2024 – Exercise 2 Cash Flows from Operating Activities Indirect Method The condensed single step income statement
5 Managerial Accounting Questions due Saturday, August 16th at 12:00PM CDT – 2024
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Exercise 2: Cash Flows from Operating Activities: Indirect Method The condensed single-step income statement for the year ended December 31, 2014, of Conti Chemical Company, a distributor of farm fertilizers and herbicides, follows.
Sales $26,000,000 Less: Cost of goods sold $15,200,000 Operating expenses (including depreciation of $1,640,000) 7,600,000 Income taxes expense 800,000 23,600,000 $2,400,000 Selected accounts from Conti Chemical’s balance sheets for 2014 and 2013 follow.
2014 2013 Accounts receivable $4,800,000 $3,400,000 Inventory 1,680,000 2,040,000 Prepaid expenses 520,000 360,000 Accounts payable 120,000 200,000 Income taxes available 280,000 240,000
Prepare a schedule of cash flows from operating activities using the indirect method.
Exercise 8: Preparing the Statement of cash Flows: Indirect Method Keeper Cooperation’s income statement for the year ended June 30, 2014, and its comparative balance sheets for June 30, 2014 and 2013 follow.
Keeper Corporation Income Statement For the Year Ended June 30, 2014 Sales $234,000 Cost of goods sold 156,000 Gross Margin $78,000 Operating expenses 45,000 Operating income $33,000 Interest expense 2,800 Income before income taxes $30,200 Income taxes expense 12,300 Net income $17,900
Keeper Corporation Comparative Balance Sheets June 30, 2014 and 2013 2014 2013 Assets Cash $69,900 $12,500 Accounts receivable (net) 21,000 26,000 Inventory 43,000 48,400 Prepaid Expenses 3,200 2,600 Furniture 55,000 60,000 Accumulated depreciation- furniture (9,000) (5,000) Total Assets: $183,500 $144,500
Liabilities and Stockholders’ Equity
Accounts payable $13,000 $14,000 Income taxes payable 1,200 1,800 Notes payable (long-term) 37,000 35,000 Common stock, $10 par value 115,000 90,000 Retained earnings 17,300 3,700 Total liabilities and stockholders’ equity $183,500 $144,500
Keeper issued a $22,000 note payable for purchase of furniture; sold at carrying value furniture that cost $27,000 with accumulated depreciation of $15,300; recorded depreciation on the furniture for the year, $19,300; repaid a note in the amount of $28,000; issued $25,000 of common stock at par value; and paid dividends of $4,300. Prepare Keeper’s statement of cash flows for the year 2014 using the indirect method.
Exercise 9: In 2014, Andy’s Corporation had year-end assets of $2,400,000 sales of $3,300,000. Net income of $280,000, net cash flows from operating activities of $390,000, dividends of $120,000, purchases of plant assets of $500,000, and sales of plant assets of $90,000. In 2013, year-end assets were $2,100,000. Calculate free cash flow and the cash-generating efficiency ratios of cash flow yield, cash flows to sales, and cash flows to assets (Round to one decimal or the nearest tenth of a percent.)
Problem 1: Classification of Cash Flow Transaction Analyze each transaction listed in the table that follows and place X’s in the appropriate columns to indicate the transaction’s classification and its effect on cash flows using the indirect method.
Problem 3: Statement of Cash Flows: Indirect Method
Chaplin Arts, Inc.’s comparative balance sheets for December 31, 2014 and 2013, follow:
Chaplin Arts, Inc. Comparative Balance Sheets December 31, 2014 and 2013
The following additional information about Chaplin Art’s operations during 2013 is available: (a) net income, $28,000; (b) building and equipment depreciation expense amounts, $15,000 and $3,000, respectively; (c) equipment that cost $13,500 with accumulated depreciation of $12,500 sold at a gain of $5,300; (d) equipment purchases, $12,500; (e) patent amortization, $3,000; purchase of patent, $1,000; (f) funds borrowed by issuing notes payable, $25,000; notes payable repaid, $15,000; (g) land and building purchased for $162,000 by signing a mortgage for the total cost; (h) 1,500 shares of $20 par value common stock issued for a total of $50,000; and (i) paid cash dividends, $9,000.
REQUIRED:
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