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Managerial Accounting 14th Edition Solution Manual - Document preview page 1

Managerial Accounting 14th Edition Solution Manual - Page 1

Document preview content for Managerial Accounting 14th Edition Solution Manual

Managerial Accounting 14th Edition Solution Manual

Managerial Accounting 14th Edition Solution Manual is packed with detailed solutions to help you grasp concepts effortlessly.

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Managerial Accounting 14th Edition Solution Manual - Page 1 preview imageChapter 15Introduction toManagerial Accounting.....................................................15-1Chapter 16Job Order Costing......................................................................................16-1Chapter 17Process Cost Systems................................................................................17-1Chapter 18Activity-Based Costing...............................................................................18-1Chapter19Cost-Volume-ProfitAnalysis......................................................................19-1Chapter 20Variable Costing forManagement Analysis................................................20-1Chapter 21Budgeting.................................................................................................21-1Chapter 22Evaluating Variances from Standard Costs.................................................22-1Chapter 23Evaluating Decentralized Operations.........................................................23-1Chapter 24Differential Analysis and Product Pricing...................................................24-1Chapter 25CapitalInvestment Analysis......................................................................25-1Chapter 26LeanManufacturingand Activity Analysis..................................................26-1Chapter 13Statement of Cash Flows...........................................................................13-1(Managerial)Chapter 14Financial Statement Analysis.....................................................................14-1(Managerial)Appendix CInternational Financial Reporting Standards(IFRS).......................................C-1AppendixDInvestments...............................................................................................D-1Appendix FSpecial Journals and Subsidiary Ledgers.......................................................F-1
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Managerial Accounting 14th Edition Solution Manual - Page 2 preview image
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Managerial Accounting 14th Edition Solution Manual - Page 3 preview image13-1CHAPTER13STATEMENTOFCASHFLOWSDISCUSSIONQUESTIONS1.Itiscostlytoaccumulatethedataneededandtopreparethestatementofcashflows.2.Itfocusesonthedifferencesbetweennetincomeandcashflowsfromoperatingactivities,andthedataneededaregenerallymorereadilyavailableandlesscostlytoobtainthanisthecaseforthedirectmethod.3.Inaseparatescheduleofnoncashinvestingandfinancingactivitiesaccompanyingthestatementofcashflows.4.The$30,000increasemustbeaddedtoincomefromoperationsbecausetheamountofcashpaidtomerchandisecreditorswas$30,000lessthantheamountofpurchasesincludedinthecostofgoodssold.5.The$25,000decreaseinsalariespayableshouldbedeductedfromincometodeterminetheamountofcashflowsfromoperatingactivities.Theeffectofthedecreaseintheamountofsalariesowedwastopay$25,000morecashduringtheyearthanhadbeenrecordedasanexpense.6.A.$100,000gainB.Cashinflowof$600,000C.Thegainof$100,000wouldbedeductedfromnetincomeindeterminingnetcashflowfromoperatingactivities;$600,000wouldbereportedascashflowsfrominvestingactivities.7.Cashflowsfromfinancingactivities—issuanceofbonds,$1,960,000($2,000,000×98%)8.A.Cashflowsfrominvestingactivities—Cashreceivedfromthedisposaloffixedassets,$15,000The$15,000gainonassetdisposalshouldbedeductedfromnetincomeindeterminingnetcashflowfromoperatingactivitiesundertheindirectmethod.B.Noeffect9.Thesame.Thetotalamountreportedasthenetcashflowfromoperatingactivitiesisnotaffectedbytheuseofthedirectorindirectmethod.10.Cashreceivedfromcustomers,cashpaymentsformerchandise,cashpaymentsforoperatingexpenses,cashpaymentsforinterest,cashpaymentsforincometaxes.
