Chapter 13 Homework Questions
E13-1 Matching Items Reported to Cash Flow Statement Categories (Indirect Method)
LO1
Reebok International Ltd. is a global company that designs and markets sports
and fitness products, including footwear, apparel, and accessories. Some of the items included in it
consolidated statement of cash flows presented using the indirect method are listed here.
Indicate whether each item is disclosed in the Operating Activities (O), Investing
Activities (I), or Financing Activities (F) section of the statement or (NA) if the item
does not appear on the statement. (Note: This is the exact wording used on the actual
statement.)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Dividends paid.
Repayments of long-term debt.
Depreciation and amortization.
Proceeds from issuance of common stock to employees.
[Change in] Accounts payable and accrued expenses.
Cash collections from customers.
Net repayments of notes payable to banks.
Net income.
Payments to acquire property and equipment.
[Change in] Inventory.
E13-6 Reporting Cash Flows from Operating Activities (Indirect Method) LO2
The following information pertains to Satellite Company:
Income Statement for 2012
Sales
Expenses
Cost of goods sold
$
$
Depreciation expense
Salaries expense
51,775
8,400
11,400
Net income
Accounts receivable
Inventory
Salaries payable
71,575
$
Partial Balance Sheet
2012
$
86,600
10,900
15,025
2011
$
14,000
12,800
9,100
1,670
940
Required:
Present the operating activities section of the statement of cash flows for Satellite
Company using the indirect method.
Statement of Cash Flows
E13-13 (Supplement B) Computing and Reporting Cash Flow Effects of the Sale of
Equipment
During the period, Wong Company sold some excess equipment at a loss. The following
information was collected from the company’s accounting records:
From the Income Statement
Depreciation expense
Loss on sale of equipment
From the Balance Sheet
Beginning equipment
Ending equipment
Beginning accumulated
depreciation
Ending accumulated
depreciation
$
860
4,000
19,100
10,400
1,860
1,890
No new equipment was bought during the period.
Required:
1. For the equipment that was sold, determine its original cost, its accumulated
depreciation, and the cash received from the sale. (Use the equipment and
accumulated depreciation T-accounts to infer the book value of the equipment sold.)
2. Wong Company uses the indirect method for the Operating Activities section of the cash
flow statement. What amount related to the sale would be added or subtracted in the
computation of Net Cash Flows from Operating Activities?
The loss of
would be added.
3. What amount related to the sales would be added or subtracted in the computation of
Net Cash Flows from Investing Activities?
The cash inflow of
would be added.
E13-16 Preparing a Statement of Cash Flows (Indirect Method) LO2, 4, 6
Deep Waters Company was started several years ago by two diving instructors. The company’s
comparative balance sheets and income statement are presented below, along with additional
information.
2012
Balance Sheet at December 31
Cash
Accounts receivable
Prepaid expenses
Equipment
2011
Net income
$
4,000
800
50
0
5,100
$
4,850
$
450
1,600
3,050
$
1,100
1,000
2,750
$
Income Statement for 2012
Lessons revenue
Wages expense
Other expenses
3,700
900
100
400
$
Wages payable
Contributed capital
Retained earnings
$
5,100
$
4,850
$
33,950
30,000
3,650
$
300
Additional Data:
a. Prepaid expenses relate to rent paid in advance.
b. Other expenses were paid in cash.
c. Purchased equipment for $400 cash at the end of 2012 to be used starting in 2013.
d. An owner contributed capital by paying $600 cash in exchange for the company’s stock.
Required:
Prepare the statement of cash flows for the year ended December 31, 2012, using the indirect
method.
DEEP WATERS COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities:
Net cash used for operating activities
Cash flows from investing activities:
Net cash used for investing activities
Cash flows from financing activities
Net cash provided by financing activities
Net decrease in cash during the year
Cash balance, January 1, 2012
Cash balance, December 31, 2012
E13-5 Comparing the Direct and Indirect Methods LO1
Indicate whether the following cash flows are used under direct, indirect method or both.
