Problem Set 2 Week Four ACC 300 P12 1A You are given the following transactions that occurred in the latest fiscal year Distinguish among operating investing and financing activities Complete the table indicating whether each item 1 should be reported as an operating O activity investing I activity financing F activity or as a noncash 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 Cash Inflow Outflow or No Effect Inflow Investing I Outflow Where Reported Transaction Depreciation expense on the plant assets Noncash NC Paid interest expense Cash from a sale of plant assets Acquired land by issuing common stock Noncash NC Paid a cash dividend Financing F Distributed a stock dividend Recorded cash sales Recorded sales on account Purchased inventory for cash Purchased inventory on account Operating O Operating O Noncash NC Investing I Noncash NC No Effect Operating O Outflow Inflow No Effect Inflow Inflow Outflow No Effect P12 2A The aforementioned account balances relate to the stockholder s equity accounts of Patil Corporation at the end of the year 2012 Common stock 10 500 and 10 000 shares respectively for 2012 and 2011 Preferred stock 5 000 shares Retained earnings 125 000 125 000 300 000 270 000 2011 160 800 140 000 A minimal stock dividend was announced and assigned in 2012 The market value of the shares is 8 800 In 2011 and 2012 the cash dividends were 20 000 The common stock has no declared value Determine cash flow effects of changes in equity accounts SO 4 AN Instructions A What was the amount of net income declared by the Patil Corporation in 2012 Net Income Beginning Balance Retained Earnings Cash Dividends Ending Balance Retained Earnings Net Income 300 000 20 000 270 000 Net Income 50 000 B In 2012 what is the amount of cash inflows and outflows in accordance to the common stock and dividend accounts Cash Inflow Outflow from Common Stock 160 800 140 000 Cash Inflow Outflow from Common Stock 20 800 Cash Inflow Outflow from Dividends 20 000 given C Determine where cash inflows or outflows are determined in would be classified on the statement of cash flows Cash Inflow Outflow from Common Stock Reported in Financing Activities Cash Inflow Outflow from Dividends Reported in Financing Activities P12 3A The income statement of Mazor Company is presented here MAZOR COMPANY Income Statement For the Year Ended November 30 2012 Beginning inventory Purchases Goods available for sale Ending inventory Sales Cost of goods sold Total cost of goods sold Gross profit Operating expenses Selling expenses Administrative expenses Net income Additional information In the year 1 900 000 4 400 000 6 300 000 1 600 000 450 000 700 000 7 600 000 4 700 000 2 900 000 1 150 000 1 750 000 a Accounts receivable declined by 380 000 and inventory declined by 300 000 b Prepaid expenses are raised by 150 000 c Accounts payable to suppliers of materials declined by 350 000 d Accrued expenses payable declined by 100 000 e Administrative expenses involbes depreciation expense of 110 000 Mazor Company Statement of Cash Flows Indirect Method For the Year Ended November 30 2012 Net Income 1 750 000 Adjustments to Reconcile Net Income to Cash from Continuing Operations Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses Decrease in Accounts Payable Decrease in Accrued Expenses 300 000 150 000 350 000 100 000 380 000 Increase in Depreciation Expense 110 000 Net Cash Inflows from Operating Activities 1 940 000 P12 4A Mazor Company Statement of Cash Flows Direct Method For the Year Ended November 30 2012 Cash Inflows from Revenue Cash Outflows for Expenses 790 000 600 000 Income Before Income Taxes 1 750 000 Net Cash Inflows from Operating Activities 1 940 000 P12 5A The income statement of Retzlaff Company is contained in the following information 614 000 55 000 16 000 970 000 685 000 285 000 56 000 229 000 Retzlaff s balance sheet contained the comparative data at December 31 RETZLAFF COMPANY Income Statement For the Year Ended December 31 2012 Revenues Operating expenses excluding depreciation Depreciation expense Loss on sale of equipment Income before income taxes Income tax expense Net income 2012 70 000 60 000 Accounts receivable Accounts payable 41 000 32 000 Income taxes payable 13 000 7 000 2011 Retzlaff Company Statement of Cash Flows Indirect Method For the Year Ended December 31 2012 Net Income 300 000 Adjustments to Reconcile Net Income to Cash from Continuing Operations Increase in Accounts Receivable Increase in Accounts Payable Increase in Income Taxes Payable 6 000 10 000 9 000 Net Cash Inflows from Operating Activities 305 000 P12 6A Mazor Company Statement of Cash Flows Direct Method For the Year Ended December 31 2012 Cash Inflows from Revenue Cash Outflows for Expenses 15 000 10 000 Income Before Income Taxes 300 000 Net Cash Inflows from Operating Activities 305 000 P12 7A The following are the financial records of Helwany Company HELWANY COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable Inventory Property plant and equipment Accumulated depreciation Total Liabilities and Stockholders Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total HELWANY COMPANY Income Statement 2012 35 000 20 000 28 000 60 000 32 000 111 000 19 000 7 000 17 000 18 000 50 000 111 000 2011 20 000 14 000 20 000 78 000 24 000 108 000 15 000 8 000 33 000 14 000 38 000 108 000 For the Year Ended December 31 2012 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net income Additional data 18 000 6 000 242 000 175 000 67 000 24 000 43 000 43 000 40 000 8 000 32 000 Depreciation expenses amounts to 17 500 Dividends declared and paid amounts to 20 000 In the year the apparatus was sold for 8 500 This apparatus principally costs 18 000 and had accumulated depreciation of 9 500 at the period of purchase Helwany Company Statement of Cash Flows Indirect Method For the Year Ended December 31 2012 Net Income 32 000 Adjustments to Reconcile Net Income to Cash from Continuing Operations Increase in Accounts Receivable Increase in Inventory Increase in Accounts Payable Decrease in Income Tax Payable Increase in Depreciation 8 000 4 000 1 000 17 500 6 000 Net Cash Inflows from Operating Activities 38 500 Current