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Managerial Accounting 14th Edition Solution Manual - Page 4 preview imageCHAPTER13StatementofCashFlows13-2BASICEXERCISESBE13–1A.InvestingD.OperatingB.InvestingE.OperatingC.OperatingF.FinancingBE13–2Netincome......................................................................................................................$224,500Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation...........................................................................................................11,575Amortizationofpatents.........................................................................................2,500Gainfromsaleofinvestments...........................................................................(33,190)Netcashflowfromoperatingactivities.......................................................$205,385BE13–3Netincome......................................................................................................................$75,800Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable...........................................................................(5,000)Increase ininventory................................................................................................(7,450)Increaseinaccountspayable...............................................................................3,380Netcashflowfromoperatingactivities..........................................................$66,730Note:Thechangeindividendspayableimpactsthecashpaidfordividends,whichisdisclosedunderfinancingactivities.BE13–4Cashflowsfromoperatingactivities:Netincome........................................................................................$396,200Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation..............................................................................61,250Lossondisposalofequipment....................................27,600Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable............................................(9,000)Increaseinaccountspayable................................................Netcashflowfromoperatingactivities.............................3,350$479,400
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Managerial Accounting 14th Edition Solution Manual - Page 5 preview imageCHAPTER13StatementofCashFlows13-3BE13–5ThegainonthesaleoflandissubtractedfromnetincomeintheOperatingActivitiessection.Gainonsaleofland..........................................................................................$(40,000)Thepurchaseandsaleoflandisreportedaspartofcashflowsfrominvestingactivitiesasshownbelow.Cashreceivedfromsaleofland.......................................................................240,000Cashpaidforpurchaseofland.......................................................................(400,000)BE13–6Cashflowsfromfinancingactivities:Cashreceivedfromissuingcommonstock$800,000Cashreceivedfromissuingbonds700,000Cashpaidfordividends(90,000)Netcashfromfinancingactivities$1,410,000Appendix2BE13–7Sales..........................................................................................................................$112,000Decreaseinaccountsreceivable........................................................................10,500Cashreceivedfromcustomers...........................................................................$122,500Appendix2BE13–8Costofgoodssold................................................................................................$240,000Increase ininventories............................................................................................19,200Increaseinaccountspayable..............................................................................(12,000)Cashpaidformerchandise..................................................................................$247,200
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Managerial Accounting 14th Edition Solution Manual - Page 6 preview imageCHAPTER13StatementofCashFlows13-4EXERCISESEx.13–1Therewerenetadditionstothenetlossreportedontheincomestatementtoconvertthenetlossfromtheaccrualbasistothecashbasis.Forexample,depreciationisanexpenseindeterminingnetincome,butitdoesnotresultinacashoutflow.Thus,depreciationisaddedbacktothenetlossinordertodeterminenetcashflowfromoperations.Asecondlargeitemthatisaddedtothenetlossistheincreaseinadvancedticketsalesof$246million.Thisrepresentsanincreaseinunused,butpaid,tickets(unearnedrevenue)betweenthetwobalancesheetdates.Thisisasignificantitemthatislargelyuniquetotheairlineindustry.Thecashflowsfromoperatingactivitiesdetailisprovidedasfollowsforclassdiscussion:UnitedContinentalHoldings,Inc.CashFlowsfromOperatingActivities(SelectedfromStatementofCashFlows)(inmillions)Cashflowsfromoperatingactivities:Netincome(loss)$(723)Adjustmentstoreconcilenetincome(loss)tonetcashflowprovidedbyoperatingactivities:Depreciationandamortization1,522Specialcharges389Debtandleasediscountamortization(247)Sharebasedcompensation14Other,net251Changesincertainassetsandliabilities:Decrease(increase)inaccountsreceivable(21)Decrease(increase)inotherassets(484)Increase(decrease)inaccountspayable285Increase(decrease)inadvancedticketsales246Increase(decrease)infrequentflyerdeferredrevenue(712)Increase(decrease)inotherliabilities415Netcashflowsfrom(usedfor)operatingactivities$935
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Managerial Accounting 14th Edition Solution Manual - Page 7 preview imageCHAPTER13StatementofCashFlows13-5Ex.13–2A.Cashpayment,$411,000E.Cashpayment,$50,000B.Cashreceipt,$440,000F.Cashreceipt,$490,000C.Cashreceipt,$60,000G.Cashpayment,$332,500D.Cashpayment,$650,000H.Cashpayment,$1,320,000Ex.13–3A.operatingG.financingB.financingH.investingC.financingI.financingD.financingJ.investingE.financingK.investingF.investingEx.13–4A.addedG.addedB.deductedH.addedC.addedI.addedD.addedJ.addedE.addedK.deductedF.added
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Managerial Accounting 14th Edition Solution Manual - Page 8 preview imageCHAPTER13StatementofCashFlows13-6Ex.13–5A .Netincome......................................................................................$73,600Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation..............................................................................27,400Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable..........................................(8,000)Decreaseininventories........................................................4,500Decreaseinprepaidexpenses.............................................2,250Increaseinaccountspayable..............................................5,000Decreaseinwagespayable..................................................(900)Netcashflowfromoperatingactivities.........................$103,850B.Cashflowsfromoperatingactivitiesshowsthecashinfloworoutflowfromacompany’sday-to-dayoperations.Netincomereportstheexcessofrevenuesoverexpensesforacompanyusingtheaccrualbasisofaccounting.Revenuesarerecordedwhentheyareearned,notnecessarilywhencashisreceived.Expensesarerecordedwhentheyareincurredandmatchedagainstrevenue,notnecessarilywhencashispaid.Asaresult,thecashflowsfromoperatingactivitiesdiffersfromnetincomebecauseitdoesnotusetheaccrualbasisofaccounting.Ex.13–6A.Cashflowsfromoperatingactivities:Netincome...................................................................................$185,000Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation........................................................................96,000Changesincurrentoperatingassetsandliabilities:Decreaseinaccountsreceivable.....................................5,450Increaseininventories.....................................................(11,200)Decreaseinprepaidexpenses........................................900Decreaseinaccountspayable.........................................(18,500)Increaseinsalariespayable............................................3,200Netcashflowfromoperatingactivities.....................$260,850B.Yes.Theamountofcashflowsfromoperatingactivitiesreportedonthestatementofcashflowsisnotaffectedbythemethodofreportingsuchflows.
