Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 11, Problem 16AE
Preparing a statement of cash flows—indirect method (Learning Objective 3) 20-25 min.
The income statement and additional data of Consolidated Services, Inc., follow:
Consolidated Services. Inc. Income Statement Year Ended November 30, 2018 |
||||
Revenues: | ||||
Sales Revenue | $304,000 | |||
Dividend Revenue | 11,000 | |||
Total Revenues | $315,000 | |||
Expenses: | ||||
Cost of Goods Sold | $103,000 | |||
Salaries Expense | 55,000 | |||
Depreciation Expense | 28,000 | |||
Advertising Expense | 16,000 | |||
Interest Expense | 6,000 | |||
Income Tax Expense | 9,000 | |||
Total Expenses | 217,000 | |||
Net Income | $ 98,000 |
Additional data:
- a. Acquisition of fixed assets totaled $117,000. Of this amount, $103,000 was paid in cash; a $14,000 note payable was signed for the remainder.
- b. Proceeds from a sale of land totaled $22,000. No gain or loss was recognized on the sale.
- c. Proceeds from issuance of common stock totaled $50,000.
- d. Payment of long-term note payable was $9,000.
- e. Payment of dividends was $11,000.
- f. Data from the comparative balance sheet follow:
November 30 | 2018 | 2017 |
Current Assets: | ||
Cash............................................................. | $85,000 | $23,000 |
Accounts Receivable................................... | 52,000 | 57,000 |
Inventory...... | 52,000 | 40,000 |
Current Liabilities: | ||
Accounts Payable. ....................................... | $41,000 | $32000 |
Accrued Liabilities....................................... | 14,000 | 29,000 |
Requirements
- 1. Prepare Consolidated Services’ statement of cash flows for the year ended November 30, 2018, using the indirect method.
- 2. Calculate Consolidated Services’
free cash flow for the year ended November 30, 2018. - 3. Evaluate Consolidated Services’ cash flows for the year. In your evaluation, mention all three categories of cash flows as well as free cash flow and give the reason(s) for your evaluation.
E11-16A Calculating the cash conversion cycle (Learning Objective 5) 5-10 min.
Use the data for Consolidated Services from E11-15A.
Requirements
- 1. Calculate the cash conversion cycle for Consolidated Services. Round all calculations to two decimal places. Assume all sales are on credit.
- 2. Comment on Consolidated Services’ cash conversion cycle, assuming it was 92.45 days for the prior year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
rect method.
Carlson Software Corp. has assembled the following data for the years ending December 31,
P12-60A (Learning Objectives 2, 3: Prepare the statement of cash flows-indirect method)
2016 and 2015
3. Prepal
cash flows from opl
4
5
6
7
8
$
10
11
12
13
Current Accounts:
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories
Prepaid expenses
Current liabilities:
Accounts payable
Income tax payable
Accrued liabilities
Transaction Data for 2016:
Acquisition of land by issuing
long-term note payable.....
Stock dividends
Collection of loan.
Depreciation expense.
Purchase of building
with cash.
Retirement of honds payable
by issuing common stock....
Purchase of long-term
investment with cash........
$202,000
34,900
12,400
19,000
159,000
80,000
45,300
31, 2016 Format
December 31,
2016
$ 105,800
18,000
8,600
2,900
equipment
Amortization expense
$ 9,300
28,600
15,000
Purchase of treasury stock.
Loss on sale of equipment......
Payment of cash dividends
Issuance of…
Sales
CRUZ, INCORPORATED
Income Statement
For Year Ended December 31, 2021
Cost of goods sold
Gross profit
Operating expenses (excluding depreciation)
Depreciation expense
Income before taxes
Income taxes expense
Net income
$ 332,400
213,900
118,500
60,700
25,600
32,200
11,800
$ 20,400
Required:
Use the indirect method to prepare the operating activities section of Cruz's statement of cash flows.
