You are provided with the following transactions that took place during a recent fiscal year.
Instructions
Complete the table indicating whether each item (1) affects operating (O) activities, investing (1) activities, Financing (F) activities, or is a non-cash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.
The following account balances relate to the stockholders equity accounts of Kerbs Corp. at year-end.
| 2020 | 2019 | |
| Common stock, 10500 and 10,000 shares, respectively for 2020 and 2019. | $170,000 | $140,000 |
| Preferred stock, 5,000 shares | 125,000 | 125,000 |
| Retained earnings | 300,000 | 300,000 |
A small stock dividend was declared and issued in 2020. The market value of the shares was $10,500, cash dividends were $15,000 in both 2020 and 2019. The common stock has no par or stated value.
Instructions
- What was the amount of net income reported by Kerbs Corp. in 2020?
- Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2020.
- Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows
The income statement of Whitlock Company is presented here.
Additional information
- Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
- Prepaid expenses increased $150,000 during the year
- Accounts payable to suppliers of merchandise decreased $340,000 during the year.
- Accrued expenses payable decreased $100,000 during the year.
- Operating expenses include depreciation expense of $70,000
Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2020, for Whitlock Company, using the indirect method.
Data for Whitlock Company are presented below
Additional information
- Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
- Prepaid expenses increased $150,000 during the year
- Accounts payable to suppliers of merchandise decreased $340,000 during the year.
- Accrued expenses payable decreased $100,000 during the year.
- Operating expenses include depreciation expense of $70,000
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method.
Zumbrunn Company's income statement contained the condensed information below.
Accounts payable pertain to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the indirect method.
Data for Zumbrunn Company are presented below.
Accounts payable pertain to operating expenses.
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method.
The following are the financial statements of Nosker Company.
Nosker Company.
Comparative Balance Sheets
December 31
Comparative Balance Sheets
December 31
Nosker Company.
Income Statement
For the Year Ended December 31, 2020
Income Statement
For the Year Ended December 31, 2020
Additional information:
- Dividends declared and paid were $20,000.
- During the year equipment wassold for $8,500 cash. This equipment coast $18,000 originally and had a book value of $8,500 is in the operating expenses
- All depreciation expense $14,500 is in the operating expenses
- All sales and purchasers and on account.
Instructions
- Prepare a statement of cash flows using the indirect method.
- Compute free cash flow
Data for Nosker Company are presented in bellow.
Nosker Company.
Comparative Balance Sheets
December 31
Comparative Balance Sheets
December 31
Nosker Company.
Income Statement
For the Year Ended December 31, 2020
Income Statement
For the Year Ended December 31, 2020
Additional information:
- Dividends declared and paid were $20,000.
- During the year equipment wassold for $8,500 cash. This equipment coast $18,000 originally and had a book value of $8,500 is in the operating expenses
- All depreciation expense $14,500 is in the operating expenses
- All sales and purchasers and on account.
Further analysis reveals the following.
- Accounts payable pertain to merchandise suppliers.
- All operating expenses except for depreciation were paid in cash
Instructions
- Prepare a statement of cash flows for Nosker Company using the direct method.
- Compute free cash flow
Condensed financial data of Cheng Inc. follow.
Cheng Inc.
Comparative Balance Sheets
December 31
Comparative Balance Sheets
December 31
Cheng Inc.
Income Statement
For the Year Ended December 31, 2019
Income Statement
For the Year Ended December 31, 2019
Additional information:
- New equipment costing $85,000 was purchased for cash during the year.
- Old equipment having an original cost of $57,500 was sold for $1,500 cash.
- Bonds matured and were paid off at face value for cash.
- A cash dividend of $40,350 was declared and paid during the year.
Instructions
Prepare a statement of cash flows using the indirect method.
Data for cheng In. are presented in.
Cheng Inc.
Comparative Balance Sheets
December 31
Comparative Balance Sheets
December 31
Cheng Inc.
Income Statement
For the Year Ended December 31, 2019
Income Statement
For the Year Ended December 31, 2019
Additional information:
- New equipment costing $85,000 was purchased for cash during the year.
- Old equipment having an original cost of $57,500 was sold for $1,500 cash.
- Bonds matured and were paid off at face value for cash.
- A cash dividend of $40,350 was declared and paid during the year.
Further analysis reveals that accounts payable pertain to merchandise creditors.
Instructions
Prepare a statement of cash flows for Cheng Inc. using the direct method.
Minhajur Rahaman