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Managerial Accounting 14th Edition Solution Manual - Page 9 preview imageCHAPTER13StatementofCashFlows13-7Ex.13–7A.Cashflowsfromoperatingactivities:Netincome...........................................................................$508,000Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation................................................................57,600Gainondisposalofequipment...............................(33,600)Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(8,960)Decreaseininventory...............................................5,120Decreaseinprepaidinsurance................................1,920Decreaseinaccountspayable.................................(6,080)Increaseinincometaxespayable...........................1,410Netcashflowfromoperatingactivities.............$525,410Note:ThechangeindividendspayablewouldbeusedtoadjustthedividendsdeclaredinobtainingthecashpaidfordividendsintheFinancingActivitiessectionofthestatementofcashflows.B.Cashflowsfromoperatingactivitiesreportsthecashinfloworoutflowfromacompany’sday-to-dayoperations.Netincomereportstheexcessofrevenuesoverexpensesforacompanyusingtheaccrualbasisofaccounting.Revenuesarerecordedwhentheyareearned,notnecessarilywhencashisreceived.Expensesarerecordedwhentheyareincurredandmatchedagainstrevenue,notnecessarilywhencashispaid.Asaresult,thecashflowsfromoperatingactivitiesdiffersfromnetincomebecauseitdoesnotusetheaccrualbasisofaccounting.Ex.13–8Cashflowsfrominvestingactivities:Cashreceivedfromsaleofequipment........................................................$101,250Thelossonthesale,$16,875($101,250proceedsfromsaleless$118,125bookvalue),wouldbeaddedtonetincomeindeterminingthecashflowsfromoperatingactivitiesiftheindirectmethodofreportingcashflowsfromoperationsisused.Ex.13–9Cashflowsfrominvestingactivities:Cashreceivedfromsaleofequipment........................................................$37,200Thelossonthesale,$6,800($37,200proceedsfromsaleless$44,000bookvalue),wouldbeaddedtonetincomeindeterminingthecashflowsfromoperatingactivitiesiftheindirectmethodofreportingcashflowsfromoperationsisused.
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Managerial Accounting 14th Edition Solution Manual - Page 10 preview imageCHAPTER13StatementofCashFlows13-8Ex.13–10Cashflowsfrominvestingactivities:Cashreceivedfromsaleofland......................................................................$95,550Cashpaidforpurchaseofland.......................................................................(104,300)Thegainonthesaleofland,$31,710,wouldbedeductedfromnetincomeindeterminingthecashflowsfromoperatingactivitiesiftheindirectmethodofreportingcashflowsfromoperationsisused.Ex.13–11Dividendsdeclared...................................................................................................$1,200,000Decreaseindividendspayable.............................................................................150,000Dividendspaidtostockholdersduringtheyear.................................................$1,350,000Ex.13–12Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock....................................................$1,920,000Cashpaidfordividends...................................................................................(315,000)Note:Thestockdividendisnotdisclosedonthestatementofcashflows.
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Managerial Accounting 14th Edition Solution Manual - Page 11 preview imageCHAPTER13StatementofCashFlows13-9Ex.13–13Cashflowsfrominvestingactivities:Cashpaidforpurchaseofland......................................................................$(246,000)Aseparatescheduleofnoncashinvestingandfinancingactivitieswouldreportthepurchaseof$324,000landwithalong-termmortgagenote,asfollows:Purchaseoflandbyissuinglong-termmortgagenote.....................................$324,000Ex.13–14Cashflowsfromfinancingactivities:Cashreceivedfromissuingbondspayable.................................................$420,000Cashpaidtoredeembondspayable.............................................................(138,000)Note:Thediscountamortizationof$2,625wouldbeshownasanadjustingitem(increase)intheCashFlowsfromOperatingActivitiessectionundertheindirectmethod.Ex.13–15A.Netcashflowfromoperatingactivities.................................Increaseinaccountsreceivable.............................................$14,300$357,500Increaseinprepaidexpenses.................................................2,970Decreaseinincometaxespayable.........................................7,700Gainonsaleofinvestments.....................................................13,20038,170$395,670Depreciation................................................................................$(29,480)Decreaseininventories.............................................................(19,140)Increaseinaccountspayable.................................................(5,280)(53,900)Netincome,perincomestatement.........................................$341,770NotetoInstructors:ThenetincomemustbedeterminedbyworkingbackwardthroughtheCashFlowsfromOperatingActivitiessectionofthestatementofcashflows.Hence,thoseitemsthatwereadded(deducted)todeterminenetcashflowfromoperatingactivitiesmustbededucted(added)todeterminenetincome.
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Managerial Accounting 14th Edition Solution Manual - Page 12 preview imageCHAPTER13StatementofCashFlows13-10Ex.13–15(Concluded)B.Curwen’snetincomedifferedfromcashflowsfromoperationsbecauseof:●$29,480ofdepreciationexpensewhichhasnoeffectoncashflowsfromoperatingactivities,●a$13,200gainonthesaleofinvestments.Theproceedsfromthissale,whichincludethegain,arereportedintheInvestingActivitiessectionofthestatementofcashflows.●Changesincurrentoperatingassetsandliabilitiesthatareaddedordeducted,dependingontheireffectoncashflows:Increaseinaccountsreceivable,$14,300Increaseinprepaidexpenses,$2,970Decreaseinincometaxespayable,$7,700Decreaseininventories,$19,140Increaseinaccountspayable,$5,280Ex.13–16A.NationalBeverageCo.CashFlowsfromOperatingActivities(inthousands)Cashflowsfromoperatingactivities:Netincome$49,311Adjustmentstoreconcilenetlosstonetcashflowfromoperatingactivities:Depreciation11,580Gainondisposalofproperty(1,188)Otheritemsinvolvingnoncashexpenses1,383Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(1,746)Decreaseininventory990Increaseinprepaidexpenses(605)Decreaseinaccountspayable(710)Decreaseinaccruedandothercurrentliabilities(995)Netcashflowfromoperatingactivities$58,020B.NationalBeverageisdoingwellfinancially.Thecompanyhaspositiveearningsandpositivenetcashflowfromoperatingactivities.Thecompanycontinuestogrow,andthetrendinrecentyearshasbeenpositive.Theincreaseinaccountsreceivableisapositivesign,indicatinganincreaseinsales.
