1. Ejercicio E12-7 de la página 590.

E12-7 Preparing and Evaluating a Simple Statement of Cash Flows (Indirect Method)

LO 12-1, 12-2, 12-5
Suppose the income statement for Goggle Company reports $95 of net income, after deducting depreciation of $35. The co
$70. The company’s comparative balance sheet, at December 31
STEP 1 STEP 2
Previous Year Current Year Change relates to operating, investing, and/or
Cash $35 $240 10 O
Accounts Receivable 75 175 FA
Inventory 260 135 O
Equipment 500 560 O
Accumulated Depreciation—Equipment -45 -80 -35 FA
Total $825 $1,030
Salaries and Wages Payable $10 $  50  O
Notes Payable (long-term) 445 515 70 FA
Common Stock 10 10 I
Retained Earnings 360 455 95 I
Total $825 $1,030

Required:
1. Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, an
2. Prepare a statement of cash flows using the indirect method.
Indirect Method
Net Income 95
Depreciation 35
Changes in current aseets and current liabili 60
Net cash provided by operating activities 70

3. In one sentence, explain why an increase in accounts receivable is subtracted.

Se resta un aumento en cuentas por cobrar ya que este aumento implica que las recaudaciones en efectivo fueron menores q

4. In one sentence, explain why a decrease in inventory is added.

Se agrega una disminución en el inventario ya que las compras de bienes aumentan el saldo del inventario y es favorable para

5. In one sentence, explain why an increase in salaries and wages payable is added.
porque son componentes de la utilidad neta

6. Are the cash flows typical of a start-up, healthy, or troubled company? Explain.
Los flujos de efectivo se usan principalmente en start ups, ya que muestra los principales tipos de actividad comercial que ca
aumentara o disminuyera durante el período contable.
educting depreciation of $35. The company bought equipment costing $60 and obtained a long-term bank loan for
ative balance sheet, at December 31, is presented here.

elates to operating, investing, and/or financing activities.

60
-70
70

t relates to operating, investing, and/or financing activities.

iones en efectivo fueron menores que las ventas e ingreso de efectivo

do del inventario y es favorable para la empresa

s tipos de actividad comercial que causaron que el efectivo de una empresa

e el período contable.
2. Ejercicio E12-13 de la página 593. 
E12-13 Preparing and Evaluating a Statement of Cash Flows (Indirect Method) from Comparative Balance Sheets and Inco
LO 12-1, 12-2, 12-3, 12-4, 12-5

Consultex, Inc., was founded in 2015 as a small financial consulting business. The company had done reasonably well in
purchase land and repaid $2,000 principal on an existing promissory note. In March, the company paid $2,000 cash for di
improve its cash position, Consultex borrowed $5,000 by signing a new promissory note in May and also issued stock t
presented be

Requirements:

1. Prepare a properly formatted Statement of Cash Flows for Consultex, Inc., for the year ended October 31, 2018 (using

Consultex, Inc.
Cash Flow Statement
For year ended 31st October 2018
Cash Flow Operating Activity
Net Income 3000
Changes in current operating assets and liabilities
Increase Accounts receivable -2000
Decrease Salaries and Wages payable -1000
Decrease Prepaid rent 1000 -2000
Net Cash Flow Operating Activities 1000
Cash Flow Investing Activities
Cash Paid purchased land -16000
Net Cash Flow Investing Activities -16000
Cash Flow Financing activities
Cash Received from sale of common stock 12000
Cash Paid Purchased of own shares -1000
Payment of dividend -2000
Cash received from issue o notes payable 5000
Notes payable (long term) -2000
Cash flows from financing activities 12000

Cash Flow during the year -3000

Cash Flow Beginning 14000
Cash Flow End 11000

2. What one thing can Consultex reasonably change in 2019 to avoid depleting its cash?
La empresa debería disminuir su compra de activo fijo
parative Balance Sheets and Income Statements

any had done reasonably well in 2015–2017 but started noticing its cash dwindle early in 2018. In January 2018, Consultex had paid $16,00
company paid $2,000 cash for dividends and $1,000 to repurchase and eliminate Consultex stock that had previously been issued for $1,00
te in May and also issued stock to a new private investor for $12,000 cash. Year-end comparative balance sheets and income statements a
presented below.

ar ended October 31, 2018 (using the indirect method).

2018, Consultex had paid $16,000 to
previously been issued for $1,000. To
sheets and income statements are
3. Problema  CP12-3 página 598.
CP12-3 Preparing a Statement of Cash Flows (Indirect Method)
LO 12-2, 12-3, 12-4, 12-5

Hunter Company is developing its annual financial statements at December 31. The statements are complete exc
Current Year Prior Year

Balance Sheet at December 31

Cash $44,000 $18,000
Accounts Receivable 27,000 29,000
Inventory 30,000 36,000
Equipment 111,000 102,000
Accumulated Depreciation—Equipment -36,000 -30,000
Total Assets $176,000 $155,000
Accounts Payable $25,000 $22,000
Salaries and Wages Payable 800 1,000
Note Payable (long-term) 38,000 48,000
Common Stock 80,000 60,000
Retained Earnings 32,200 24,000
Total Liabilities and Stockholders’ Equity $176,000 $155,000
Income Statement (current year)
Sales Revenue $100,000
Cost of Goods Sold 61,000
Other Expenses 27,000
Net Income $12,000

Additional Data:

1. Bought equipment for cash, $9,000.

2. Paid $10,000 on the long-term note payable.
3. Issued new shares of stock for $20,000 cash.
4. Declared and paid a $3,800 cash dividend.
5. Other expenses included depreciation, $6,000; salaries and wages, $10,000; taxes, $3,000; utilities, $8,000.
6. Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relati

Required:

1. Prepare the statement of cash flows for the year ended December 31 using the indirect method.
Indirect Method
Net Income 12,000
Depreciation - 36,000
Changes in current aseets and current liabilities 11,000
Net cash provided by operating activities - 35,000

2. Use the statement of cash flows to evaluate Hunter’s cash flows.

TIP: Demonstration Case A provides a good example of information to consider when evaluating cash flows

HUNTER COMPANY
Statement of Cash Flows
For the Year Ended DECEMBER 31
Cash Flows from Operating Activities
Cash collected from customers $44,000
Cash paid to suppliers of inventory
Cash paid to employees and suppliers of services -6,800
Cash paid for income taxes -10,000
Net cash provided by operating activities 27,200 40300
Cash Flows from Investing Activities
Purchase of equipment -9,000
Net cash used in investing activities -9,000
Cash Flows from Financing Activities
Proceeds from issuance of common stock 20,000
Net cash provided by financing activities 20,000
Net Increase in Cash and Cash Equivalents 38,200 51,300
Cash and Cash Equivalents at beginning of year 18,000
Cash and Cash Equivalents at end of year $56,200
e statements are complete except for the statement of cash flows. The completed comparative balance sheets and income stat

11000
0
-10000

$3,000; utilities, $8,000. 21000

are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.

rect method.
evaluating cash flows
heets and income statement are summarized: