MODULE 9-STATEMENT OF CASH FLOW EXERCISES 1. Selected transactions of Eller Company are listed below. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Common stock is sold for cash above par value. Bonds payable are issued for cash at a discount. Interest on a short-term note receivable is collected. Merchandise is sold to customers for cash. Cash is paid to purchase inventory. Equipment is purchased by signing a 3-year, 10% note payable. Cash dividends on common stock are declared and paid. 100 shares of XYZ common stock are purchased for cash. Land is sold for cash at book value. Bonds payable are converted into common stock.

Instructions Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity, or (d) a noncash investing and financing activity.
2.

Prince Company reported net income of $150,000 for the current year. Depreciation recorded on buildings and equipment amounted to $80,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: Cash Accounts receivable Inventories Prepaid expenses Accounts payable Income taxes payable End of Year $20,000 19,000 55,000 7,500 12,000 1,600 Beginning of Year $15,000 30,000 65,000 5,000 16,000 1,300

Instructions Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method. 3. Assuming a statement of cash flows is prepared, indicate the reporting of the transactions and events listed below by major categories on the statement. Use the following code letters to indicate the appropriate category under which the item would appear on the statement of cash flows. Code Cash Flows From Operating Activities Add to Net Income A Deduct from Net Income D Cash Flows From Investing Activities IA Cash Flows From Financing Activities FA

Category 1. Common stock is issued for cash at an amount above par value. Merchandise inventory increased during the period. 3. Depreciation expense recorded for the period. 4. Building was purchased for cash. 5. Bonds payable were acquired and retired at their carrying value. 6. 7. 8. 9. 10. Accounts payable decreased during the period. Prepaid expenses decreased during the period. Treasury stock was acquired for cash. Land is sold for cash at an amount equal to book value. Patent amortization expense recorded for a period. THE END 2. _______ _______ _______

_______ _______ _______ _______ _______

1) 1. (c) FA 2. (c) FA 3. (a) OA 4. (a) OA 5. (a) OA 6. (d) Non-CA 7. (c) FA 8. (b) IA 9. (b) IA 10. (d) Non-CA

2) Net income = $150,000 Depreciation expense= 80,000 Decrease in accounts receivable = 30,000 - 19,000 = 11,000 Decrease in inventories = 65,000 55,000 = 10,000 Increase in prepaid expenses= 5,000 7,500 = -2,500 Decrease in accounts payable = 16,000 12,000 = -4,000 Increase in income taxes payable = 1,600 1,300 = 300 --------- Thus---- Net cash provided by operating activities = above = $244,800 3) 1- FA 2- D 3- A 4- IA

5- FA 6- D

7- A 8- FA

9- IA 10- A

2) Net income = $150,000 -Depreciation expense= 80,000 -Decrease in accounts receivable = 30,000 - 19,000 = 11,000 -Decrease in inventories = 65,000 55,000 = 10,000 -Increase in prepaid expenses= 5,000 7,500 = -2,500 -Decrease in accounts payable = 16,000 12,000 = -4,000