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Managerial Accounting 14th Edition Solution Manual - Page 13 preview imageCHAPTER13StatementofCashFlows13-11Ex.13–17A.Olson-JonesIndustries,Inc.StatementofCashFlowsFortheYearEndedDecember31,20Y2Cashflowsfromoperatingactivities:Netincome$62Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation26Gainonsaleofland(40)Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(6)Increaseininventories(18)Increaseinaccountspayable14Netcashflowfromoperatingactivities$38Cashflowsfrominvestingactivities:Cashreceivedfromsaleofland$120Cashpaidforpurchaseofequipment(30)Netcashflowfrominvestingactivities90Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock$60Cashpaidfordividends*(19)Netcashflowfromfinancingactivities41Changeincash$169Cashatthebeginningoftheyear14Cashattheendoftheyear$183*Dividends=$24–$5=$19B.Olson-JonesIndustriesInc.’snetincomewasmorethanthecashflowsfromoperationsbecauseof:●$26ofdepreciationexpense,whichhasnoeffectoncash.●A$40gainonthesaleofland.Theproceedsfromthissaleof$120,whichincludethegain,arereportedintheInvestingActivitiessectionofthestatementofcashflows.●Changesincurrentoperatingassetsandliabilitiesthatareaddedordeducted,dependingontheireffectoncashflows:Increaseinaccountsreceivable,$6deductedIncreaseininventories,$18deductedIncreaseinaccountspayable,$14added
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Managerial Accounting 14th Edition Solution Manual - Page 14 preview imageCHAPTER13StatementofCashFlows13-12Ex.13–181.TheincreaseinaccountsreceivableshouldbedeductedfromnetincomeintheCashFlowsfromOperatingActivitiessection.2.ThegainonthesaleofinvestmentsshouldbedeductedfromnetincomeintheCashFlowsfromOperatingActivitiessection.3.TheincreaseinaccountspayableshouldbeaddedtonetincomeintheCashFlowsfromOperatingActivitiessection.4.Thecorrectamountofcashatthebeginningoftheyear,$240,000,shouldbeaddedtotheincreaseincash.5.Thefinalamountshouldbetheamountofcashattheendoftheyear,$350,160.6.Thefinalamountofnetcashflowfromoperatingactivitiesis$381,360.
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Managerial Accounting 14th Edition Solution Manual - Page 15 preview imageCHAPTER13StatementofCashFlows13-13Ex.13–18(Concluded)Acorrectstatementofcashflowswouldbeasfollows:ShastaInc.StatementofCashFlowsFortheYearEndedDecember31,20Y9Cashflowsfromoperatingactivities:Netincome$360,000Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation100,800Gainonsaleofinvestments(17,280)Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(27,360)Increaseininventories(36,000)Increaseinaccountspayable3,600Decreaseinaccruedexpensespayable(2,400)Netcashflowfromoperatingactivities$381,360Cashflowsfrominvestingactivities:Cashreceivedfromsaleofinvestments$240,000Cashpaidforpurchaseofland(259,200)Cashpaidforpurchaseofequip.(432,000)Netcashflowusedforinvestingactivities(451,200)Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock$312,000Cashpaidfordividends(132,000)Netcashflowfromfinancingactivities180,000Changeincash$110,160Cashatthebeginningoftheyear240,000Cashattheendoftheyear$350,160
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Managerial Accounting 14th Edition Solution Manual - Page 16 preview imageCHAPTER13StatementofCashFlows13-14Appendix2Ex.13–19A.Sales................................................................................................................$753,500Decreaseinaccountsreceivablebalance................................................48,400Cashreceivedfromcustomers..................................................................$801,900B.Incometaxexpense.......................................................................................$50,600Decreaseinincometaxpayable................................................................5,500Cashpaymentsforincometaxes..............................................................$56,100C.Becausethecustomerspaidmorethantheamountofsalesfortheperiod,cashreceivedfromcustomersexceededsalesmadeonaccountby$48,400duringthecurrentyear.Appendix2Ex.13–20A.Costofgoodssold.......................................................................................$1,031,550Decreaseinaccountspayable....................................................................9,660$1,041,210Decrease in inventories.................................................................................(15,410)Cashpaymentsformerchandise................................................................$1,025,800B.Operatingexpensesotherthandepreciation............................................$179,400Decreaseinaccruedexpensespayable....................................................1,380$180,780Decreaseinprepaidexpenses....................................................................(1,610)Cashpaymentsforoperatingexpenses....................................................$179,170
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Managerial Accounting 14th Edition Solution Manual - Page 17 preview imageCHAPTER13StatementofCashFlows13-15Appendix2Ex.13–21A.Cashflowsfromoperatingactivities:Cashreceivedfromcustomers..............................................$522,7601Cashpaymentsformerchandise...........................................(302,400)2Cashpaymentsforoperatingexpenses..................................................................................(99,960)3Cashpaymentsforincometaxes............................................(24,360)4Netcashflowfromoperatingactivities...........................$96,040Computations:1.Sales...............................................................................................................$511,000Decreaseinaccountsreceivable..............................................................11,760Cashreceivedfromcustomers.................................................................