Navigation:
1. Use the Open Excel in New Tab button to launch this question.
2. When finished in Excel, use the Save and Return to Assignment button in the lower right to return to Connect.
☑
Open Excel in new tab
Activate
PARNELL COMPANY
Income Statement
For the Year Ended December 31, 2021
($ in thousands)
Revenues and gains:
Sales
$890
11
$901
Gain on sale of building
Expenses and loss:
Cost of goods sold
Salaries
$ 345
129
53
Insurance
132
Depreciation
Interest expense
Loss on sale of equipment
59
13
731
170
Income before tax
85
Income tax expense
$ 85
Net income
PARNELL COMPANY
Selected Accounts from Comparative Balance Sheets
December 31, 2021 and 2020
($ in thousands)
Year
Change
$ 61
2021
2020
Cash
152
91
Accounts receivable
Inventory
342
207
135
312
57
228
120
78
181
(131)
(49)
120
36
17
(37)
443
Prepaid insurance
Accounts payable
Salaries payable
Deferred tax liability
Bond discount
106
108
84
61
218
Chapter 11 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 11 - Prob. 1DQCh. 11 - Prob. 2DQCh. 11 - Prob. 3DQCh. 11 - A company issued bonds during the year. Would this...Ch. 11 - Prob. 5DQCh. 11 - When using the indirect method, why are gains on...Ch. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Prob. 10DQ
Ch. 11 - Prob. 1SCCh. 11 - Operating activities are most closely related to:...Ch. 11 - Prob. 3SCCh. 11 - Prob. 4SCCh. 11 - Finlay, Inc., earned net income of 63,000 after...Ch. 11 - Prob. 6SCCh. 11 - Prob. 7SCCh. 11 - Prob. 8SCCh. 11 - Prob. 9SCCh. 11 - Elliot Enterprises had operating expenses of...Ch. 11 - Prob. 11SCCh. 11 - Prob. 12SCCh. 11 - Prob. 1SECh. 11 - Prob. 2SECh. 11 - Prob. 3SECh. 11 - Prob. 4SECh. 11 - Prob. 5SECh. 11 - Prob. 6SECh. 11 - Operating activitiesindirect method (Learning...Ch. 11 - Prob. 8SECh. 11 - Operating activitiesdirect method (Learning...Ch. 11 - Prob. 10SECh. 11 - Prob. 11SECh. 11 - Prob. 12SECh. 11 - Prob. 13AECh. 11 - Prob. 14AECh. 11 - Prob. 15AECh. 11 - Preparing a statement of cash flowsindirect method...Ch. 11 - Prob. 17AECh. 11 - Prob. 18AECh. 11 - Prob. 19AECh. 11 - Prob. 20AECh. 11 - Prob. 21AECh. 11 - Prob. 22BECh. 11 - Prob. 23BECh. 11 - Preparing a statement of cash flowsindirect method...Ch. 11 - Prob. 25BECh. 11 - Prob. 26BECh. 11 - Prob. 27BECh. 11 - Prob. 28BECh. 11 - Prob. 29BECh. 11 - Calculating certain information using the direct...Ch. 11 - Prob. 31APCh. 11 - Prob. 32APCh. 11 - Prob. 33APCh. 11 - Prob. 34APCh. 11 - Prob. 35APCh. 11 - Prob. 36APCh. 11 - Prob. 37BPCh. 11 - Prob. 38BPCh. 11 - Prob. 39BPCh. 11 - Prob. 40BPCh. 11 - Prob. 41BPCh. 11 - Prob. 42BPCh. 11 - Prob. 1CECh. 11 - Prob. 1CPCh. 11 - Apply Your Knowledge Ethics In Action Case 1....Ch. 11 - Case 2. Kevin Sailors, the CEO of Candle...Ch. 11 - Financial Analysis Purpose: To help to familiarize...Ch. 11 - Prob. 1IACh. 11 - Small Business Analysis Purpose: To help you...Ch. 11 - Written Communication Prepare a paper outlining...Ch. 11 - Comprehensive Problem The Accounting Cycle and...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- ccClassify each cash transaction between Operating (O), Investing (I), or Financing (F) activities using the following data: __Cash at the beginning of the year: $650,000 Cash Receipts from: __Bank (Interest on CD) $6,000 __Customers Sales $872,000 __Interest $33,000 __Dividends $3,600 Cash payments for: __Dividends $2,500 __Raw Materials $ 3,800 __Wages Expense $4,000 __Land $10,000 __Interest $4,000arrow_forward(Learning Objectives 1, 7: Show how to speed up cash flow from receivables;evaluate liquidity using ratios) The comparative financial statements of Diamond Pools, Inc.,for 2020, 2019, and 2018 included the following select data:Balance sheetCurrent assets:Cash...............................................Investment in trading securities......Receivables, net of allowancefor uncollectible accounts of $7,$6, and $4, respectivelyInventories .....................................Prepaid expenses............................Total current assets........................Total current liabilities.......................Income statementNet sales (all on account)...................