1,250
(1,700)
Increase in accounts receivable (net) ...

Increase in inventory .............................
Increase in accounts payable ...............
(3,750)**
(3,000)
2,000
Net cash provided by operating activities ...
7,300
Cash flows from investing activities

Sale of investments ........................................
Sale of equipment ..........................................
Purchase of equipment ..................................
Proceeds from flood damage to building .....
Net cash provided by investing activities ....
4,700
2,500
(20,000)(d)
32,000
Cash flows from financing activities

Payment of dividends ....................................
Payment of short-term note payable ............
Net cash used by financing activities...........
(5,000)
(1,000)
Increase in cash .....................................................

Cash, January 1, 2010 ............................................
Cash, December 31, 2010 ......................................
*[$32,000 ($29,750 $6,000)] **($12,250 $3,000) ($10,000
$4,500)
(7,450)
19,200
(6,000)
20,500
13,000
$33,500

Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest
Income taxes:
$2,000
$6,500
Non-cash investing and financing activities*

Retired note payable by issuing ordinary shares
Purchased equipment by issuing note payable
$10,000
16,000
$26,000
*Presented in the notes to the financial statements. Supporting Computations:

(a)
Ending retained earnings ......................................

Beginning retained earnings .................................
Net income ..............................................................
$20,750
(6,000)
$14,750
(b)
Cost ..........................................................................
Accumulated depreciation (40% X $11,000) .........
Book value ..............................................................
Proceeds from sale ................................................
Loss on sale ............................................................
$11,000
(4,400)
$ 6,600
(2,500)
$ 4,100
(c) Accumulated depreciation on equipment sold ....

Decrease in accumulated depreciation ................
(d)
$ 4,400
(2,500)
Depreciation expense
$ 1,900
Beginning equipment balance ..............................
$20,000
Cost of equipment sold ..........................................
(11,000)
Remaining balance .................................................
9,000
Purchase of equipment with note .........................
16,000
Adjusted balance ....................................................
25,000
Ending equipment balance ....................................
(45,000)
Purchased with cash ..............................................
$20,000
P23-3
MORTONSON COMPANY
($000 Omitted)
Cash receipts from customers .....................
Cash payments:
Payments for merchandise ......................
Salaries and benefits ................................
Heat, light, and power ...............................
Property taxes ...........................................
Interest .......................................................
Miscellaneous ...........................................
Income taxes .............................................
$3,520 (a)
$1,270 (b)
725
75
19
30
10
808
(c)
2,937
...Netcashprovidedbyoperatingactivities
Sale of non-trading equity investments ......
Purchase of buildings and equipment .........
Purchase of land ............................................
..........Netcashusedbyinvestingactivities
583
40
(310)
(80)
(350)
Increase in cash .....................................................

Cash, January 1, 2010 ............................................
233
100
......................................Cash,December31,2010
(a) Sales ...............................................................

Deduct ending accounts receivable ............
$3,800
780
Add beginning accounts receivable ............
3,020
500
Cash receipts (collections from

customers) .........................................
$3,520
333

(b) Cost of goods sold.........................................................................................$1,200
Add ending inventory.......................................................................................720
Goods available for sale.....................................................................1,920
Deduct beginning inventory..............................................................................560
Purchases...........................................................................................1,360
Deduct ending accounts payable.......................................................................420
940
Add beginning accounts payable......................................................................330
Cash purchases (payments for
merchandise).............................................................................$1,270
(c) Income taxes......................................................................................................$818
Deduct ending income taxes payable...................................................................40
778
Add beginning income taxes payable..................................................................30
Income taxes paid.........................................................................$ 808
P23-4
MICHAELS COMPANY
(Direct Method)
Cash receipts:
Cash received from customers .......................
Dividends received ...........................................
$1,152,450a
2,400
$1,154,850
Cash paid to suppliers .....................................