$522,7602.Costofgoodssold.....................................................................................$290,500Increase in inventories.................................................................................3,920Decreaseinaccountspayable..................................................................7,980Cashpaymentsformerchandise..............................................................$302,4003.Operatingexpensesotherthandepreciation.........................................$105,000Decreaseinprepaidexpenses..................................................................(3,780)Increaseinaccruedexpensespayable.......................................................................................................(1,260)Cashpaymentsforoperatingexpenses..................................................$99,9604.Income tax expense......................................................................................$21,700Adddecreaseinincometaxpayable.......................................................2,660Cashpaymentsforincometaxes.............................................................$24,360B.Thedirectmethoddirectlyreportscashreceiptsandpayments.Thecashreceivedlessthecashpaymentsisthenetcashflowfromoperatingactivities.IndividualcashreceiptsandpaymentsarereportedintheCashFlowsfromOperatingActivitiessection.Theindirectmethodadjustsaccrual-basisnetincomeforrevenuesandexpensesthatdonotinvolvethereceiptorpaymentofcashtoarriveatcashflowsfromoperatingactivities.
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Managerial Accounting 14th Edition Solution Manual - Page 18 preview imageCHAPTER13StatementofCashFlows13-16Appendix2Ex.13–22Cashflowsfromoperatingactivities:Cashreceivedfromcustomers..................................................$440,4401Cashpaymentsformerchandise..............................................(161,260)2Cashpaymentsforoperatingexpenses..................................(115,720)3Cashpaymentsforincometaxes...............................................(39,600)Netcashflowfromoperatingactivities..............................$123,860Computations:1.Sales..................................................................................................................$445,500Increaseinaccountsreceivable...................................................................(5,060)Cashreceivedfromcustomers....................................................................$440,4402.Costofgoodssold........................................................................................$154,000Increaseininventories....................................................................................12,100Increaseinaccountspayable.......................................................................(4,840)Cashpaymentsformerchandise.................................................................$161,2603.Operatingexpensesotherthandepreciation.............................................$115,280Decreaseinaccruedexpensespayable......................................................1,760Decreaseinprepaidexpenses.....................................................................(1,320)Cashpaymentsforoperatingexpenses......................................................$115,720
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Managerial Accounting 14th Edition Solution Manual - Page 19 preview imageCHAPTER13StatementofCashFlows13-17PROBLEMSProb.13–1ALiversInc.StatementofCashFlowsFortheYearEndedDecember31,20Y3Cashflowsfromoperatingactivities:Netincome$500,000Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation100,000Gainonsaleofinvestments(75,000)Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(50,000)Increaseininventories(20,000)Increaseinaccountspayable40,000Decreaseinaccruedexpensespayable(5,000)Netcashflowfromoperatingactivities$490,000Cashflowsfrominvestingactivities:Cashreceivedfromsaleofinvestments$175,000Cashpaidforpurchaseofland(500,000)Cashpaidforpurchaseofequipment(200,000)Netcashflowusedforinvestingactivities(525,000)Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock$125,000Cashpaidfordividends*(85,000)Netcashflowfromfinancingactivities40,000Changeincash$5,000Cashatthebeginningoftheyear150,000Cashattheendoftheyear$155,000*Cashpaidfordividends=$90,000+$25,000–$30,000=$85,000
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Managerial Accounting 14th Edition Solution Manual - Page 20 preview imageCHAPTER13StatementofCashFlows13-18Prob.13–1A(Concluded)(Optional)LiversInc.Spreadsheet(WorkSheet)forStatementofCashFlowsFortheYearEndedDecember31,20Y3AccountTitleBalance,Dec.31,20Y2TransactionsBalance,Dec.31,20Y3DebitCreditCash150,000(m)5,000155,000Accountsreceivable(net)400,000(l)50,000450,000Inventories750,000(k)20,000770,000Investments100,000(j)100,0000Land0(i)500,000500,000Equipment1,200,000(h)200,0001,400,000Accum.depr.—equipment(500,000)(g)100,000(600,000)Accountspayable(300,000)(f)40,000(340,000)Accruedexpensespayable(50,000)(e)5,000(45,000)Dividendspayable(25,000)(d)5,000(30,000)Commonstock,$4par(600,000)(c)100,000(700,000)Paid-incapitalinexcessofpar—commonstock(175,000)(c)25,000(200,000)Retainedearnings(950,000)(b)90,000(a)500,000(1,360,000)Totals0870,000870,0000Operatingactivities:Netincome(a)500,000Depreciation(g)100,000Gainonsaleofinvestments(j)75,000Increaseinaccountsreceivable(l)50,000Increaseininventories(k)20,000Increaseinaccountspayable(f)40,000Decreaseinaccruedexpensespayable(e)5,000Investingactivities:Purchaseofequipment(h)200,000Purchaseofland(i)500,000Saleofinvestments(j)175,000Financingactivities:Declarationofcashdividends(b)90,000Saleofcommonstock(c)125,000Increaseindividendspayable(d)5,000Netchangeincash(m)5,000Totals945,000945,000NotetoInstructor:Thelettersinthedebitandcreditcolumnsareincludedforreferencepurposesonly.
