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PA 1.

LO 16.2Provide journal entries to record each of the following transactions. For each, also identify *the appropriate section of the statement of cash flows, and **whether the transaction represents a source of cash (S), a use of cash (U), or neither (N).

  1. paid $12,000 of accounts payable
  2. collected $6,000 from a customer
  3. issued common stock at par for $24,000 cash
  4. paid $6,000 cash dividend to shareholders
  5. sold products to customers for $15,000
  6. paid current month’s utility bill, $1,500
PA 2.

LO 16.3Use the following information from Acorn Company’s financial statements to determine operating net cash flows (indirect method).

Income Statement items: Sales $453,000. Cost of Goods Sold (359,000). Operating Expenses, other than depreciation expense (65,000). Depreciation Expense (8,000). Loss on Sale of Plant Assets (11,900). Net Income 9,100. Balance Sheet items: December 31, 2018: Accounts Receivable 29,500. Accounts Payable 13,250. December 31, 2017: Accounts Receivable 26,500. Accounts Payable 11,750.
PA 3.

LO 16.3Use the following information from Berlin Company’s financial statements to prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018.

Cash, Accounts Receivable, Prepaid Assets, Total Assets, Accrued Liabilities, Common Stock, Retained Earnings, Total Liabilities and Equity December 31, 2018, respectively: $29,000, 11,500, 1,200, 41,700, 1,700, 33,000, 7,000, 41,700. Additional information: Net Income and Dividends Paid, respectively: 5,800, 4,000. Cash, Accounts Receivable, Prepaid Assets, Total Assets, Accrued Liabilities, Common Stock, Retained Earnings, Total Liabilities and Equity December 31, 2017, respectively: $ 24,000, 12,000, 1,000, 37,000, 1,800, 30,000, 5,200, 37,000.
PA 4.

LO 16.3Use the following information from Coconut Company’s financial statements to prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018.

Cash, Accounts Receivable, Inventory, Prepaid Rent, Accounts Payable December 31, 2018, respectively: $201,000, 22,000 33,750, 6,000, 19,500. Additional information: Net Income, Depreciation Expense, respectively: 55,000, 11,500. Cash, Accounts Receivable, Inventory, Prepaid Rent, Accounts Payable December 31, 2017, respectively: $175,000, 21,500, 30,500, 2,000, 28,750.
PA 5.

LO 16.3Use the following information from Dubuque Company’s financial statements to prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018.

From the December 31, 2018 balance sheet, changes from prior year: Accounts Receivable $7,600, Inventory 3,200, Prepaid Insurance (2,000), Accounts Payable (4,000), Sales Tax Payable 1,900. From the 2018 Income Statement: Gain from sale of investments 12,000, Depreciation Expense 26,500, Net Income 79,300.
PA 6.

LO 16.3Use the following information from Eiffel Company’s financial statements to prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018.

Income Statement items: Sales $299,000. Cost of Goods Sold (135,000). Operating Expenses, other than depreciation expense (27,000). Depreciation Expense (17,000). Gain on Sale of Plant Assets 16,500. Net Income 136,500. Balance Sheet items: December 31, 2018: Accounts Receivable 45,300. Inventory 1,600. Accounts Payable 22,500. Accrued Liabilities 900. December 31, 2017: Accounts Receivable 43,400. Inventory 1,800. Accounts Payable 21,250. Accrued Liabilities 1,150.
PA 7.

LO 16.3Analysis of Forest Company’s accounts revealed the following activity for its Land account, with descriptions added for clarity of analysis. How would these two transactions be reported for cash flow purposes? Note the section of the statement of cash flow, if applicable, and if the transaction represents a cash source, cash use, or noncash transaction.

Land items: Account balance, beginning of year $220,000. Purchase of land this year, for cash 95,000. Purchase of land this year, with note payable 75,000. Account balance, end of year 390,000.
PA 8.

LO 16.4Use the following excerpts from Zowleski Company’s financial information to prepare a statement of cash flows (indirect method) for the year 2018.

Cash, Account Receivable, Merchandise Inventory, Plant Assets, Accumulated Depreciation, Total Assets, Accounts Payable, Notes Payable, Common Stock, Retained Earnings, Total Liabilities and Equity December 31, 2018, respectively: $92,300, 22,000, 140,000, 180,000, (25,000), 409,300, 18,500, 135,500, 20,000, 235,300, 409,300. Additional information: Net Income for 2018, Depreciation Expense for 2018 (Accumulated Depreciation increase), Plant Assets purchased (Plant Assets increase), financed by note, Notes Payable increased by amount of plant asset purchase, Notes Payable decreased by amount of principal note payments: 28,400, 4,000, 30,000, 30,000, 14,500. Cash, Account Receivable, Merchandise Inventory, Plant Assets, Accumulated Depreciation, Total Assets, Accounts Payable, Notes Payable, Common Stock, Retained Earnings, Total Liabilities and Equity December 31, 2017, respectively: $85,000, 22,900, 131,000, 150,000, (21,000), 367,900, 21,000,120,000,20,000, 206,900, 367,900.
PA 9.

LO 16.4Use the following excerpts from Yardley Company’s financial information to prepare a statement of cash flows (indirect method) for the year 2018.