Cash paid for operating expenses ..................
Taxes paid .........................................................
Interest paid ......................................................
765,000b
226,350c
38,400d
57,300e
1,087,050
Cash payments:
..............Netcashprovidedbyoperatingactivities
Sale of short-term investments
($8,000 + $4,000) ............................................
Sale of land ($175,000 $125,000) + $8,000 ...
Purchase of equipment ....................................
67,800
12,000
58,000
(125,000)
.............Netcashusedbyinvestingactivities
Proceeds from issuance of ordinary shares ....
Principal payment on long-term debt .............
Dividends paid ..................................................
(55,000)
27,500
(10,000)
(24,300)
.............Netcashusedbyfinancingactivities
(6,800)
Net increase in cash ..................................................

Cash, January 1, 2010 ...............................................
6,000
4,000
.........................................Cash,December31,2010
$ 10,000
Sales Revenue ..........................................................

Increase in Accounts Receivable .............................
................................Cashreceivedfromcustomers
$1,160,000
(7,550)
$1,152,450
Cost of Goods Sold .................................................. $

Increase in Inventory .................................................
Decrease in Accounts Payable ................................
748,000
7,000
10,000
..............................................Cashpaidtosuppliers $
765,000
Operating Expenses ............................................

Depreciation/Amortization Expense ...................
Decrease in Prepaid Rent .....................................
Increase in Prepaid Insurance .............................
Increase in Office Supplies ..................................
Increase in Wages Payable ..................................
.....................CashpaidforOperatingExpenses
$276,400
(40,500)
(9,000)
1,200
250
(2,000)
$226,350
Income Tax Expense ...........................................

Increase in Income Taxes Payable ......................
......................................................Taxespaid
$39,400
(1,000)
$38,400
$51,750
5,550
$57,300
Interest Expense ..................................................

Decrease in Bond Premium .................................
...................................................Interestpaid
P23-5
(a)
Net Cash Flow from Operating Activities

Cash received from customers ..............................
Cash payments:
Cash payments to suppliers .............................
Cash payments for operating expenses ..........
Net cash provided by operating activities ............
1
$540,000 $10,500 $4,650* = $524,850
$380,000 + $6,000 $10,250 = $375,750
$524,8501
$375,7502
105,6753
481,425
$ 43,425
$120,450 $8,625 $750** $5,400 = $105,675
*Writeoff of accounts receivable.

($1,500 + $5,400 $2,250)
**Increase in accrued payables
(b)
MARCUS INC.
Net income .......................................................
activities:
Depreciation expense ..............................
Gain on sale of investments ....................
Loss on sale of machinery ......................
Increase in accounts receivable (net) .....
Increase in inventory ................................
Increase in accounts payable ..................
Increase in accrued payables ..................
$42,500
$ 8,625
(3,750)
800
(9,750)*
(6,000)
10,250
750
Net cash provided by operating activities .....
43,425

Purchase of equity investments
$22,250 ($38,500 $25,000) ...................
Purchase of machinery
$30,000 ($18,750 $3,750) .....................
Addition to buildings ....................................
Sale of investments ......................................
Sale of machinery .........................................
(8,750)
(15,000)
(11,250)
28,750
2,200
Net cash used by investing activities .........

Reduction in long-term note payable ..........
Cash dividends paid .....................................
(4,050)
(10,000)
(21,125)
925
Net cash used by financing activities .........
(31,125)
Net increase in cash ..............................................

Cash, January 1, 2010 ...........................................
Cash, December 31, 2010 .....................................
8,250
33,750
$42,000
*($70,500 $2,250) ($60,000 $1,500)
P23-7
(a)
Net Cash Provided by Operating Activities

Cash receipts from customers
Cash payments:
Cash payments to suppliers
Cash payments for operating expenses
Cash payments for income taxes
$925,000 (1)
$608,000(2)
226,000(3)
43,000(4)
Net cash provided by operating activities
877,000
$
(1)
(Sales) less (Increase in Accounts Receivables) $950,000 $25,000 =

$925,000
(2)
(Cost of Goods Sold) plus (Increase in Inventory) less (Increase in Accounts

