Bundle: Accounting, Loose-Leaf Version, 27th + CengageNOWv2, 1 term Printed Access Card for Warren/Reeve/Duchac?s Financial Accounting, 15th
27th Edition
ISBN: 9781337899451
Author: Carl S. Warren; James M. Reeve; Jonathan Duchac
Publisher: South-Western College Pub
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Textbook Question
Chapter 16, Problem 16.18EX
Statement of
The following statement of cash flows for Shasta Inc. was not correctly prepared:
| Shasta Inc. Statement of Cash Flows For the Year Ended December 31, 20Y9 |
||
| Cash flows from operating activities: | ||
| Net income............................................. | $ 360,000 | |
| Adjustments to reconcile net income to net cash flow from operating activities: | ||
| Depreciation......................................... | 100,800 | |
| Gain on sale of investments........................... | 17,280 | |
| Changes in current operating assets are liabilities: | ||
| Increase in |
27,360 | |
| Increase in inventories.............................. | (36,000) | |
| Increase in accounts payable........................ | (3,600) | |
| Decrease in accrued expenses payable............... | (12,400) | |
| Net cash flow from operating activities................... | $463,440 | |
| Cash flows from (used for) investing activities: | ||
| Cash from sale of investments............................ | $ 240,000 | |
| Cash used for purchase of land........................... | (259,200) | |
| Cash used for purchase of equipment..................... | (432,000) | |
| Net cash flow used for investing activities................. | (415,200) | |
| Cash flows from (used for) financing activities: | ||
| Cash from sale of common stock......................... | $ 312,000 | |
| Cash used for dividends................................. | (132,000) | |
| Net cash flow from financing activities.................... | 180,000 | |
| Increase (decrease) in cash.................................. | $ 47,760 | |
| Cash at the end of the year.................................. | 192,240 | |
| Cash at the beginning of the year............................ | $240,000 | |
a. List the errors you find in the statement of cash flows. The cash balance at the beginning of the year was $240,000. All other amounts are correct, except the cash balance at the end of the year.
b. Prepare a corrected statement of cash flows.
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Apex Company prepared the statement of cash flows for the current year that is shown below:Apex CompanyStatement of Cash Flows—Indirect MethodOperating activities:Net income ........................................................................................ $ 40,000Adjustments to convert net income to cash basis:Depreciation charges .................................................................... $ 22,000Increase in accounts receivable .................................................... (60,000)Increase in inventory ..................................................................... (25,000)Decrease in prepaid expenses ...................................................... 9,000Increase in accounts payable ........................................................ 55,000Decrease in accrued liabilities ....................................................... (12,000)Increase in deferred income taxes ................................................ 5,000 (6,000)Net cash provided…
Statement of Cash Flows
Partial balance sheet data and additional information for Ernst Company are listed
below:
Ernst Company
Partial Balance Sheet
December 31, 2002 and 2001
Assets 2002 2001
Cash ......................................................................... $ 22,000 $ 16,000
Accounts receivable.................................................. 218,000 260,000
Inventory.................................................................... 85,000 95,000
Liabilities
Accounts payable...................................................... $ 105,000 $ 135,000
Additional Information:
(a) Net income for 2002 was $15,000.
(b) Depreciation expense for 2002 was $30,000.
(c) Sales for 2002 totaled $490,000; cost of goods sold was $350,000.
Requirements:
a) Prepare the operating activities section of the statment of cash flows using INDIRECT METHOD.
b) Prepare the operating activities section of the statment of cash flows using DIRECT METHOD.
A company’s current-year income statement and selected balance sheet data at December 31 of the current and prior years follow. Prepare the operating activities section of the statement of cash flows using the indirect method for the current year.
Chapter 16 Solutions
Bundle: Accounting, Loose-Leaf Version, 27th + CengageNOWv2, 1 term Printed Access Card for Warren/Reeve/Duchac?s Financial Accounting, 15th
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