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Managerial Accounting 14th Edition Solution Manual - Page 21 preview imageCHAPTER13StatementofCashFlows13-19Prob.13–2AYellowDogEnterprisesInc.StatementofCashFlowsFortheYearEndedDecember31,20Y8Cashflowsfromoperatingactivities:Netincome$190,000Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation115,000Changesincurrentoperatingassetsandliabilities:Decreaseinaccountsreceivable25,000Increaseininventory(110,000)Increaseinprepaidexpenses(5,000)Increaseinaccountspayable10,000Netcashflowfromoperatingactivities$225,000Cashflowsfrominvestingactivities:Cashpaidforequipment$(395,000)Netcashflowusedforinvestingactivities(395,000)Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock$600,000Cashpaidfordividends(50,000)Cashpaidtoretiremortgagenotepayable(400,000)Netcashflowusedforfinancingactivities150,000Changeincash$(20,000)Cashatthebeginningoftheyear100,000Cashattheendoftheyear$80,000NotetoInstructors:Thedisposaloffullydepreciatedequipmentisnotincludedinthecashflowstatementbecausethereisnoassociatedcashflow.Thistransactionstrictlyinvolvestheremovalof$75,000fromtheequipmentandaccumulateddepreciation—equipmentaccounts.
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Managerial Accounting 14th Edition Solution Manual - Page 22 preview imageCHAPTER13StatementofCashFlows13-20Prob.13–2A(Concluded)(Optional)YellowDogEnterprisesInc.Spreadsheet(WorkSheet)forStatementofCashFlowsFortheYearEndedDecember31,20Y8AccountTitleBalance,Dec.31,20Y7TransactionsBalance,Dec.31,20Y8DebitCreditCash100,000(l)20,00080,000Accountsreceivable(net)300,000(k)25,000275,000Merchandiseinventory400,000(j)110,000510,000Prepaidexpenses10,000(i)5,00015,000Equipment750,000(h)395,000(g)75,0001,070,000Accum.depr.—equipment(160,000)(g)75,000(f)115,000(200,000)Accountspayable(90,000)(e)10,000(100,000)Mortgagenotepayable(400,000)(d)400,0000Commonstock,$10par(200,000)(c)400,000(600,000)Paid-incapitalinexcessofpar—commonstock(100,000)(c)200,000(300,000)Retainedearnings(610,000)(b)50,000(a)190,000(750,000)Totals01,035,0001,035,0000Operatingactivities:Netincome(a)190,000Depreciation(f)115,000Decreaseinaccts.receivable(k)25,000Increaseinmerchandiseinventory(j)110,000Increaseinprepaidexpenses(i)5,000Increaseinaccountspayable(e)10,000Investingactivities:Purchaseofequipment(h)395,000Financingactivities:Paymentofcashdividends(b)50,000Saleofcommonstock(c)600,000Paymentofmortgagenotepayable(d)400,000Netdecreaseincash(l)20,000Totals960,000960,000Note to Instructor:The letters in the debit and credit columns are included for referencepurposes only.
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Managerial Accounting 14th Edition Solution Manual - Page 23 preview imageCHAPTER13StatementofCashFlows13-21Prob.13–3AWhitmanCo.StatementofCashFlowsFortheYearEndedDecember31,20Y2Cashflowsfromoperatingactivities:Netloss$(35,320)Adjustmentstoreconcilenetlosstonetcashflowfromoperatingactivities:Depreciation*55,620Lossonsaleofland**12,600Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(66,960)Increaseininventories(105,480)Decreaseinprepaidexpenses5,760Decreaseinaccountspayable(35,820)Netcashflowusedforoperatingactivities$(169,600)Cashflowsfrominvestingactivities:Cashreceivedfromlandsold$151,200Cashpaidforacquisitionofbuilding(561,600)Cashpaidforpurchaseofequipment(104,400)Netcashflowusedforinvestingactivities(514,800)Cashflowsfromfinancingactivities:Cashreceivedfromissuanceofbondspayable$270,000Cashreceivedfromissuanceofcommonstock400,000Cashpaidfordividends(32,400)Netcashflowfromfinancingactivities637,600Changeincash$(46,800)Cashatthebeginningoftheyear964,800Cashattheendoftheyear$918,000*Depreciation=$26,280+$29,340**Lossonsaleofland=$151,200–$163,800
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Managerial Accounting 14th Edition Solution Manual - Page 24 preview imageCHAPTER13StatementofCashFlows13-22Prob.13–3A(Concluded)(Optional)WhitmanCo.Spreadsheet(WorkSheet)forStatementofCashFlowsFortheYearEndedDecember31,20Y2AccountTitleBalance,Dec.31,20Y1TransactionsBalance,Dec.31,20Y2DebitCreditCash964,800(o)46,800918,000Accountsreceivable761,940(g)66,960828,900Inventories1,162,980(h)105,4801,268,460Prepaidexpenses35,100(f)5,76029,340Land479,700(l)163,800315,900Buildings900,900(k)561,6001,462,500Accum.depr.—buildings(382,320)(e)26,280(408,600)Equipment454,680(i)104,400(j)46,800512,280Accum.depr.—equipment(158,760)(j)46,800(d)29,340(141,300)Accountspayable(958,320)(c)35,820(922,500)Bondspayable0(m)270,000(270,000)Commonstock,$25par(117,000)(n)200,000(317,000)Paid-incapitalinexcessofpar—commonstock(558,000)(n)200,000(758,000)Retainedearnings(2,585,700)(a)35,320(2,582,780)(b)(32,400)Totals0923,980988,780(64,800)Operatingactivities:Netloss(a)35,320Depreciation—equipment(d)29,340Depreciation—buildings(e)26,280Lossonsaleofland(l)12,600Increaseinaccts.receivable(g)66,960Increaseininventories(h)105,480Decreaseinprepaidexpenses(f)5,760Decreaseinaccountspayable(c)35,820Investingactivities:Purchaseofequipment(i)104,400Acquisitionofbuilding(k)561,600Saleofland(l)151,200Financingactivities:Paymentofcashdividends(b)(32,400)Issuanceofbondspayable(m)270,000Issuanceofcommonstock(n)400,000Netdecreaseincash(o)46,800Totals941,980877,180