(In millions)2020$ 9015027034050$ 900$ 550$7,7002019$ 9518028035540$ 950$ 640$5,3552018$ 6011523032535$ 765$ 650$4,745Requirements1. Compute the following ratios for 2020 and 2019:a. Current ratiob. Quick (acid-test) ratioc. Days’ sales outstanding2. Which ratios improved from 2019 to 2020 and which ratios deteriorated?…arrow_forwardFree Cash Flow Kat Co. reports the following financial data for the current year: Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash disbursed for capital expenditures Compute Kat's free cash flow. Free cash flow S 17175 x Check $21,500 (10,555) 4,250 (4,325)arrow_forward
- Calculate Operating Cash Flow (OCF) for the company using the following information. Note the calculator icon in the top right corner, use this. Please write your answer as a whole number including comma. Eg. For $4,000 please write: 4,000. Thank you! Sales Cost of goods sold Depreciation Earnings before interest and taxes Interest Taxes (21%) Net Income Dividends Addition to retained earnings $2,995 1,604 764 $627 200 90 $337 $229 108arrow_forwardCash Flow RatiosSpencer Company reports the following amounts in its annual financial statements: Cash flow from operating activities $90,000 Capital expenditures $59,500* Cash flow from investing activities (68,000) Average current assets 136,000 Cash flow from financing activities (8,500) Average current liabilities 102,000 Net income 42,500 Total assets 255,000 * This amount is a cash outflowa. Compute Spencer's free cash flow.b. Compute Spencer's operating-cash-flow-to-current-liabilities ratio.c. Compute Spencer's operating-cash-flow-to-capital-expenditures ratio. Round ratios to two decimal points. a. Free cash flow Answer b. Operating-cash-flow-to-current-liabilities ratio Answer c. Operating-cash-flow-to-current-expenditures ratio Answerarrow_forwardDirection: Classify each cash flow activity (Operating, Investing, Financing, or Non-cash). Then, prepare the Statement of Cash Flows for the year ended December 31, 2019. Talent Fees receivables from clients 500,000 Cash receipt from clients 600,000 . Depreciation expense 40,000 Proceeds of Japan bank loan 350,000 Cash purchase of building 800,000 Provision for doubtful accounts 28,000 Additional Investment of Lena 900,000 Dividends income received 23,000 Rent Income received 32,000 Payment of operating expenses 975,000 Principal long-term loan paid 600,000 Asset withdrawal of owner 125,000 Proceeds from sale of land 950,000arrow_forward
- Prepare the operating activities section of the statement of cash flows for GreenGarden using the indirect method. Annual Income Statement Data Selected Year-End Balance Sheet Data Sales..... $50,000 Prepaid expenses increase.. $3,000 Expenses: Cost of goods sold.. Inventory increase Accounts payable decrease 30,000 500 1,000 Wages expense.. 10,000 Amortization expense. 1,500 Net income. $ 8,500arrow_forwardFrom the following information prepare a statement of cash flows on the indirect method for Wishful Thinking College, a not-for-profit college, for the year ended 12/31/21. Make sure you include all required disclosures. · Increase in net assets $1,000,000 · Increase in cash 855,000 · Increase in Investment Income Receivable 8,000 · Increase in student receivables 32,000 · Decrease in supplies inventory 5,000 · Increase in accounts payable 100,000 · Decrease in deferred tuition revenue 20,000 Included in the change in net assets were the following items: · Cash gifts for scholarships $100,000 · Cash gifts for equipment acquisition 10,000 · Cash gifts for permanent endowment 500,000 · Gift of land 300,000 · Reclassifications of temporarily restricted amounts 80,000 · Donated services of retired professor teaching 2 online classes per term…arrow_forwardory Bookmarks Profiles Tab YouTube Mc Graw Hill ation.com/ext/map/index.html?