1.) BURCH CORPORATION
A.) Operating activities:
Net income
Adjustments:
Depreciation charges
Decrease in accounts receivable
Increase in inventory
Decrease in prepaid expenses
Increase in accounts payable
Increase in accrued liabilities
Decrease in taxes payables
Increase in deferred taxes
Net cash provided by operating activities
119,000
$26,000
21,000
(12,000)
8,000
23,000
14,000
(9,000)
4,000
b.)Investing activities
Increase in long-term investments
Increase in plant & equipment
Net cash used for investing activities
$(80,000)
(10,000)
$(90,000)
c.)
Decrease in bonds payable
Increase in common stock
Cash dividends
Net cash used in financing activities
$(50,000)
20,000
(45,000)
$(75,000)
75,000
$194,000
2.) DANFORD CORPORATION
Net income
Adjustments to convert net income to a cash basis:
Depreciation charges
Decrease in accounts receivables
Decrease in inventory
Decrease in accounts payable
Decrease in wages payables
Increase in taxes payables
Decrease in deferred taxes
Gain on sale of plant and equipment
Net cash provided by operations
$40
48
5
9
(12)
(2)
3
(3)
(8)
$80
3.) DANO CORPORATION
INDIRECT METHOD
Net income
Adjustments:
Depreciation charges
Decrease in accounts receivable
Increase in inventory
Increase in prepaid expenses
Increase in accounts payable
Decrease in accrued liabilities
Increase in taxes payable
Increase in deferred taxes
Net cash provided by operating activities
$84,000
$29,000
14,000
(13,000)
(3,000)
18,000
(5,000)
17,000
4,000
61,000
$145,000
DIRECT METHOD
Sales
Adjustments to a cash basis:
Decrease in accounts receivable
$540,000
+14,000
Cost of goods sold
Adjustments to a cash basis:
Increase in inventory
Increase in accounts payable
220,000
Selling and administrative expense
Adjustments to a cash basis:
Increase in prepaid expenses
Decrease in accrued liabilities
Depreciation charges
200,000
+13,000
-18,000
$554,000
215,000
+3,000
+5,000
-29,000
179,000
Income tax expense
36,000
Adjustments to a cash basis:
Increase in taxes payable
-17,000
Increase in deferred taxes
-4,000
Net cash provided by operating activities
15,000
$145,000
B.) Investing activities
Increase in long-term investments
Net cash used for investing activities
$(70,000)
$(70,000)
c.) Financing activities
Decrease in bonds payable
Increase in common stock
Cash dividends
Net cash used in financing activities
$(40,000)
20,000
( 34,000)
$(54,000)
4.) BIVEN CORPORATION
Net income
Adjustments to convert net income to a cash basis:
Depreciation charges
Increase in accounts receivable
Increase in inventory
Decrease in accounts payable
Increase in wages payable
Increase in taxes payable
Increase in deferred taxes
Gain on sale of plant and equipment
Net cash provided by operations
$109
17
(5)
(9)
(6)
2
1
1
(20)
90
Investing activities:
Proceeds from sale of plant and equipment
Increase in plant and equipment
Net cash used for investing activities
20
(64)
(44)
Financing activities:
Decrease in bonds payable
Increase in common stock
Cash dividends
Net cash used by financing activities
Net increase (decrease) in cash and cash equivalent
Cash balance, beginning
Cash balance, end
(13)
3
(31)
(41)
5
30
$35