Cash Flows (and Related Changes)
1.
Accounts payable increase or decrease
2.
Payments to employees
3.
Cash collections from customers
4.
Accounts receivable increase or decrease
5.
Payments to suppliers
6.
Inventory increase or decrease
7.
Wages payable, increase or decrease
8.
Depreciation expense
9.
Net income
10.
Cash flows from operating activities
11.
Cash flows from investing activities
12.
Cash flows from financing activities
13.
Net increase or decrease in cash during the period
Statement of Cash
Flows method
P13-1 Preparing a Statement of Cash Flows (Indirect Method) LO1, 2, 4, 6
HiDef Films , Inc., is developing its annual financial statements at December 31, 2012. The
statements are complete except for the statement of cash flows. The completed comparative
balance sheets and income statement are summarized as follows:
2012
2011
Cash
68,550
64,700
Accounts receivable
16,550
23,550
Merchandise inventory
23,550
18,700
Property and equipment
210,850
151,100
Less: Accumulated depreciation
(60,200)
(46,350
259,300
211,700
10,500
20,800
5,700
1,900
61,700
72,800
100,400
66,500
81,000
49,700
259,300
211,700
Balance Sheet at December 31
Accounts payable
Wages Payable
Note payable, long-term
Contributed capital
Retained earnings
Income Statement for 2010
Sales
201,000
Cost of goods sold
98,000
Depreciation expense
13,850
Other expenses
43,600
Net income
45,550
Additional Data:
a.
Bought equipment for cash, $59,750.
b.
Paid $11,100 on the long-term note payable.
c.
Issued new shares of stock for $33,900 cash.
d.
Dividends of $14,250 were declared and paid.
e.
Other expenses all relate to wages.
f.
Accounts payable includes only inventory purchases made on credit.
Required:
1. Prepare the statement of cash flows using the indirect method for the year ended
December 31, 2012
HIDEF FILMS, INC.
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities:
Adjustments to reconcile net income to net cash
provided by operating activities:
Net cash provided by operating activities
Cash flows from investing activities:
Net cash used by investing activities
Cash flows from financing activities:
Net Cash provided by financing activities
Net increase in cash during the year
Cash balance, January 1, 2012
Cash balance, December 31, 2012
P13-2 Preparing a Statement of Cash Flows (Indirect Method) LO1, 2, 4, 6
BG Wholesalers is developing its annual financial statements at December 31, 2013. The
statements are complete except for the statement of cash flows. The completed comparative
balance sheets and income statement are summarized:
2012
2011
Cash
39,000
31,400
Accounts receivable
35,300
31,100
Merchandise inventory
46,000
40,000
Property and equipment
124,900
101,900
Less: Accumulated depreciation
(33,400)
(26,600
211,800
177,800
Accounts payable
39,400
30,700
Accrued expenses
3,000
3,600
Note payable, long-term
46,400
50,600
Contributed capital
93,600
74,300
Retained earnings
29,400
18,600
211,800
177,800
Balance Sheet at December 31
Income Statement for 2010
Sales
134,000
Cost of goods sold
84,000
Other expenses
39,200
Net income
10,800
Additional Data:
a. Bought equipment for cash, $23,000.
b. Paid $4,200 on the long-term note payable.
c. Issued new shares of stock for $19,300 cash.
d. No dividends were declared or paid.
e. Other expenses included depreciation, $6,800; wages, $20,800; taxes, $6,800; other, $4800.
f. Accounts payable includes only inventory purchases made on credit. Because there are no
liability accounts relating to taxes or other expenses, assume that these expenses were fully paid
in cash.
Required:
1. Prepare the statement of cash flows for the year ended December 31, 2013, using the
indirect method.
BG Wholesalers
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities:
Adjustments to reconcile net income to net cash
provided by operating activities:
Net cash provided by operating activities
Cash flows from investing activities:
Net cash used by investing activities
Cash flows from financing activities:
Net Cash provided by financing activities
Net increase in cash during the year
Cash balance, January 1, 2012
Cash balance, December 31, 2012
