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What would the statement of cash flows be with the followinginformation below?

year ended 12/31/13

Net income for the year 2013 was $5000.00. Accounts receivabledecreased $2000.00, inventories increased $4000.00, accountspayable decreased $7000, depreciation expense included in netincome was $8000.00. Land was sold for book value of $8000.00 and anew truck was purchased for $14000.00. company borrowed $18,000 ona two year bank note. dividends of $6000 were paid in cash.Preferred stock issued to retire $7000 of long term notes payable.Beginning cash balance was $22,000.00 and ending balance was$32,000.00

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Irving Heathcote
Irving HeathcoteLv2
28 Sep 2019

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Problem 13-23 Kate Petusky prepared Addison Controls’ balancesheet and income statement for 2013. Before she could complete thestatement of cash flows, she had to leave town to attend to afamily emergency. Because the full set of statements must beprovided to the auditors today, Addison’s president, Lance Meyers,has asked you to prepare the statement of cash flows. Meyers hasprovided you with the balance sheets and income statement thatPetusky prepared, as well as some notes she made: Addison ControlsIncome Statement For the Year Ended December 31, 2013 Sales revenue$ 128,900 Cost of goods sold 70,870 Gross margin 58,030 Sellingexpense $13,440 Administrative expense 8,330 Salaries expense20,380 Depreciation expense 1,900 Interest expense 4,470 48,520Income before gain and taxes 9,510 Gain on sale of Land 919 Incometax expense 850 Net income $ 9,579 Addison Controls ComparativeBalance Sheets As of December 31 2013 2012 Cash $ 5,330 $ 4,250Accounts receivable, net 6,360 5,550 Inventory 31,970 34,370 Totalcurrent assets 43,660 44,170 Property, plant, & equipment, net211,630 215,420 Total Assets $ 255,290 $ 259,590 Accounts payable $3,480 $ 6,140 Accrued expenses 2,510 2,490 Taxes payable 2,1702,870 Bonds payable 60,070 50,070 Total liabilities 68,230 61,570Common stock 125,370 125,370 Retained earnings 61,690 72,650 Totalstockholders’ equity 187,060 198,020 Total liabilities &stockholders’ equity $ 255,290 $ 259,590 • Equipment with anoriginal cost of $35,110 was sold for $20,369. The book value ofthe equipment was $19,450. • On June 1, 2013, the company purchasednew equipment for cash at a cost of $17,560. • At the end of theyear the company issued bonds payable for $10,000 cash. The bondswill mature on December 31, 2017. • The company paid $20,539 incash dividends for the year. Using the indirect method, prepareAddison Controls' statement of cash flows for 2013. (If an amountdecreases cash flow then enter with a negative sign preceding thenumber or parenthesis, e.g. -15,000 or (15,000).) Addison ControlStatement of Cash Flows For the Year Ended December 31, 2013 Changein cashCash flows from financing activitiesCash flows fromoperating activitiesAdjustments to net incomeCash flows frominvesting activitiesCash, beginning balanceCash, ending balanceIncrease in accounts payableIncrease in accrued expensesDecrease inincome taxes payableDecrease in inventoriesSale of equipmentIssuebondsIncrease in income taxes payableDecrease in accountsreceivablePurchase of equipmentCash dividends on common stockNetincome / (loss)DepreciationGain on sale of landIncrease in accountsreceivableIncrease in inventoriesDecrease in accountspayableDecrease in accrued expenses $ Change in cashCash, beginningbalanceAdjustments to net incomeCash flows from investingactivitiesCash, ending balanceCash flows from operatingactivitiesCash flows from financing activities Purchase ofequipment Issue bonds Increase in accounts payable Decrease inaccounts receivable Increase in accrued expenses Decrease inaccrued expenses Cash dividends on common stock Decrease in incometaxes payable Decrease in inventories Increase in income taxespayable Net income / (loss) Sale of equipment Increase ininventories Depreciation Gain on sale of land Increase in accountsreceivable Decrease in accounts payable $ Sale of equipmentDecrease in accrued expenses Decrease in accounts payable Decreasein income taxes payable Increase in accounts receivable Increase inincome taxes payable Increase in accounts payable Purchase ofequipment Increase in accrued expenses Net income / (loss) Issuebonds Cash dividends on common stock Depreciation Gain on sale ofland Decrease in accounts receivable Increase in inventoriesDecrease in inventories Issue bonds Gain on sale of land Net income/ (loss) Sale of equipment Cash dividends on common stock Increasein accounts payable Decrease in accrued expenses Purchase ofequipment Increase in