ch12 - SOLUTIONS TO PROBLEMS PROBLEM 12-1C Transaction (a)...

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SOLUTIONS TO PROBLEMS PROBLEM 12-1C Transaction Where Reported Cash Inflow, Out- flow, or No Effect? (a) Purchased shares of common treasury stock. F Cash outflow (b) Distributed a stock dividend to common stockholders. NC No cash flow effect (c) Recorded cash sales. O Cash inflow (d) Recorded sales on account. O No cash flow effect (e) Recorded prepayment of insurance expense. O Cash outflow (f) Purchased supplies on account. O No cash flow effect (g) Recorded amortization expense on a patent. O No cash flow effect (h) Recorded and received interest revenue. O Cash inflow (i) Recorded cash proceeds from a sale of plant assets. I Cash inflow (j) Acquired land by issuing a note payable. NC No cash flow effect 12-1

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PROBLEM 12-2C (a) Net income can be determined by analyzing the retained earnings account. Retained earnings beginning of year. .......................... \$210,000 Add: Net income (plug). ................................................. 44,000 * 254,000 Less: Cash dividends. ................................................... 18,000 Stock dividends. .................................................. 17,600 Retained earnings, end of year. .................................... \$218,400 *(\$218,400 + \$17,600 + \$18,000 – \$210,000) (b) Cash inflow from the issue of stock was \$23,000 (\$200,600 – \$160,000 – \$17,600). Common Stock 160,000 17,600 Stock Dividend 23,000 Shares Issued for Cash 200,600 Cash outflow for dividends was \$18,000. The stock dividend does not use cash. (c) Both of the above activities (issue of common stock and payment of dividends) would be classified as financing activities on the statement of cash flows. 12-2
PROBLEM 12-3C VON ROENN COMPANY Partial Statement of Cash Flows For the Year Ended November 30, 2007 Cash flows from operating activities Net income. ............................................................. \$1,120,000 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense. ........................... \$ 84,000 Decrease in accounts receivable. ......... 180,000 Increase in inventory. ............................ (300,000) Decrease in prepaid expenses. ............. 210,000 Increase in accounts payable. .............. 290,000 Decrease in accrued expenses payable. ............................................. (75,000 ) 389,000 Net cash provided by operating activities. ........................................... \$1,509,000 12-3

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*PROBLEM 12-4C VON ROENN COMPANY Partial Statement of Cash Flows For the Year Ended November 30, 2007 Cash flows from operating activities Cash receipts from customers. ......... \$6,580,000 (1) Less cash payments: To suppliers. ............................... \$3,850,000 (2) For operating expenses. ............ 1,221,000 (3) 5,071,000 Net cash provided by operating activities. .......................................... \$1,509,000 Computations: (1) Cash receipts from customers Sales \$6,400,000 Add: Decrease in accounts receivable 180,000 Cash receipts from customers
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This note was uploaded on 05/24/2010 for the course ACCT 2101 taught by Professor Dollar during the Spring '10 term at SPSU.

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ch12 - SOLUTIONS TO PROBLEMS PROBLEM 12-1C Transaction (a)...

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