Brief exercise 5 12cash flow statement operating

BRIEF EXERCISE 5-12
Cash Flow Statement
Operating Activities
Net income ............................................................ $40,000
Depreciation expense .......................................... $  4,000
Increase in accounts receivable ......................... (10,000)
Increase in accounts payable ............................. 7,000 1,000
Net cash provided by operating activities... 41,000
Investing Activities
Purchase of equipment ....................................... (8,000)
Financing Activities
Issue notes payable ............................................. $20,000
Property dividends .............................................. (5,000 )
Net cash flow from financing activities ....... 15,000
Net increase in cash ($41,000 – $8,000 +
$15,000) .......................................................................
$48,000
Free Cash Flow = $41,000 (Net cash provided by operating activities) –
$8,000 (Purchase of equipment) – $5,000 (Dividends) = $28,000.
BRIEF EXERCISE 5-13
Cash flows from operating activities
Net income ............................................................ $151,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense .................................... $44,000
Increase in accounts payable ....................... 9,500
Increase in accounts receivable ................... (13,000 ) 40,500
Net cash provided by operating activities ......... $191,500
BRIEF EXERCISE 5-14
Sale of land and building .......................................... $191,000
Purchase of land ........................................................ (37,000)
Purchase of equipment ............................................. (53,000 )
Net cash provided by investing activities ......... $101,000

BRIEF EXERCISE 5-15
Issuance of common stock ....................................... $147,000
Purchase of treasury stock ....................................... (40,000)
Payment of cash dividend ......................................... (95,000)
Retirement of bonds .................................................. (100,000 )
Net cash used by financing activities ................ $ (88,000 )
BRIEF EXERCISE 5-16
Free Cash Flow Analysis
Net cash provided by operating activities ............... $400,000
Purchase of equipment ................................. (53,000)
Purchase of land* .......................................... (37,000)
Dividends ....................................................... (95,000 )
Free cash flow ............................................................ $215,000
*If the land were purchased as an investment, it would be excluded in the
computation of free cash flow.
EXERCISE 5-8 (10–15 minutes)
1. Dividends payable of $2,375,000 will be reported as a current liability
[(1,000,000 – 50,000) X $2.50].
2. Bonds   payable   of   $25,000,000   and   interest   payable   of   $3,000,000
($100,000,000 X 12% X 3/12) will be reported as a current liability.
Bonds payable of $75,000,000 will be reported as a long-term liability.
3. Customer advances of $17,000,000 will be reported as a current liability
($12,000,000 + $30,000,000 – $25,000,000).