inventories Decrease in income taxes payableDepreciation Increase in accounts receivable Decrease in accountspayable Decrease in inventories Decrease in accounts receivableIncrease in income taxes payable Increase in accrued expensesDecrease in accrued expenses Sale of equipment Increase ininventories Decrease in accounts receivable Purchase of equipmentIncrease in accrued expenses Decrease in income taxes payable Issuebonds Depreciation Gain on sale of land Cash dividends on commonstock Increase in accounts receivable Decrease in inventories Netincome / (loss) Decrease in accounts payable Increase in accountspayable Increase in income taxes payable Increase in accruedexpenses Purchase of equipment Issue bonds Sale of equipmentDecrease in accounts payable Cash dividends on common stock Gain onsale of land Net income / (loss) Decrease in accrued expensesDepreciation Increase in accounts receivable Decrease in accountsreceivable Decrease in inventories Increase in inventories Decreasein income taxes payable Increase in accounts payable Increase inincome taxes payable Purchase of equipment Increase in income taxespayable Sale of equipment Issue bonds Cash dividends on commonstock Decrease in accounts receivable Gain on sale of land Decreasein inventories Net income / (loss) Depreciation Increase inaccounts receivable Increase in inventories Decrease in accountspayable Increase in accounts payable Decrease in income taxespayable Increase in accrued expenses Decrease in accrued expensesGain on sale of land Issue bonds Increase in inventories Increasein income taxes payable Decrease in accounts payable Cash dividendson common stock Decrease in inventories Increase in accruedexpenses Increase in accounts payable Net income / (loss) Decreasein accrued expenses Purchase of equipment Decrease in income taxespayable Depreciation Increase in accounts receivable Sale ofequipment Decrease in accounts receivable Net cash usedprovided byinvestingfinancingoperating activities Cash flows from operatingactivitiesCash flows from financing activitiesCash flows frominvesting activitiesCash, ending balanceChange in cashAdjustmentsto net incomeCash, beginning balance Decrease in inventoriesDecrease in accounts payable Gain on sale of land Decrease inaccounts receivable Issue bonds Cash dividends on common stockIncrease in accounts receivable Increase in inventoriesDepreciation Net income / (loss) Purchase of equipment Increase inaccounts payable Increase in accrued expenses Decrease in accruedexpenses Decrease in income taxes payable Increase in income taxespayable Sale of equipment Increase in accrued expenses Issue bondsDecrease in accounts receivable Sale of equipment Decrease inaccrued expenses Decrease in inventories Gain on sale of landDecrease in income taxes payable Increase in income taxes payableDecrease in accounts payable Increase in accounts payableDepreciation Cash dividends on common stock Purchase of equipmentNet income / (loss) Increase in inventories Increase in accountsreceivable Net cash providedused by operatinginvestingfinancingactivities Change in cashAdjustments to net incomeCash, beginningbalanceCash, ending balanceCash flows from financing activitiesCashflows from operating activitiesCash flows from investing activitiesIncrease in income taxes payable Purchase of equipment Decrease inaccounts payable Issue bonds Decrease in inventories Cash dividendson common stock Net income / (loss) Depreciation Increase ininventories Increase in accounts receivable Sale of equipmentDecrease in income taxes payable Increase in accounts payable Gainon sale of land Increase in accrued expenses Decrease in accruedexpenses Decrease in accounts receivable Decrease in accountspayable Net income / (loss) Sale of equipment Increase in incometaxes payable Increase in accounts receivable Decrease in accruedexpenses Increase in inventories Decrease in accounts receivableCash dividends on common stock Increase in accrued expensesDecrease in income taxes payable Decrease in inventories Increasein accounts payable Purchase of equipment Depreciation Issue bondsGain on sale of land Net cash usedprovided byoperatinginvestingfinancing activities Cash flows from investingactivitiesCash flows from financing activitiesChange in cashCash,ending balanceCash flows from operating activitiesCash, beginningbalanceAdjustments to net income Cash, ending balanceCash flowsfrom operating activitiesCash flows from investing activitiesCashflows from financing activitiesAdjustments to net incomeChange incashCash, beginning balance Change in cashCash flows from investingactivitiesCash flows from financing activitiesCash, beginningbalanceCash flows from operating activitiesCash, endingbalanceAdjustments to net income $

