CH11 Practice Exercises_Statement of CF’s
Practice Exercise #1 STMT CF’s VERITAS [Sale asset, New loans, Issued stock]
The following is the income statement for Veritas, Inc. for the year ended 12/31/18:
Net Sales Revenue
$940,000
Cost of Goods Sold
($575,000)
Salaries Expense
($250,000)
Depreciation Expense
($40,000) (2. + OA)
Other Expense s
($45,000)
Gain on Sale of Equipment
$11,000 (3. - OA)
Net Income
$41,000 (1. OA)
Below are the company’s balance sheets as of 12/31/18 and 12/31/17:
12/31/18
12/31/17
Assets
Cash
$176,000
$150,000
Accounts Receivable
$155,000
$120,000 (+35000) subtract OA
Inventory
$313,000
$285,000 (+28,000) subtract OA
Equipment
$524,000
$480,000
Acc. Dep., Equipment
($139,000)
($123,000)
Total Assets
$1,029,000
$912,000
Liabilities
Accounts Payable
Taxes Payable
Long-Term Notes Payable
Stockholders’ Equity
Common Stock
Retained Earnings
Total Liabilities & S/E
$62,000
$27,000
$215,000
$32,000 (+30000) add OA
$35,000 (-8000) subtract OA
$228,000
$525,000
$200,000
$1,029,000
$440,000 (+85000)
$177,000
$912,000
Other information
1. Veritas borrowed an additional $35,000 during 2018 with a long-term note payable.
2. During 2018, the company issued additional shares of its no-par common stock.
3. During the year, Veritas sold equipment. The company originally paid $75,000 for the equipment in 2014.
At the time of sale, the accumulated depreciation on the equipment was $24,000.
4. All new equipment during the year was purchased with cash.
5. All dividends declared during the year were paid in cash.
Use the template below to prepare the statement of cash flows for the year ended 12/31/18.
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CH11 Practice Exercises_Statement of CF’s
Veritas Corporation
Statement of Cash Flows
For the Year Ended 12/31/18
Operating Activities:
Net income
$41,000
Add depreciation expense
+$40,000
Add (subtract) losses (gains) on sale of PP&E
<$11,000>
Add (subtract) decreases (increases) in
current assets:
Increase in AR
<$35,000>
Increase in Inventory
<$28,000>
Add (subtract) increases (decreases) in
current liabilities:
Increase in AP
+$30,000
Decrease in Taxes Payable
<$8,000>
Net Cash Flow from Operating Activities
$29,000
Investing Activities:
Sale of Equipment
+$62,000
Purchase of Equipment
<$119,000>
<$57,000>
Net Cash Flow from Investing Activities
Financing Activities:
Issuance of Common Stock
+$85,000
Borrowing of Long-Term Notes Payable
+$35,000
Payment on Notes Payable
<$48,000>
Payment of Dividends
<$18,000>
Net Cash Flow from Financing Activities
+$54,000
Net increase (decrease) in cash
(A)
+$26,000
Cash at beginning of the period (B)
$150,000
Cash at the end of the period (C)
A+B=C
$176,000
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CH11 Practice Exercises_Statement of CF’s
Practice Exercise #2 STMT CF’s NOFX [Sale asset, No new loans]
The following is the income statement for NOFX Corporation for the year ended 12/31/18:
Net Sales Revenue
$635,000
Cost of Goods Sold
($240,000)
Salaries Expense
($295,000)
Depreciation Expense
($37,000)
Other Expenses
($24,000)
Loss on Sale of Equipment
($12,000)
Net Income
$27,000
Below are the company’s balance sheets as of 12/31/18 and 12/31/17:
12/31/18
12/31/17
Assets
Cash
$91,000
$54,000
Accounts Receivable
$21,000
$35,000
Inventory
$162,000
$195,000
Equipment
$378,000
$342,000
Acc. Dep., Equipment
($78,000)
($57,000)
Total Assets
$574,000
$569,000
Liabilities
Accounts Payable
Salaries Payable
Long-Term Notes Payable
$25,000
$30,000
$107,000
$31,000
$18,000
$125,000
Stockholders’ Equity
Common Stock
Retained Earnings
Total Liabilities & S/E
$300,000
$112,000
$574,000
$300,000
$95,000
$569,000
Other information
1. During 2018, the company sold equipment. The equipment was initially purchased in 2016 for $50,000.
At the time of sale, the accumulated depreciation on the equipment was $16,000.
2. The company did not take out any additional loans during the year.
3. The company purchased all new equipment during the year with cash.
4. The company paid cash for all dividends declared during 2018.
Use the template below to prepare the statement of cash flows for the year ended 12/31/18.
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CH11 Practice Exercises_Statement of CF’s
NOFX Corporation
Statement of Cash Flows
For the Year Ended 12/31/18
Operating Activities:
Net income
Add depreciation expense
Add (subtract) losses (gains) on sale of PP&E
Add (subtract) decreases (increases) in
current assets:
Add (subtract) increases (decreases) in
current liabilities:
Net Cash Flow from Operating Activities
Investing Activities:
Net Cash Flow from Investing Activities
Financing Activities:
Net Cash Flow from Financing Activities
Net increase (decrease) in cash
Cash at beginning of the period
Cash at the end of the period
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