Chapter 12: Q2DQ (page 532)
What are some investing activities reported on the statement of cash flows?
The Investing activities which are reported on the statement of cash flow are the purchase of land, Sale of furniture, purchase of investments, and sale of the building.
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Use the following financial statements and additional information to
MONTGOMERY INC. Comparative Balance Sheets December 31, 2018, and 2017 | ||
2018 | 2017 | |
Assets | ||
Cash | \( 30,400 | \) 30,550 |
Accounts receivable, net | 10,050 | 12,150 |
Inventory | 90,100 | 70,150 |
Total current assets | 130,550 | 112,850 |
Equipment | 49,900 | 41,500 |
Accum. depreciation—Equipment | (22,500) | (15,300) |
Total assets | \(157,950 | \)139,050 |
Liabilities and Equity | ||
Accounts payable | 23,900 | \( 25,400 |
Salaries payable | 500 | 600 |
Total current liabilities | 24,400 | 26,000 |
Equity | ||
Common stock, no par value | 110,000 | 100,000 |
Retained earnings | 23,550 | 13,050 |
Total liabilities and equity | \)157,950 | \(139,050 |
MONTGOMERY INC. Income Statement For Year Ended December 31, 2018 | |
Sales | \)45,575 |
Cost of goods sold | (18,950) |
Gross profit | 26,625 |
Operating expenses | |
Depreciation expense \(7,200 | |
Other expenses 5,550 | |
Total operating expense | 12,750 |
Income before taxes | 13,875 |
Income tax expense | 3,375 |
Net income | \)10,500 |
Additional Information
a. No dividends are declared or paid in 2018.
b. Issued additional stock for $10,000 cash in 2018.
c. Purchased equipment for cash in 2018; no equipment was sold in 2018.
Refer to the information reported about Golden Corporation in Problem 12-6A.
Required
Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 12A.1; report operating activities under the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events.
a. Net income was \(136,000.
b. Accounts receivable increased.
c. Inventory increased.
d. Accounts payable increased.
e. Income taxes payable increased.
f. Depreciation expense was \)54,000.
g. Purchased equipment for \(36,000 cash.
h. Issued 12,000 shares at \)5 cash per share.
i. Declared and paid $89,000 of cash dividends.
Refer to the information in Problem 12-1B.
Required
Prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the direct method.
BTN 12-8 Jenna and Matt Wilder are completing their second year operating Mountain High, a downhill ski area and resort. Mountain High reports a net loss of \((10,000) for its second year, which includes an \)85,000 unusual loss from fire. This past year also involved major purchases of plant assets for renovation and expansion, yielding a year-end total asset amount of \(800,000. Mountain High’s net cash outflow for its second year is \)(5,000); a summarized version of its statement of cash flows follows.
Net cash flow provided by operating activities | $295,000 |
Net cash flow used by investing activities | (310,000) |
Net cash flow provided by financing activities | 10,000 |
Required
Write a one-page memorandum to the Wilders evaluating Mountain High’s current performance and assessing its future. Give special emphasis to cash flow data and their interpretation.
Refer to the data in QS 12-11.
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