Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th
Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th
14th Edition
ISBN: 9781305878839
Author: Carl Warren, Jonathan Duchac, James M. Reeve
Publisher: Cengage Learning
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Chapter 13, Problem 13.5APR

Statement of cash flows —direct method applied to PR 13–1A

The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2 is as follows:

  Dec. 31, 20Y3 Dec. 31, 20Y2

Assets

   
Cash $ 155,000 $ 150,000
Accounts receivable (net) 450,000 400,000
Inventories 770,000 750,000
Investments 0 100,000
Land 500,000 0
Equipment 1,400,000 1,200,000
Accumulated depreciation—equipment (600,000) (500,000)

Total assets

Liabilities and Stockholders' Equity

$2,675,000 $2,100,000
Accounts payable (merchandise creditors) $ 340,000 $ 300,000
Accrued expenses payable (operating expenses) 45,000 50,000
Dividends payable 30,000 25,000
Common stock, $4 par 700,000 600,000
Paid-in capital: Excess of issue price over par—common stock 200,000 175,000
Retained earnings 1,360,000 950,000
Total liabilities and stockholders' equity $2,675,000 $2,100,000

The income statement for the year ended December 31, 20Y3, is as follows:

Sales   $ 3,000,000
Cost of goods sold   1,400,000
Gross profit   $ 1,600,000
Operating expenses:    
Depreciation expense $ 100,000  
Other operating expenses. 950,000  
Total operating expenses   1,050,000
Operating income   $550,000
Gain on sale of investments   75,000
Income before income tax   $625,000
Income tax expense   125,00
Net income   $ 500,000

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

  1. A. The investments were sold for $175,000 cash.
  2. B. Equipment and land were acquired for cash.
  3. C. There were no disposals of equipment during the year.
  4. D. The common stock was issued for cash.
  5. E. There was a $90,000 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

Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th

Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Adjustments to net incomeindirect method Ripley...Ch. 13 - Prob. 13.3BECh. 13 - Prob. 13.4BECh. 13 - Prob. 13.5BECh. 13 - Common stock transactions on the statement of cash...Ch. 13 - Appendix 2 Cash received from customersdirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 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 - Cash flows from operating activities indirect...Ch. 13 - Prob. 13.6EXCh. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Prob. 13.8EXCh. 13 - Prob. 13.9EXCh. 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 - Reporting issuance and retirement of long-term...Ch. 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 - Prob. 13.21EXCh. 13 - Prob. 13.22EXCh. 13 - Statement of cash flowsindirect method The...Ch. 13 - Prob. 13.2APRCh. 13 - Prob. 13.3APRCh. 13 - Prob. 13.4APRCh. 13 - Statement of cash flows direct method applied to...Ch. 13 - Prob. 13.1BPRCh. 13 - Prob. 13.2BPRCh. 13 - Prob. 13.3BPRCh. 13 - Prob. 13.4BPRCh. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Prob. 13.1ADMCh. 13 - Prob. 13.2ADMCh. 13 - Prob. 13.3ADMCh. 13 - Priceline: Free cash flow Priceline Group, Inc. is...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Prob. 13.3TIF
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