Income Statement items: Sales $455,000. Cost of goods sold (221,500). Operating expenses, other than depreciation expense (58,600). Depreciation expense (24,000). Gain on sale of plant assets 23,500. Net income 174,400. Balance Sheet items: December 31, 2018: Cash $321,450. Accounts receivable 39,750. Inventory 33,000. Accounts payable 17,550. Accrued liabilities 3,500. December 31, 2017: Cash $133,500. Accounts receivable 36,500. Inventory 35,000. Accounts payable 19,550. Accrued liabilities 2,200. Additional information: Plant assets were sold for $40,000; book value $16,500. Dividends of $25,000 were declared and paid.
PA 10.

LO 16.4Use the following excerpts from Wickham Company’s financial information to prepare a statement of cash flows (indirect method) for the year 2018.

Cash, Account Receivable, Merchandise Inventory, Land, Plant Assets, Accumulated Depreciation, Total Assets, Accounts Payable, Accrued Liabilities, Common Stock, Retained Earnings, Total Liabilities and Equity December 31, 2018, respectively: $225,000, 38,350, 59,500, 150,000, 160,000, (49,000), 583,850, 29,100, 15,500, 45,000, 494,250, 583,850. Additional information: Net Income for 2018, Depreciation Expense for 2018, Land purchased, for cash, Stock issued in exchange for cash, at par value, Dividends declared and paid, respectively: 98,000, 12,000, 100,000, 25,000,11,000. Cash, Account Receivable, Merchandise Inventory, Land, Plant Assets, Accumulated Depreciation, Total Assets, Accounts Payable, Accrued Liabilities, Common Stock, Retained Earnings, Total Liabilities and Equity December 31, 2017, respectively: $200,000, 35,350, 58,200, 50,000, 160,000, (37,000), 466,550, 27,300, 12,000, 20,000, 407,250, 466,550.
PA 11.

LO 16.4Use the following excerpts from Tungsten Company’s financial information to prepare a statement of cash flows (indirect method) for the year 2018.

Beginning cash $18,444. Net Income 36,500. Depreciation expense 11,000. Accounts receivable change (8,300). Inventory change 4,900. Prepaid assets change 3,400. Investments change (no asset sales) 10,000. Accounts payable change 450. Note payable principal balance change (no new loans) (9,400). Common stock balance change (due to stock issuance) 20,000.
PA 12.

LO 16.5The following shows excerpts from financial information relating to Aspen Company and Bergamot Company.

Aspen Company Net Cash Flows from Operating Activities $320,000. Total Assets 450,400. Net Income 300,000. Sales Revenue 463,500. Capital Expenditures 120,750. Dividend Payments 25,000. Bergamot Company Net Cash Flows from operating activities $486,900. Total Assets 625,000. Net Income 550,200. Sales Revenue 875,000. Capital Expenditures 250,000. Dividend Payments 65,700.

Compute the following for both companies. Compare your results.

  1. free cash flow
  2. cash flows to sales ratio
  3. cash flows to assets ratio
PA 13.

LO 16.6Use the following excerpts from Fromera Company’s financial information to prepare the operating section of the statement of cash flows (direct method) for the year 2018.

2018 Income Statement items: Sales $299,000. Cost of goods sold (135,000). Operating expenses, other than depreciation expense (27,000). Depreciation expense (17,000). Gain on sale of plant assets 16,500. Net income 136,500. Balance Sheet items: December 31, 2018: Accounts receivable (associated with sales) $45,300. Inventory (associated with inventory) 1,600. Accounts payable (associated with inventory) 22,500. Accrued liabilities (associated with other expenses) 900. December 31, 2017: Accounts receivable (associated with sales) $43,400. Inventory (associated with inventory) 1,800. Accounts payable (associated with inventory) 21,250. Accrued liabilities (associated with other expenses) 1,150.
PA 14.

LO 16.6Use the following excerpts from Victrolia Company’s financial information to prepare a statement of cash flows (direct method) for the year 2018.

2018 Income Statement items: Sales $455,000. Cost of goods sold (221,500). Operating expenses, other than depreciation expense (58,600). Depreciation expense (24,000). Gain on sale of plant assets 23,500. Net income 174,400. Balance Sheet items: December 31, 2018: Cash $321,450. Accounts receivable 39,750. Inventory 33,000. Accounts payable 17,550. Accrued liabilities 3,500. December 31, 2017: Cash $133,500. Accounts receivable 36,500. Inventory 35,000. Accounts payable 19,550. Accrued liabilities 2,200. Additional information: Plant assets were sold for $40,000; book value $16,500. Dividends of $25,000 were declared and paid.
PA 15.

LO 16.6Use the following cash transactions relating to Lucknow Company to determine the cash flows from operating, using the direct method.

Beginning cash balance $122,000. Collected from customers 33,000. Paid dividends to stockholders 3,000. Paid for interest on notes payable 4,750. Collected dividends from stock owned 3,500. Collected cash from sale of land 20,000. Paid principal payments on notes payable 12,000. Collected cash from issuance of stock 40,000. Paid suppliers for merchandise 29,400. Ending cash balance 169,350.
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