_con=con&external_browser=0&launch Url=https%253A%252F%252FI... Classes N Netflix Dashboard EDU 1011 (2019-F... G Annotated Bibliog... 1 Required information [The following information applies to the questions displayed below.] 10 Q A Expenses prior years follow. Lansing Company's current-year income statement and selected balance sheet data at December 31 of the current and S (2 LANSING COMPANY Income Statement For Current Year Ended December 31 Sales revenue Cost of goods sold Depreciation expense Salaries expense Rent expense Insurance expense Interest expense Utilities expense Net income 2 2 At December 31 Accounts receivable Inventory Accounts payable Salaries payable SOF Utilities payable Prepaid insurance Prepaid rent W S # Window Help 3 LANSING COMPANY Selected Balance Sheet Accounts 20 F3 □ (20 (2 E D $ 4 $ 127,200 Current Year $ 6,600 2,980 5,400 1,080 OOD DOD F4 52,000 17,000 28,000 10,000 R 4,800…arrow_forward
- Forecast the Statement of Cash Flows Following are the income statement and balance sheet for Medtronic PLC. Note: Complete the entire question using the following Excel template: Excel Template. Then enter the answers into the provided spaces below with two decimal places. Medtronic PLC Consolidated Statement of Income $ millions, For Fiscal Year Ended April 26, 2019 Net sales $30,557 Costs and expenses Cost of products sold 9,155 Research and development expense 2,330 Selling, general, and administrative expense 10,418 Amortization of intangible assets 1,764 Restructuring charges, net 198 Certain litigation charges, net 166 Other operating expense, net 258 Operating profit 6,268 Other nonoperating income, net (373) Interest expense 1,444 Income before income taxes 5,197 Income tax provision 547 Net income 4,650 Net income loss attributable to noncontrolling interests (19) Net income attributable to Medtronic $4,631 Medtronic…arrow_forwardWrite a cash flow for this income statement Genuises School Income Statement For year ended June 30,2025 Profits & Loss Yearly Total Revenues Tuition Fees (Books+Resources+Uniform) Fees 829,500 OMR 693,000 OMR 136,000 OMR Less cost of Revenues Website & software Science Lab resources Library resources IT Lab Resources Offices Furniture IB License 400,000 OMR Gross Profit 429,000 OMR Less Expenses Salaries 184,800 OMR Advertising & marketing 1000 OMR Utilities(Electricity,Water,Internet service &Telephone Bill) 2400 OMR Loan Payments 12,000 OMR Rent expense+accamodation 60,000 OMR Repair & Maintenance 500 OMR Stationary & Printing 500 OMR Petrol 960 OMR Software 1000 OMR Insurance 4800 OMR Total expenses 267,000OMR Net Profit (Net Income) 162,000 OMRarrow_forwardHelp Sa Hampton Company reports the following information for its recent calendar year. Income Statement Data Sales Selected Year-End Balance Sheet Data $ 78,000 Accounts receivable increase $ 7,000 Expenses: Cost of goods sold Salaries expense Depreciation expense Inventory decrease 3, 000 900 42, 000 Salaries payable increase 10, 000 4,000 $ 22,000 Net income Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Statement of Cash Flows (partial) Cash flows from operating activities-indirect method Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilitiesarrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License