1. Which of the following would NOT be considered a significantnon cash transaction?

Issuing debt to purchase plant assets

Exchanging plant assets

Paying stock dividends

All of the above are significant non cash transactions

2. During 2018, ABC Company reports the following activities

1. Net Income was recorded in the amount of $75,000

2. Depreciation expense was $10,000

3. Repaid a loan of $10,000 cash

4. Issued stock in exchange for $30,000

5. Sold equipment which had a book value of $20,000 for $17,000(recognizing a $3,000 loss).

6. Accounts Receivable decreased by $5,000

7. Accounts Payable decreased by $2,000

Calculate the cash provided by operating activities given theabove information.

3. ABC Company reports cash flows from operating activities of$30,000. In addition, ABC Company pays dividends of $5,000 and doesnot purchase any fixed assets during the year. Interest expense forthe year was $7,000. Calculate free cash flows for ABC Company.

4. The net income reported on the income statement for thecurrent year was $245,000. Depreciation was $40,000. Accountreceivable and inventories decreased by $12,000 and $35,000,respectively. Prepaid expenses and accounts payable increased,respectively, by $1,000 and $8,000. How much cash was provided byoperating activities?

5. In calculating cash flows from operating activities using theindirect method, a gain on the sale of equipment is

Ignored because it does not impact cash

Added to net income

Subtracted from net income

Not reported on the Statement of Cash Flows

6. The following data are availablefor ABC Corporation.

Sale ofland $225,000

Sale ofequipment $130,000

Issuance of commonstock 140,000

Purchase ofequipment 70,000

Payment of cashdividends 120,000

Net cash provided by investing activities is:

7. ABC Company issues $50,000 of common stock during the yearfor cash. How would this be reported on the statement of cashflows?

As an addition to financing activities

As an addition to planning activities

As an addition to investing activities

As a subtraction from operating activities

8. XYZ Store had net credit sales of $8,500,000 and cost ofgoods sold of $5,000,000 for the year. The Accounts Receivablebalances at the beginning and end of the year were $600,000 and$760,000, respectively. The accounts receivable turnover was

9. ABC Company reports net income of $50,000 for 2018. Theprofit margin for ABC Company is 5%. Calculate the net sales forABC Company

10. Turnbull Department Store had net credit sales of$18,000,000 and cost of goods sold of $15,000,000 for the year. Theaverage inventory for the year amounted to $2,500,000. The averagenumber of days that it took to convert inventory into cash for ABCwas

11. Each of the following is included in computing the acid-testratio EXCEPT

Net accounts receivable

Cash

Inventory

Short-term investments

12. ABC Corporation had net income of $240,000. The weightedaverage number of shares outstanding in 2017 was 60,000 shares. AleCorporation's common stock is selling for $76 per share on the NewYork Stock Exchange. ABC Corporation's price-earnings ratio is

13. ABC Company reports Sales revenue of the following amountsfor 2016, 2017 and 2018:

2016: $125,000

2017: $210,000

2018: $215,000

Calculate the percentage change in sales revenue from 2016 to2018

14. Horizontal analysis is also called:

Linear anlysis

Common sizing

Trend analysis

Vertical analysis

15. XYZ Company reports cost of goods sold of $80,000 in 2018and of $60,000 in 2017. Calculate the % change in cost of goodssold from 2017 to 2018.

