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I need all proper journal entries and any calculations shown for 12-1A.
PLEASE USE ATTACHED ANWSER SHEET FOT THE WORKSHEET
PROBLEM SET A
Problem 12-1A (50 minutes) 25 Pts
Part 1:Complete the heading and then complete the Cash Flow Statement.
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in accounts receivable ($65,000 – $49,625)
Increase in inventory ($273,750 – $252,500)
Decrease in prepaid expenses ($6,250 – $5,375)
Decrease in accounts payable ($116,625 – $88,125)
Depreciation expense
Loss on disposal of equipment
Net cash provided by operating activities
Cash flows from investing activities
Cash received from sale of equipment
Cash paid for equipment
Net cash used in investing activities
Cash flows from financing activities
Cash borrowed on short-term note
Cash paid on long-term note
Cash received from issuing stock (2,500 x $18)
Cash paid for dividends
Net cash used in financing activities
Net decrease in cash
Cash balance at beginning of 2011
Cash balance at end of 2011
Noncash investing and financing activities
Problem 12-1A (Concluded)
Part 2: This should be an in-depth analysis of the cash inflows and outflows for the company and what they could mean presently and in the future.
Chapter 12 Quiz 25 pts
Problem 1: 1 pt
A statement of cash flows should reconcile the differences between the beginning and ending balances of:
A. Net income
B. Equity
C. Cash and cash equivalents
D. Working capital
E. Cash, cash equivalents and short-term investments
Answer:
Problem 2: 1 pt
The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:
A. Operating activities
B. Financing activities
C. Investing activities
D. Schedule of noncash investing or financing activity
E. None of these as this is not reported on the statement of cash flows
Answer:
Problem 3: 1 pt
The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:
A. Operating activities
B. Financing activities
C. Investing activities
D. Schedule of noncash financing and investing activities
E. None of these as this is not reported on the statement of cash flows
Answer:
Problem 4: 1 pt
Cash flows from selling trading securities are reported in the statement of cash flows as part of:
A. Operating activities
B. Financing activities
C. Investing activities
D. Noncash activities
E. None of these as this is not reported in the statement of cash flows
Answer:
Problem 5: 1 pt
A company’s transactions with its creditors to borrow money and/or to repay the principal amounts of loans are reported as cash flows from:
A. Operating activities
B. Investing activities
C. Financing activities
D. Direct activities
E. Indirect activities
Answer:
Problem 6: 1 pt
The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:
A. Historical cost principle
B. Materiality principle
C. Full disclosure principle
D. Going concern principle
E. Business entity principle
Answer:
Problem 7: 1 pt
The cash flow on total assets ratio:
A. Is the same as return on assets
B. Is the same as profit margin
C. Can be an indicator of earnings quality
D. Is highly affected by accounting principles of income recognition and measurement
E. Is average net assets divided by cash flows from operations
Answer:
Problem 8: 3 pts
Use the following information and the indirect method to calculate the net cash provided or used by operating activities:
Net income
$12,300
Depreciation expense
12,000
Payment on mortgage payable
15,000
Gain on sale of land
7,500
Increase in merchandise inventory
2,050
Increase in accounts payable
6,150
Proceeds from sale of land
8,000
A. $12,700
B. $13,900
C. $20,900
D. $28,400
E. $35,900
Answer:
Problem 9: 5 pts
Use the cash flow on total assets ratio to determine which of these three companies is using its assets most efficiently. 5 pts
Company A
Company B
Company C
Cash provided by operations
$ 300,000
$ 600,000
$ 400,000
Cash provided (used) by investing activities
Purchase of operating assets
(190,000)
(380,000)
(200,000)
Cash provided (used) by financing activities
Repayment of debt
(100,000)
(210,000)
(190,000)
Net Increase in cash
$ 10,000
$ 10,000
$ 10,000
Average total assets
$ 2,500,000
$ 6,000,000
$ 5,000,000
Show your work:
A. Company A
B. Company B
C. Company C
D. As all the companies have the same net increase in cash, they are all equally efficient in the use of their assets
E. Cannot be determined from the given information
Answer:
Problem 10: 10 Pts
The following information is available for the Arthur Corporation:
Arthur Corporation
Balance Sheets
At December 31
2010
2009
Assets:
Cash
$ 24,640
$ 23,040
Accounts receivable
32,180
29,400
Merchandise inventory
73,125
61,710
Long-term investments
55,900
56,400
Equipment
175,500
145,500
Accumulated depreciation
(33,550)
(31,200)
Total assets
$327,795
$284,850
Liabilities:
Accounts payable
$ 65,000
$40,380
Income taxes payable
10,725
10,200
Bonds payable
48,750
66,000
Total liabilities
$124,475
$116,580
Equity:
Common stock
117,000
96,000
Contributed capital in excess of par
13,000
9,000
Retained earnings
73,320
63,270
Total equity
$203,320
$168,270
Total liabilities and equity
$327,795
$284,850
Arthur Corporation
Income Statement
For Year Ended December 31, 2010
Sales
$240,000
Cost of goods sold
$80,900
Depreciation expense
29,400
Other operating expenses
48,000
Interest expense
2,000
(160,300)
Other gains (losses):
Loss on sale of equipment
(8,400)
Income before taxes
71,300
Income taxes expense
(27,650)
Net income
$ 43,650
Additional Information:
(1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired.
(2) Old equipment with an original cost of $37,550 was sold for $2,100 cash.
(3) New equipment was purchased for $67,550 cash.
(4) Cash dividends of $33,600 were paid.
(5) Additional shares of stock were issued for cash.
Prepare a complete statement of cash flows for the 2009 calendar year using the direct method.
Answer:
(a)
Cash receipts from customers:
(b)
Cash paid for merchandise inventory:
(c)
Payments for income taxes:
(d) Received from sales of long-term investments:
(e)
Received from stock issuance:
(f)
Paid to retire bonds:
Arthur Corp.
Statement of Cash Flows (direct method)
For Year Ended December 31, 2010
Cash flows from operating activities:
(a)
(b)
given
(c)
given
Cash flows from investing activities
(d)
given
given
Cash flows from financing activities:
(e)
(f)
given
Net in cash
Cash balance beginning of year
Cash balance end of year
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