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Managerial Accounting 14th Edition Solution Manual - Page 25 preview imageCHAPTER13StatementofCashFlows13-23Appendix2Prob.13–4ACanaceProductsInc.StatementofCashFlowsFortheYearEndedDecember31,20Y6Cashflowsfromoperatingactivities:Cashreceivedfromcustomers1$5,960,600Cashpaymentsformerchandise2(2,456,800)Cashpaymentsforoperatingexpenses3(3,107,400)Cashpaymentsforincometaxes(102,800)Netcashflowfromoperatingactivities$293,600Cashflowsfrominvestingactivities:Cashreceivedfromsaleofinvestments$176,000Cashpaidforpurchaseofland(520,000)Cashpaidforpurchaseofequipment(200,000)Netcashflowusedforinvestingactivities(544,000)Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock$240,000Cashpaidfordividends*(25,600)Netcashflowfromfinancingactivities214,400Changeincash$(36,000)Cashatthebeginningoftheyear679,400Cashattheendoftheyear$643,400ReconciliationofNetIncomewithCashFlowsfromOperatingActivities:Netincome.....................................................................................................$217,200Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation...........................................................................................44,000Lossonsaleofinvestments..............................................................64,000Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable........................................................(19,400)Increaseininventories..........................................................................(28,200)Increaseinaccountspayable............................................................23,400Decreaseinaccruedexpensespayable...........................................(7,400)Netcashflowfromoperatingactivities.........................................$293,600*Dividends paid: $28,000 + $6,400–$8,800 = $25,600
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Managerial Accounting 14th Edition Solution Manual - Page 26 preview imageCHAPTER13StatementofCashFlows13-24Appendix2Prob.13–4A(Concluded)Computations:1.Sales.............................................................................................................$5,980,000Increaseinaccountsreceivable.............................................................(19,400)Cashreceivedfromcustomers...............................................................$5,999,4002.Costofgoodssold...................................................................................$2,452,000Increase in inventories...............................................................................28,200Increaseinaccountspayable..................................................................(23,400)Cashpaymentsformerchandise............................................................$2,456,8003.Operatingexpensesotherthandepreciation........................................$3,100,000Decreaseinaccruedexpensespayable.................................................7,400Cashpaymentsforoperatingexpenses................................................$3,107,400
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Managerial Accounting 14th Edition Solution Manual - Page 27 preview imageCHAPTER13StatementofCashFlows13-25Appendix2Prob.13–5ALiversInc.StatementofCashFlowsFortheYearEndedDecember31,20Y3Cashflowsfromoperatingactivities:Cashreceivedfromcustomers1$ 2,950,000Cashpaymentsformerchandise2(1,380,000)Cashpaymentsforoperatingexpenses3(955,000)Cashpaymentsforincometaxes(125,000)Netcashflowfromoperatingactivities$490,000Cashflowsfrominvestingactivities:Cashreceivedfromsaleofinvestments$175,000Cashpaidforpurchaseofland(500,000)Cashpaidforpurchaseofequipment(200,000)Netcashflowusedforinvestingactivities(525,000)Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock$125,000Cashpaidfordividends4(85,000)Netcashflowfromfinancingactivities40,000Changeincash$5,000Cashatthebeginningoftheyear150,000Cashattheendoftheyear$155,000ReconciliationofNetIncomewithCashFlowsfromOperatingActivities:Net income...................................................................................................................$500,000Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation...................................................................................................100,000Gainonsaleofinvestments...........................................................................(75,000)Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable...................................................................(50,000)Increaseininventories..............................................................................(20,000)Increaseinaccountspayable...................................................................40,000Decreaseinaccruedexpensespayable...................................................(5,000)Netcashflowfromoperatingactivities.........................................................$490,000
