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Cash Flow Statement Math Solution File 01

The document outlines the preparation of a Statement of Cash Flows for Reynolds Company for the year ended December 31, 2017, using the indirect method, based on provided financial statements and additional information. It includes details on cash flows from operating, investing, and financing activities, as well as adjustments for non-cash transactions and changes in working capital. The final cash balance at the end of the year is reported, along with various transactions affecting cash flow.

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62 views17 pages

Cash Flow Statement Math Solution File 01

The document outlines the preparation of a Statement of Cash Flows for Reynolds Company for the year ended December 31, 2017, using the indirect method, based on provided financial statements and additional information. It includes details on cash flows from operating, investing, and financing activities, as well as adjustments for non-cash transactions and changes in working capital. The final cash balance at the end of the year is reported, along with various transactions affecting cash flow.

Uploaded by

intasirahmedriyad
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF or read online on Scribd
Cash Flow Statement Mathematical ye Problem-01 & ‘Using the following financial statements and additional jon of Reynolds Company, prepare a Statement of Cash Flow’ for the year ended December 31, 2017, ¢ indixect method. Comparative Balance Sheets — December 31°. Assets 2016 . © Cash ‘$37,000 \ Accounts receivable ‘$26,000 r Inventory ‘$54,000. | $0. Prepaid expenses 34,000 36,000 oO Land $45,000 $70,000 | * oO Buildings e $200,000, $200,000 SS ‘Accumulated depreefition—buildings | 21,000) Equipment $193,000 ‘Accumulate tation—equipment | (28,000) Total $569,000 and Stockholders’ Equity | 2017 payable $40,000 1a mued expenses payable 30 ‘Bonds payable $150,000 & ‘Common stock (SI par) : $60,000 * O Retained earnings 206,000 | $136,000 SY Total Liabilities & Equity $569,000 $386,000 & Income Statement (Fort Ended December 31, 2017) & © Sales revenue 0 ‘+ Interest expense: $12,000 © Loss on disposal of equipment: $2,000 + Income before income taxes: $190,000 @ ‘+ Income tax expense: $65,000 A + Net income: $125,000 1. Operating expenses include agin expense of $33,000 and charges fiom prepaid expenses of $2,000. 2. Land was sold at its for cash. Page 1 of 17 © Cost id: $465,000 & © Operatifig expenses: $221,000 a Additional Information: 3. Cash dividends of $55,000 were declared and paid in 2017, Interest expense of $12,000 was paid in cash. 5. Equipment with a cost of $166,000 was purchased for book value of $36,000 was sold for $34,000 cash. 6. Boads of $10,000 were redeemed at their face = common stock, 7. Common stock ($1 par) of $130,000 was is 8. Accounts payable pertain to merchandi wo ae eben with a cost of $41,000 and a cash. Bouds of $30,000 were converted into Solution x Particulars ‘Amount (8) Cash Flows from Operating ai Net income = 125,000 ‘Adjustments for non-cash > ‘Depreciation expense =o 33 Loss on sale of e Changes in working ¢apital: Therese) ts receivable 000) wventory & (54,000) pepaid expenses & 2,000 ise) in accounts payable er 17,000) Tease in accrued expenses payable 10,000 ‘Net cash provided by Operating Act 59,000 Cash Flows from Investing Acti i Proceeds from sale of land 25,000 Proceeds from sale of equi 34,000 Purchase of equipment (166,000) ‘Net cash used in In tivities «ao7, Cash Flows financing Activities Dividends paid ‘Redemption of bonds for cash Proceeds from issuance of common stock Oo 130,000 ‘Net cash provided by Financing Activities << 65,000 ‘Net Increase in Cash 17,000 Cash at Beginning of Year (lan 1, 2077) © 37,000 Cash at End of Year (Dec 31, 2017) 34,000 cp Page 2 of 17 Problem-02 ye 1. Furst Corporation had the following transactions{ 1. Paid salaries of $14,000. * 2. Issued 1,000 shares of $1 par value cot for equipment worth $16,000. 3. Sold equipment (cost $10,000, iation $6,000) for $3,000. 4. Sold land (cost $12,000) for $16, 5. 