Payable)
$600,000 + $14,000 $6,000 = $608,000
(3)
(Operating Expenses) less (Depreciation Expense) less (Bad Debt Expense)

$250,000 $22,000* $2,000 = $226,000
(4)
(Income Taxes) less (Increase in Income Taxes Payable) $45,000 $2,000 =

$43,000
48,000
*$21,000 [$14,000 ($10,000 X .60)] = $13,000 Equipment depreciation $37,000 $28,000 = 9,000
Building depreciation
$22,000
(b)
SHARPE COMPANY

Net income .............................................................
activities:
Depreciation expense ....................................
$67,000
$22,000
Gain on sale of equity investments .............

Loss on sale of equipment ...........................
Increase in accounts receivable (net) ..........
Increase in inventory .....................................
Increase in accounts payable .......................
Increase in income taxes payable ................
...........Netcashprovidedbyoperatingactivities
(15,000)
3,000
(23,000)
(14,000)
6,000
2,000

Purchase of equity investments
[$55,000 ($85,000 $35,000)] .........................
Purchase of equipment
[$70,000 ($48,000 $10,000)] .........................
Sale of equity investments ($35,000 + $15,000) ....
Sale of equipment
[$10,000 ($10,000 X 60%)] $3,000 ................
(19,000)
48,000
(5,000)
(32,000)
50,000
1,000
...........Netcashprovidedbyinvestingactivities
14,000

Payment of long-term notes payable ...................
Cash dividends paid
[($95,000 + $67,000) $92,000] .........................
Issuance of ordinary shares .................................
Net cash used by financing activities ..................
(8,000)
(70,000)
35,000*
(43,000)
Net increase in cash .......................................................

Cash, January 1, 2010 ....................................................
Cash, December 31, 2010 ..............................................
19,000
51,000
$70,000
*$310,000 $260,000 = $50,000; $50,000 ($40,000 $25,000) = $35,000

Non-cash investing and financing activities*
Issuance of ordinary shares for land ...................
$15,000
*Presented in the notes to the financial statements.
P23-8
(a)
DINGEL CORPORATION
Net income ..........................................................
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss on sale of equipment .........................
Gain from flood damage .............................
Depreciation expense .................................
$15,750(a)
5,200(b)
(13,250)*
800(c)
Copyright amortization ...............................

Gain on sale of equity investment .............
Increase in accounts receivable (net) .......
Increase in inventory ..................................
Increase in accounts payable ....................
250
(1,500)
(3,750)
(2,000)
1,000
...Netcashflowprovidedbyoperatingactivities
Sale of equity investments ................................
Sale of equipment ...............................................
Purchase of equipment (cash) ..........................
Proceeds from flood damage to building .........
2,500
4,500
2,500
(15,000)
37,000
........Netcashprovidedbyinvestingactivities
Payment of dividends ........................................
Payment of short-term note payable ................
...............Netcashusedbyfinancingactivities
Increase in cash ......................................................
Cash, January 1, 2010 .............................................
Cash, December 31, 2010 .......................................
*[($33,000 + $4,000) ($29,750 $6,000)]
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ...........................................
$2,000
Income taxes .................................
$5,000
(13,250)
29,000
(5,000)
(1,000)
(6,000)
25,500
13,000
$38,500

Non-cash investing and financing activities:*
Retired note payable by issuing ordinary shares .......
Purchased equipment by issuing note payable ..........
$
$
5,000
16,000
21,000
*Presented in the notes to the financial statements.

Supporting Computations:
(a)
Ending retained earnings ..............................................

Beginning retained earnings .........................................
Net income ..............................................................
Cost .................................................................................
Accumulated depreciation (30% X $11,000) ................
Book value ......................................................................
Proceeds from sale ........................................................
Loss on sale ............................................................
(c) Accumulated depreciation on equipment sold ...........