16. ABC, Inc. has the following income statement (inmillions):

ABC,INC.

IncomeStatement

Forthe Year Ended December 31, 2017

NetSales $300

Cost of GoodsSold 180

GrossProfit 120

OperatingExpenses 45

NetIncome $75

Using vertical analysis, what percentage is assigned to NetIncome?

17. Vertical analysis is also called:

Ratio anlysis

Common sizing

Trend analysis

Horizontal analysis

18. Swiss Clothing Store had a balance in the AccountsReceivable account of $920,000 at the beginning of the year and abalance of $980,000 at the end of the year. Net credit sales duringthe year amounted to $6,650,000. The average collection period ofthe receivables in terms of days was

Question 1

On January 2, 2013, Potter Ltd. purchased 40% ontiago Ltd. for$900,000. At the acquisition date, Santiago’s balance sheet showedtotal shareholders’ equity of $1,500,000. Any acquisitiondifferential is to be allocated to Santiago’s equipment. At theacquisition date, the equipment had a remaining useful life of 10years. For the past 5 years, Santiago has paid annual dividends of$50,000 and will continue to do so in the future.

The following information has been extracted from Santiago’sincome statement:

2014 2013

Net income (loss) before extraordinaryitems $ (90,000) $ 450,000

Extraordinary gain (net oftax) __-___ 150,000

Net income(loss) $ (90,000) $ 600,000

Required:

Assume that Potter has significant influence. Prepare Potter’sjournal entries related to its investment in Santiago for 2013 and2014.

Question 2

On September 1, 2014, Sunshine Ltd. acquired all the assets(with the exception of cash) and liabilities of Moonbeam Ltd. Underthe terms of acquisition, Moonbeam shareholders received 3 Class ASunshine Ltd. shares plus $2.00 cash for every four shares ofMoonbeam. At the acquisition date, Sunshine’s Class A shares werevalued at $2.50 per share. Sunshine had agreed to cover Moonbeam’sestimated liquidation costs of $10,000. The $1,500 of cash inMoonbeam’s bank at the acquisition date will go towards payingthese costs. The statements of financial position at theacquisition date are as follows:

Sunshine Moonbeam Ltd.

Ltd. Cost FMV

Cash $ 30,000$ 1,500 $ 1,500

Accountsreceivable 52,500 28,500 26,250

Inventory 78,000 39,750 48,000

Property and equipment(net) 449,250 224,250 248,250

Kucey Ltd. bonds(investment) _67,500 _27,000 28,500

677,250 321,000

Accountspayable 117,000 114,000 114,000

Loanpayable ___-___ _60,000 60,000

117,000 174,000

Share capital issued at$1 450,000 120,000

Retainedearnings 110,250 _27,000

560,250 147,000

$677,250 $321,000

Items not reflected in Moonbeam’s statement of financialposition:

Contingent liability related to a loan guarantee was reported inthe notes to the financial statements and has a fair value of$2,000.

Moonbeam had expensed $15,000 in research and development costsin the past year. At the acquisition date, Sunshine has determinedthat the value of the research in progress is $3,000.

Sunshine’s statement of financial position does not include$5,000 in fees for valuation and accounting advice related to theacquisition of Moonbeam. Sunshine expects to pay these feesshortly.

Required:

1) Prepare the acquisition analysis and calculate thegoodwill.

2) Prepare all the journal entries in Sunshine’s books to recordthe acquisition of Moonbeam.

3) Prepare Sunshine’s statement of financial positionimmediately following the acquisition.

