* •4 | The Statement of Cash Flo s 337

30*. Condensed financial statements for the Billy Com- pany are as follows:
Billy Company PROBLEMS
Balance fitieet

21,conde.nsed financial statements of Buckner Corporation are as folloW

The
I)ecemorr3T

Cash Comparative i ce Steel

S 7,500 S 6,000
Oecemder 3J, f&! Qg 39x2
receivable .. 9,000
15,000
11,000
12,50F.
\/’ ..’::: :!
Fixed assets’ ... ” 30,000 25,000 jsx;!
Accumulated depreciation . (12,500) (10,0tKl)
549,000 $44,500 Asseis
Current assets:
Cash G 50,QXI $ 35,000
Accounts payable .. .. s•s,ooo s›s,ooo Accounts receivable '00,000 90,000
Bonds payable 10,000 15,000 lnven1ory . 60,000 65,000
\. Common stock 15,?00 10,000 Prepaid expenses . 10.000 8,000
Retained earnings .. . 6,00c 4,500 ”Total current assets . S220,000 $198,000
$49,000 44,500 Fixed ass sts:
Building and equipment(net) - - S y000 C220,0O0
Land ...... ..... ... - • '
Billy Company Total assets .. . ...., . . s . $470,000 S468t000
lnco, e Statement
For the Year Ending December 3l, 19x2
Liabilities and
Stockflnmers’ I.9un
Sales , .. . $35,000 Accoun:s payable . $100,0OJ S 80000
Ccst of goods sold 17,0g0 10,0@ 10£O0
!nterest payable ,
Gross margin . 848,000 . 30,000 40,000
Depreciation $ 2,500 20G,000 200,08n
Operating expenses 11,?00 13,5uU â40,000 138,000
Net income ... $ 4,500
Total liabilities
and stockholders’ equity . .. ' j** 0 $68a
Requi.‘ed.

Prepare a statement of cash flows ior Buckner Co !!

income statement
19x2.

Sales ...... 8Z50,00B

Less: Cost of goods sold .-. ' 1S^,000
Gross margin
Operating expenses ........'-
20,000 84.000

- Depreciation .......
Net loss.

Required:

Prepare a statement of cash flOWs for 19x2.

 eatow is the Income statement for tne Rau Com-
23. Consider the following selected account balances
for the ygar ended Uacember 31, 19x1.
for Messersahmidt, Inc.
Rau Company
income Srafemenr
For the Year Ended December 31, 19x1 Accounts racei‘zable . .....
inventor1es . . . . . . . 550 700 $150
Salae 61,000,000
Buildings . . ........... 1,000 800 200
Accumulated
Beglnnliig Inver.tory . . . depreclat[on—
5 20,000
bui ldlnq . . 175 150 25
..
Gpode evaJlable for sale. . . . "’ -“ •”'”• ” 300 200 100
Endlng tnyantory 100 150
Cost of goods sold . . . Bonds payable—
Groas margin . .. . .. . . . . . . . . long-term . . .
Operating expenses: Cauttal stock 200 300 too
SaJarleg . . Re\alned earnings . . .
Oapractatton . . . . . Sales . . 1,100 1,200
Bad debte Cost oT goods sold . . TOO 450
10,000
AdvartisJnq . . Expenses 500 575
20,000
Patent amortization . . 5,00u
Total operating expenses 105,000 Required:

Gain on safe at equipment . . . . . .
hej Income . . . .
Supplemei ital data for 19x1'
Increase in net accounts receivable
. Decrease In accounts payable . ..
so,ooo Prepare a statement of cash flows for i\4e? ver
& 450,000 scnmidt, Inc., for the period enging Oecer ber 31,
1'3x2, using tha indirect mett.oa a ›J assuming,
where it is nec•.ssar, . !hat the cha ages in the ac-
cour.ts ere the res' lit uf ca•h ir ansacttons.
$6,000
1,500

Required:

Prepare a schedule computing cash flows from op-

erating activities.
 t4 | The Statement of Cash Flcws 343

Below is the balanae sheet for Ranger Company

31.
comparing the years 19x1 and 19x2. J9efeinad Eamfnps Siaremenf
For i;ia Yaer Eeded Osoemder 3f,
I.•xj
f9rf
S25,1XQ
Retained singsat beginning of year 15,0 Id
. . Add: Net' - - ‘ - '-

AcCoUrta re-ceiyable {net) g0,f}00 75,000 $ubtr8Ct• @iyjdgnds ......................................

M3rke!abIe seCurJtie; Retained earnings ^'W^
Prepaid expenses . . .
BulI'1ings . . . . .
d depreciatlon— CompenaimeBalance Sheet
buimung‘s
Totai assets ............ Or cem6gr 3f
...

Tlabili.’ies and Asaets

Stockholders’ Equity $ 71, S 50,000
Accounts payable .
Bonds parable 100,000 80,0C0 S 60,fXX
Cap'\al stock' ' .. 50,000 60,000
Fle\ai eel earnings .. ....... 24,060 26,000 Inventories- - • • • •-- •- • - --- - - - 15,000 10,I¥X
!otaJ !!8biII!ias and Buildlng .'•- - •••••••. 1O0t000
9tock' folders' equity pqgg,T\ujcteo depreciation—
/27,000)
125,000
Additional information for 19x2:
Total assets - - - - - -- - $307,000
Sales .. . . 845,000
Cost of goods sold . . . . 21,500
Total expenses . 17,500 siockholders‘_Eguit
Cash dividends paid 10,000 y $ 35,000 5,0IX
AccountS payable.-.- • • 7,000
Require.°d:
• A reed w•ses payable
. - g pp pgyable—

Prepare a statement of cash flows for the year end-

ed December 31, 19x2. Retained earnings . - . 35,000
Total equities . . . . • - - • - - . • . .
$307,000
32. The 19x1 financial statements for the Alston Com-
pany are: The folloWlft9 I f\fOC **-” ” ie:

income Sfafement .› as som! fOi

ror the Year Ended December 3l,
19a onased for 550,000.
c. A long-io• ... - -s Issued for $10,000.
*0,000
Net sales ....... ........... ... 520,000 d. US.- s* sh diwuends were paid during th£
Cost of goodo sold year.
. . Gross margin
..... Required:
Operating expenses:
Depreciation . , . . . .
Othar expenses . .. . . . . . . . . . . . 1,000 10,000
NeMOcometcKnopcratons .. .. 510.000 Prepare a statement of cash tlows for the Alstor
Geinonsateo|teno,.. Company for the year ending December 31, 19x1.
diet income