Decrease in accumulated depreciation ........................
Depreciation expense ............................................
(b)
(b) (1)
$
$
20,750
(5,000)
15,750
11,000
(3,300)
7,700
(2,500)
5,200
3,300
(2,500)
800
For a severely financially troubled firm:

Operating: Probably a small cash inflow or a cash outflow. Investing: Probably a cash inflow as
assets are sold to provide
needed cash.
Financing:
Probably a cash inflow from debt financing (borrowing funds) as a source of cash
at high interest cost.
(2)
For a recently formed firm which is experiencing rapid growth:

Operating: Probably a cash inflow.
Investing: Probably a large cash outflow as the firm expands. Financing: Probably a large
cash inflow to finance expansion.
Pr. 23-128
Keating Corporation
Increase (Decrease) in Cash
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in subsidiary loss
Gain on sale of short-term investments
Decrease in deferred tax liability
Increase in accounts receivable (net)
Increase in inventory
Decrease in prepaid expenses
Decrease in accounts payable
Increase in accrued liabilities
$327,000
$ 20,000
163,000
(34,000)
(15,500)
(69,900)
(74,200)
17,800
(80,700)
21,500
(52,000)
275,000

Sale of short-term investments
Purchase of plant and equipment
Major repairs to equipment
155,000
(210,000)
(33,000)
Net cash provided by investing activities
(88,000)

Payment of cash dividend
Sale of serial bonds
(185,000)
80,000
Net cash used by financing activities
(105,000)
Net increase in cash

Cash, January 1, 2011
Cash, December 31, 2011
82,000
166,000
$248,000
Pr. 23-129
(a)
Hartman, Inc.

Net income
Adjustments to reconcile net income to
net cash provided by operating activities:
Patent amortization
Increase in receivables
$201,000
$ 75,000
21,000
(42,000)
Decrease in inventory
Decrease in prepaid expenses
30,000
9,000
(15,000)
18,000
96,000
297,000
Cash used in investing activities

Purchase of plant assets
(210,000)

Payment of cash dividend
Retirement of mortgage payable
Sale of preferred stock
(138,000)
(450,000)
645,000
Net cash provided by financing activities
57,000

Cash, January 1, 2011
Cash, December 31, 2011
(b)
144,000
153,000
$297,000
Hartman, Inc.
Schedule of Cash Provided by Operating Activities
For Year Ended December 31, 2011

Cash received from customers (1)
Cash paid to suppliers (2)
Operating expenses paid (3)
$1,938,000
$1,074,000
567,000
1,641,000

(1)
(2)
(3)
297,000
$1,980,000 $42,000
$1,089,000 $30,000 + $15,000
$690,000 $75,000 $21,000 $9,000 $18,000
Pr. 23-130
Eusey, Inc.
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expensebuildings
Depreciation expensemachinery
Depreciation expense--office equipment
Gain on sale of building and land
Loss on sale of long-term investments
$ 140,000
$204,000
60,000
16,000
(100,000)
4,000
(1)
(2)
(3)
(4)
(5)
Decrease in accounts receivable (net)

Increase in inventory
Increase in prepaid expenses
Loss on condemnation of land
78,000
(217,200)
(20,000)
(183,200)
72,000
132,000
45,600

Sale of long-term investments
Proceeds from condemnation of land
Purchase of land
Sale of building and land
Purchase of building
Purchase of machinery
185,600
140,000
108,000
(560,000)
400,000
(1,060,000)
(140,000)
(6)
(7)
(8)
(9)
(10)
(11)
Net cash used by investing activities

Sale of bonds
Retirement of preferred stock
Sale of common stock
(1,112,000)
832,000
(80,000)
300,000
Net cash provided by financing activities

1,052,000
$ 125,600
Pr. 23-130 (cont.)

