College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 23A, Problem 7SPB

EXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional information relevant to cash flows during the period are given below and on the next page.

Chapter 23A, Problem 7SPB, EXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional , example  1

Chapter 23A, Problem 7SPB, EXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional , example  2

Additional information:

1. Office equipment was sold in 20-2 for $35,000. Additional information on the office equipment sold is provided below.

Chapter 23A, Problem 7SPB, EXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional , example  3

2. Depreciation expense for the year was $70,000.

3. The following purchases were made for cash:

Chapter 23A, Problem 7SPB, EXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional , example  4

4. Declared and paid cash dividends of $40,000.

5. Issued 10,000 shares of $10 par common stock for $22 per share.

6. Acquired additional office equipment by issuing a note payable for $8,000.

Chapter 23A, Problem 7SPB, EXPANDED STATEMENT OF CASH FLOWS Financial statements for McGinnis Company as well as additional , example  5

REQUIRED

Prepare a statement of cash flows explaining the change in cash and cash equivalents for the year ended December 31, 20-2.

STATEMENT OF CASH FLOWS UNDER THE DIRECT METHOD Using the information provided in Problem 23-12B for McGinnis Company, prepare the following:

1. A schedule for the calculation of cash generated from operating activities for McGinnis Company for the year ended December 31, 20-2.

2. A statement of cash flows for McGinnis Company prepared under the direct method for the year ended December 31, 20-2.

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Net Cash Provided by Operating Activities Wiley Company’s income statement for Year 2 follows: The company’s selling and administrative expense for Year 2 includes $7,500 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years 1 and 2 are as follows: Required: 1. Using the direct method, convert the company’s income statement to a cash basis. 2. Assume that during Year 2 Wiley had a $9,000 gain on sale of investments and a $3,000 loss on the sale of equipment. Explain how these two transactions would affect your computations in (1) above.
Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows: Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co.  Interpret your results in part (a).
Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from operating activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable                  $ 7,700Decrease in inventories                                      19,140Depreciation                                                       29,480Gain on sale of investments                               13,200Increase in accounts payable                              5,280Increase in prepaid expenses                              2,970Increase in accounts receivable                           14,300a. Determine the net income reported by Curwen Inc. for the year ended December 31.b. Briefly explain why Curwen’s net income is different from net cash flow from operating activities.
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