6 . Issued another 1,000 shares of $1 Instructions For each transaction re the journal entry, and (b) affect the statement of ;. Assume the indirect method. — We S iu ©) sa 2S waosnson x 000 jes and wages expense is not ‘tely on the statement of cash flows. It ow sat he income statement and is nchuded in the OR sihccomptin . (@) event 16,000 ae Paid-in Capital in Exc: Common Stock 15,4 + -O ©) The teeuance of, stock for equipment ($16,000) is reported sh Financ sagan lavesth ach pretithe borioe of the aratement of cash 3. (a) Cash * Leas GD Plant Assets 1,000 —\S Accur jation—Equipment Equi 10,000 (b) es -cipt ($3,000) is reported in the investing, ‘The loss ($1,000) is added Some in the operating ecction. 4@ Land 12,000 Gain on Disposal of Plant Assets 3000 (®) The cash receipt ($16,000) is reported jr(Rg investing section. The gain ($4,000) is deducted from net income in the oppratihgecttion. 5. (a) Cash \ 18,000 ‘Common Stock 1,000 Paid-in Capital in Excess of mon Stock 17,000 (b) The cash receipt ($18,000) is in the financing section. 6. (@) Depreciation Expense 20,000 ‘Accumulated Be pment 20,000 (By Depreciation expense ( is added to nét income in the operating section. OP esa Problem-03 ay Strong Corporation's comparative balance sheets are presented x Assets 2017 (8) Cash 28.200 ‘Accounts receivable 24,200, Tnvestmenis 16,000 Equipment ‘Accumulated depreciation —equipment 70,000 © (10,000) “~ Total Assets 121,400 | 116,000 r Liabilities and Stockholders’ Equity 2017(S) | 2016 ($) oe ‘Accounts payable 19,600 | 11,100 \ Bonds payable» 10,000 _ [30,000 S ‘Common stock 60,000 Retained 31,800 | 29,9 q Total Lial ‘& Equity 121,400 Addi a oO a Net income was $28,300, 1a Dividends declared and paid were 2. Equipment which cost $10,000 3. Allother changes in noneurt accumulated =o 300. the change in Instructions: (a) Prepare a stateme! ©. for 2017 using the indirect method ) mm CS fr @ Solution + Particulars ‘Amount ($) Cash Flows from Operating Activities ‘Net income 28,300 ‘Adjustments to reconcile net income to net — by operating activities: Depreciation expense (14,000 - 10,000 + 1,2 5,200 Loss on sale of equipment (10,000 — 1,200% 4,300 = 4,500 loss) 4500 Changes in working capital: = Increase in accounts recei (1,900) Page 4 of 17 — Tncrease in accounts payable 8,500 ‘Net cash provided by Operating Activities > 44,600 Cash Flows from Investing Activities )) — Repayment of * — Dividends ‘Net 10,000) in Financing ¢ . 6.000) o ~ ase in Cash 43,000 1a ‘ginning Cash Balance 12,000 Ending Cash Balance GS 33,000 * o Problem-14 xs Se ABC Enterprises has providéd'the following financial information for the year’ jecember 31, 2024. You are required to pr Flow Statement using the indirect method, ash flows fiom Operating, Investing, and Financ ities. Income sony ils: & + NetProfivafter Tax: 80,000 a ‘+ Depreciation Expense: 15,000 + Amortization of Patent: 2,000 A + Loss on Sale of Machinery: 4,000 XS Changes in Working Capital: OG © Accounts Receivable increased wf + Inventory decreased by 3,000 © Prepaid Expenses in 500 Page 15 of 17 ‘* Accounts Payable increased by 4,000 ve ‘© Outstanding Expenses increased by 2,500 Investing Activities: & © Purchased land for 40,000 © Sold machinery for 10,000 (original cost 20, ons depreciation 6,000) Financing Activities: * Oo ‘+ Issued shares for cash: 50,000 © Repaid bank loan: 30,000 © + Paid dividend. 8,000 4% r Opening Cash Balance: Y& eS O = 20,000 for ABC Enterprises for the year en ber 31, 2024 using the indirect Prepare a Cash Flow, eal ‘method. xX . “ Solution _ ev ~ Particulars < ‘Amount lows from Operating Activities ao Coren G 80,000 r ‘Add: Depreciation 15,000 & ‘Add: Amortization of Patent aw 2,000 ~O 4,000 & Changes in Working Capit AW ‘Add: Loss on Sale of Machiner, ~Tnerease in Accou (6000) + Deerease in 3,000 —Tnerease in E + Increase in Accounis Payable eon + Increase in Outstanding Expenses RA 2,500 ‘Net Cash from Operating Activities 103,000 — Purchase of Land (40,000) + Sale of Machinery --- 10,000 : 5 Page 16 of 17 sae ‘Net Cash Used in Investing ee C. Cash Flows from Financing Activities + Issue of Shares —Bank Loan Repaid 2 000 30,000) ~ Dividend Paid Ry (8,000) Se ‘Net Cash from Financing 12,000 ‘Net Increase in Cash < : 85,000 © Opening Cash Balance 20,000 La Closing Cash Balance 105,000 Page 17 of 17

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