Texas A&M University Commerce Operating Activities Questions

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PROBLEM 14–7 Prepare a Statement of Cash Flows LO14–1, LO14–2

Comparative financial statements for Weaver Company follow:

[Table in the picture]

During this year, Weaver sold some equipment for $20 that had cost $40 and on which there was accumulated depreciation of $16. In addition, the company sold long-term investments for $10 that had cost $3 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $40 of its own stock. This year Weaver did not retire any bonds. Required:

1. Using the indirect method, determine the net cash provided by operating activities for this year.

2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year.

PROBLEM 14–9 Understanding a Statement of Cash Flows LO14–1, LO14–2 Brock Company is a merchandiser that prepared the statement of cash flows and income statement provided below:

Required: Assume you have been asked to teach a workshop to the employees within Brock Company’s Marketing Department. The purpose of your workshop is to explain how the statement of cash flows differs from the income statement. Your audience is expecting you to explain the logic underlying each number included in the statement of cash flows. Prepare a memo that explains the format of the statement of cash flows and the rationale for each number included in Brock’s statement of cash flows.

Garrison, Ray; Garrison, Ray. Managerial Accounting (Page 716). McGraw-Hill Higher Education. Kindle Edition.

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PROBLEM 14–7 Prepare a Statement of Cash Flows L014-1, L014-2 Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at December 31 This Year Last Year $ 9 340 125 10 Assets Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments Total assets $ 15 240 175 6 436 470 85 385 484 610 93 517 16 $1,017 19 $840 Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 310 60 40 410 290 700 210 107 317 $230 72 34 336 180 516 250 74 324 $840 $1,017 $800 500 300 213 Weaver Company Income Statement For This Year Ended December 31 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income 87 $7 3 90 27 $ 63 During this year, Weaver sold some equipment for $20 that had cost $40 and on which there was accumulated depreciation of $16. In addition, the company sold long-term invest- ments for $10 that had cost $3 when purchased several years ago. Weaver paid a cash dividend this year and the company repurchased $40 of its own stock. This year Weaver did not retire any bonds. Required: 1. Using the indirect method, determine the net cash provided by operating activities for this year. 2. Using the information in (1) above, along with an analysis of the remaining balance sheet accounts, prepare a statement of cash flows for this year. PROBLEM 14-9 Understanding a Statement of Cash Flows LO14-1, LO14-2 Brock Company is a merchandiser that prepared the statement of cash flows and income statement provided below: $275 གྷ 9609 107 382 Brock Company Statement of Cash Flows-Indirect Method Operating Activities Net income Adjustments to convert net income to a cash basis: Depreciation 140 Increase in accounts receivable (24) Decrease in inventory 39 Decrease in accounts payable (45) Decrease in accrued liabilities (5) Increase in income taxes payable 6 Gain on sale of equipment (4) Net cash provided by (used in) operating activities Investing Activities Additions to property, plant, and equipment (150) Proceeds from sale of equipment 19 Net cash provided by (used in) investing activities.... Financing Activities Issuance of bonds payable 40 Issuance of common stock Cash dividends paid Net cash provided by (used in) financing activities Net increase in cash and cash equivalents Beginning cash and cash equivalents Ending cash and cash equivalents ('། (131) (35) 260 170 $430 Brock Company Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of equipment Income before taxes Income taxes Net income $5,200 2.980 2.220 1,801 419 4 423 148 $ 275
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PROBLEM 14–7
Operating Activities:Net Income
Add: Loss on sale of Equipment
Less: Gain on sale of Investment
Add: Depreciation (93-85+16)
Working capital Adjustment:
Less: Increase Account Receivable
Add: Decrease Inventory
Less: Increase Prepaid Exp
Add: Increase Account Payable
Less: Decrease Accrued Liab
Add: Increase Income tax payable
Net Cash Inflow (Outflow) from Operating Activities

63.00
4.00
7.00
24.00
100.00
50.00
4.00
80.00
12.00
6.00
104.00

Operating Activities:As calculated above
Investing Activities:Add: Sold Equipment
Add: Sold Investment
Less: Purchase Plant Equipmnet ($610 - $470 + $40)
Net Cash Inflow (Outflow) from Investing Activities

104.00

20.00
10.00
180.00
(150.00)

Financing Activities:Add: Issue Bonds
Less: Repurchased own stock
Less: Paid D...

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