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Managerial Accounting 14th Edition Solution Manual - Page 28 preview imageCHAPTER13StatementofCashFlows13-26Appendix2Prob.13–5A(Concluded)Computations:1.Sales................................................................................................................$3,000,000Increaseinaccountsreceivable................................................................(50,000)Cashreceivedfromcustomers..................................................................$2,950,0002.Costofgoodssold......................................................................................$1,400,000Increase ininventories..................................................................................20,000Increaseinaccountspayable....................................................................(40,000)Cashpaymentsformerchandise...............................................................$1,380,0003.Operatingexpensesotherthandepreciation...........................................$950,000Decreaseinaccruedexpensespayable...................................................5,000Cashpaymentsforoperatingexpenses...................................................$955,0004.Cash dividends declared..............................................................................$90,000Increaseindividendspayable....................................................................(5,000)Cashpaymentsfordividends....................................................................$85,000
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Managerial Accounting 14th Edition Solution Manual - Page 29 preview imageCHAPTER13StatementofCashFlows13-27Prob.13–1BMerrickEquipmentCo.StatementofCashFlowsFortheYearEndedDecember31,20Y9Cashflowsfromoperatingactivities:Netincome$141,680Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation14,790Lossonsaleofinvestments10,200Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(19,040)Increaseininventories(8,670)Increaseinaccountspayable11,560Increaseinaccruedexpensespayable3,740Netcashflowfromoperatingactivities$154,260Cashflowsfrominvestingactivities:Cashreceivedfromsaleofinvestments$91,800Cashpaidforpurchaseofland(295,800)Cashpaidforpurchaseofequipment(80,580)Netcashflowusedforinvestingactivities(284,580)Cashflowsfromfinancingactivities:Cashreceivedfromsaleofcommonstock$250,000Cashpaidfordividends*(96,900)Netcashflowfromfinancingactivities153,100Changeincash$22,780Cashatthebeginningoftheyear47,940Cashattheendoftheyear$70,720*$102,000 + $20,400–$25,500 = $96,900
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Managerial Accounting 14th Edition Solution Manual - Page 30 preview imageCHAPTER13StatementofCashFlows13-28Prob.13–1B(Concluded)(Optional)MerrickEquipmentCo.Spreadsheet(WorkSheet)forStatementofCashFlowsFortheYearEndedDecember31,20Y9AccountTitleBalance,Dec.31,20Y8TransactionsBalance,Dec.31,20Y9DebitCreditCash47,940(m)22,78070,720Accountsreceivable(net)188,190(l)19,040207,230Inventories289,850(k)8,670298,520Investments102,000(j)102,0000Land0(i)295,800295,800Equipment358,020(h)80,580438,600Accum.depr.—equipment(84,320)(g)14,790(99,110)Accountspayable(194,140)(f)11,560(205,700)Accruedexpensespayable(26,860)(e)3,740(30,600)Dividendspayable(20,400)(d)5,100(25,500)Commonstock,$1par(102,000)(c)100,000(202,000)Paid-incapitalinexcessofpar—commonstock(204,000)(c)150,000(354,000)Retainedearnings(354,280)(b)102,000(a)141,680(393,960)Totals0528,870528,8700Operatingactivities:Netincome(a)141,680Depreciation(g)14,790Lossonsaleofinvestments(j)10,200Increaseinaccountsreceivable(l)19,040Increaseininventories(k)8,670Increaseinaccountspayable(f)11,560Increaseinaccruedexpensespayable(e)3,740Investingactivities:Purchaseofequipment(h)80,580Purchaseofland(i)295,800Saleofinvestments(j)91,800Financingactivities:Declarationofcashdividends(b)102,000Saleofcommonstock(c)250,000Increaseindividendspayable(d)5,100Netchangeincash(m)22,780Totals528,870528,870NotetoInstructor:Thelettersinthedebitandcreditcolumnsareincludedforreferencepurposesonly.
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Managerial Accounting 14th Edition Solution Manual - Page 31 preview imageCHAPTER13StatementofCashFlows13-29Prob.13–2BHarrisIndustriesInc.StatementofCashFlowsFortheYearEndedDecember31,20Y4Cashflowsfromoperatingactivities:Netincome$524,580Adjustmentstoreconcilenetincometonetcashflowfromoperatingactivities:Depreciation74,340Patentamortization5,040Changesincurrentoperatingassetsandliabilities:Increaseinaccountsreceivable(73,080)Decreaseininventories134,680Increaseinprepaidexpenses(6,440)Decreaseinaccountspayable(89,600)Decreaseinsalariespayable(8,120)Netcashflowfromoperatingactivities$561,400Cashflowsfrominvestingactivities:Cashpaidforconstructionofbuilding$(579,600)Netcashflowusedforinvestingactivities(579,600)Cashflowsfromfinancingactivities:Cashreceivedfromissuanceofmortgagenote$224,000Cashpaidfordividends*(123,480)Netcashflowfromfinancingactivities100,520Changeincash$82,320Cashatthebeginningoftheyear360,920Cashattheendoftheyear$443,240ScheduleofNoncashFinancingandInvestingActivities:Issuanceofcommonstocktoretirebonds$390,000*Cash paid for dividends = $131,040 +$25,200–$32,760 = $123,480
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