(1)
Net change
Debit to accumulated depreciation
$ 24,000
180,000
$204,000
(2)
Net change
Debit to accumulated depreciation
$20,000
40,000
$60,000
(3)
Net change
Write-off
$(12,000)
28,000
$ 16,000
(4)
Sale price of building and land

Book value of building and land
Gain on sale
$400,000
300,000
$100,000
(5)
Carrying value of long-term investments

Sale price of long-term investments
Loss on sale
(6)
(12)
(13)
(14)
$144,000
140,000
$ 4,000
Given.
(7)
Condemned land (at cost)

Extraordinary loss
$240,000
132,000
$108,000
(8)
Net change
Condemned land and land sold (at cost)
$300,000
260,000
$560,000
(9)
Given.
(10)
Net change
Building sold (at cost)
(11)
Given (exchange).
(12)
Bonds Payable
Add Premium
(13)
Given.
(14)
12,000 $25 = $300,000
$ 600,000
460,000
$1,060,000
$800,000
32,000
$832,000
Pr. 23-130 (cont.)

Other important reconciliations:
Shares outstanding at various times 87,600
December 31, 2011 12,000 Issued June
15, 2011
75,600
Outstanding after stock dividend March 31, 2011
75,600 1.05 = 72,000 shares
Common Stock
Issuance
Stock dividend
12,000 $10
3,600 $10
Additional Paid-in Capital

Issuance
12,000 $15
Stock dividend
3,600 $12
Retained Earnings
Net income
Dividends (cash)
Dividends (stock)
Preferred stock redemption
= $120,000
= 36,000
$156,000
= $180,000
= 43,200
$223,200
$140,000
(128,000)
12,000
(79,200)
(67,200)
(20,000)
$(87,200)

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Problem (Essay)-Statement of Cash Flow

property, plant and equipment

Share capital-ordinary, $1 par

Additional data related to 2010 are as follows.

Equity Investment (non-trading)

Additional data (ignoring taxes) :

Additional data related to 2010 are as follows :

A recently formed firm that is experiencing rapid growth?

Pr. 23-128Statement of cash flows (indirect method).

Pr. 23-129Statement of cash flows (direct and indirect methods).

Pr. 23-130A complex statement of cash flows (indirect method).

Net cash provided by operating

Net cash used by investing

PROBLEM 23-1 (Continued)

(b) Gain on sale of equipment

(c) Equity in earnings of Myers Co.

Increase in accounts receivable (net) ...

Net cash provided by operating activities ...

Cash flows from investing activities

Cash flows from financing activities

Increase in cash .....................................................

PROBLEM 23-2 (Continued)

Non-cash investing and financing activities*

*Presented in the notes to the financial statements. Supporting Computations:

Ending retained earnings ......................................

(c) Accumulated depreciation on equipment sold ....

Beginning equipment balance ..............................

Cost of equipment sold ..........................................

Remaining balance .................................................

Purchase of equipment with note .........................

Adjusted balance ....................................................

Ending equipment balance ....................................

Purchased with cash ..............................................

Increase in cash .....................................................

(a) Sales ...............................................................

Add beginning accounts receivable ............

Cash receipts (collections from

PROBLEM 23-3 (Continued)

Cash paid to suppliers .....................................

Net increase in cash ..................................................

Sales Revenue ..........................................................

Cost of Goods Sold .................................................. $

Operating Expenses ............................................

Income Tax Expense ...........................................

Interest Expense ..................................................

Net Cash Flow from Operating Activities

$540,000 $10,500 $4,650* = $524,850

$380,000 + $6,000 $10,250 = $375,750

$120,450 $8,625 $750** $5,400 = $105,675

*Writeoff of accounts receivable.

Net cash provided by operating activities .....

PROBLEM 23-5 (Continued)

Net cash used by investing activities .........

Net cash used by financing activities .........

Net increase in cash ..............................................

*($70,500 $2,250) ($60,000 $1,500)

Net Cash Provided by Operating Activities

Net cash provided by operating activities

(Sales) less (Increase in Accounts Receivables) $950,000 $25,000 =

(Cost of Goods Sold) plus (Increase in Inventory) less (Increase in Accounts

(Operating Expenses) less (Depreciation Expense) less (Bad Debt Expense)

(Income Taxes) less (Increase in Income Taxes Payable) $45,000 $2,000 =