Question 3

On May 1, 2013, Peat Co. purchased all of Sorbet Ltd.’s issuedcommon shares for $630,000. At the acquisition date, Sorbet’sfinancial statements included the following balances:

Sharecapital $400,000

Retainedearnings 210,000

Goodwill 10,000

At the acquisition date, Sorbet’s identifiable assets andliabilities were equal to their fair values, except in the case ofinventory that had a book value of $80,000 and a fair value of$86,000, and equipment that had a book value of $360,000 and a fairvalue of $370,000. The equipment was originally purchased for$480,000. At the acquisition date, the equipment had a remaininguseful life of 5 years and was amortized using the straight-linemethod. All the inventory that Sorbet had on hand at theacquisition date was sold by October 2013. Sorbet’s goodwill hasnot shown indications of impairment. Both Peat and Sorbet haveApril 30th year-ends and did not have any intercompanysales with each other.

The financial statements for Peat and Sorbet at April 30, 2015are presented on the following pages.

Statement of Financial Position

April 30, 2015

Peat Co. SorbetLtd.

Assets:

Current assets:

Cash $ 52,000 $ 161,600

Accountsreceivable 100,000 80,000

Inventory 120,000 170,000

272,000 411,600

Non-current assets:

Equipment,net 558,000 368,000

Furniture and fixtures,net 51,000 51,600

Investment in SorbetLtd. 630,000 -

Goodwill ___-___ 10,000

1,239,000 429,600

Totalassets $1,511,000 $841,200

Liabilities and shareholders’ equity:

Current liabilities:

Accountspayable $ 69,000 $ 19,600

Non-current liabilities:

Loanpayable 22,000 32,000

Totalliabilities 91,000 51,600

Shareholders’ equity:

Sharecapital 1,000,000 400,000

Retainedearnings 420,000 389,600

1,420,000 789,600

Total liabilities and shareholders’equity $1,511,000 $841,200

Condensed Statement of Income

For the year ended April 30, 2015

Peat Co. SorbetLtd.

Sales $250,000 $180,000

Expenses 170,000 130,000

Netincome $ 80,000 $ 50,000

Statement of Changes in Equity

For the year ended April 30, 2015

Peat Co. SorbetLtd.

Sharecapital $1,000,000 $400,000

Retained earnings, May 1,2014 340,000 339.600

Netincome 80,000 50,000

Retained earnings, April 30,2015 420,000 389,600

Total shareholders’equity $1,420,000 $789,600

Required:

Prepare Peat’s consolidated financial statements for April 30,2015. Ignore income taxes.

Question 4

On June 30, 2014, Pewter Ltd. gave 28,000 shares to Sterling Co.in exchange for 70% of Sterling’s outstanding shares. At the timeof the exchange, Pewter’s shares had a fair value of $22.50 pershare. The post-acquisition statements of financial position andSterling’s fair values are shown below.

Statement of Financial Position

As of June 30, 2014

Sterling Co.______

Pewter Ltd. Book value Fair Value

Assets:

Current assets:

Cash $ 750,000 $ 37,500 $ 37,500

Accountsreceivable 1,500,000 112,500 112,500

Inventory 150,000 37,500 37,500

2,400,000 187,500

Non-current assets:

Land 750,000 225,000 300,000

Equipment 2,250,000 375,000 412,500

Accumulatedamortization (900,000) (112,500)

Investment inSterling 630,000 __ -___

2,730,000 487,500

Totalassets $5,130,000 $ 675,000

Liabilities and shareholders’ equity:

Current liabilities:

Accountspayable $ 750,000 $ 75,000 75,000

Loanpayable 300,000 _____

1,050,000 75,000

Shareholders’ equity:

Commonshares 2,580,000 150,000

Retainedearnings 1,500,000 450,000

4,080,000 600,000

Total liabilities and shareholders’equity $5,130,000 $ 675,000

Required:

a) Calculate Pewter’s consolidated goodwill.

b) Prepare Pewter’s consolidated statement of financial positionat
June 30, 2014 using the entity theory method of consolidation.

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