Financial and Managerial Accounting - With CengageNow
Financial and Managerial Accounting - With CengageNow
14th Edition
ISBN: 9781337577809
Author: WARREN
Publisher: CENGAGE L
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Chapter 13, Problem 13.4BPR

Statement of cash flows — direct method

The comparative balance sheet of Martinez Inc. for December 31, 20Y4 and 20Y3, is as follows:

  Dec. 31, 20Y4 Dec. 31, 20Y3
Assets    
Cash $ 661,920 $ 683,100
Accounts receivable (net) 992,640 914,400
Inventories 1,394,400 1,363,800
Investments 0 432,000
Land 960,000 0
Equipment 1,224,000 984,000
Accumulated depreciation—equipment (481,500) (368,400)
Total assets $4,751,460 $4,008,900
Liabilities and Stockholders' Equity    
Accounts payable (merchandise creditors) $1,080,000 $ 966,600
Accrued expenses payable (operating expenses) 67,800 79,200
Dividends payable 100,800 91,200
Common stock, $5 par 130,000 30,000
Paid in capital: Excess of issue price over par—common stock 950,000 450,000
Retained earnings 2,422,860 2,391,900
Total liabilities and stockholders' equity $4,751,460 $4,008,900

The income Statement for the year ended December 51. 20Y3. is as follows:

Sales   $4,512,000
Cost of goods sold 2,352,000
Gross profit   $2,160,000
Operating expenses:    
Depredation expense $ 113,100  
Other operating expenses 1,344,840  
Total operating expenses   1,457,940
Operating income   $ 702,060
Other income:    
Gain on sale of investments   156,000
Income before income tax   $ 858,060
Income tax expense   299,100
Net income   $ 558,960

Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:

  • A. Equipment and land were acquired for cash.
  • B. There were no disposals of equipment during the year.
  • C. The investments were sold for $588,000 cash.
  • D. The common stock was issued for cash.
  • E. There was a $528,000 debit to Retained Earnings for cash dividends declared.

Instructions

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities.

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Chapter 13 Solutions

Financial and Managerial Accounting - With CengageNow

Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Prob. 13.2BECh. 13 - Prob. 13.3BECh. 13 - Prob. 13.4BECh. 13 - Land transactions on the statement of cash flows...Ch. 13 - Common stock transactions on the statement of cash...Ch. 13 - Prob. 13.7BECh. 13 - Prob. 13.8BECh. 13 - Prob. 13.1EXCh. 13 - Effect of transactions on cash flows State the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Prob. 13.4EXCh. 13 - Prob. 13.5EXCh. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Prob. 13.8EXCh. 13 - Reporting changes in equipment on statement of...Ch. 13 - Prob. 13.10EXCh. 13 - Determining cash payments to stockholders The...Ch. 13 - Prob. 13.12EXCh. 13 - Reporting land acquisition for cash and mortgage...Ch. 13 - Prob. 13.14EXCh. 13 - Prob. 13.15EXCh. 13 - Prob. 13.16EXCh. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method List the...Ch. 13 - Prob. 13.19EXCh. 13 - Prob. 13.20EXCh. 13 - Cash flows from operating activities direct method...Ch. 13 - Prob. 13.22EXCh. 13 - Prob. 13.1APRCh. 13 - Prob. 13.2APRCh. 13 - Prob. 13.3APRCh. 13 - Prob. 13.4APRCh. 13 - Statement of cash flows direct method applied to...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows indirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows direct method The...Ch. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Prob. 1ADMCh. 13 - Prob. 2ADMCh. 13 - Prob. 3ADMCh. 13 - Priceline: Free cash flow Priceline Group, Inc. is...Ch. 13 - Prob. 13.1TIFCh. 13 - Prob. 13.3TIF
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