Statement - Nos. 9 and 11

2nh3

@l

CHAPTER 12 HOMEI,\IORK

Kazaam Company, a merchandiser, recently condeted its calendar-year2011 operations. For he year. (1) all sales are credit sales, (2) all credits to Accounts Receiiable reflect cash receipts fom custonrers, (3) all purchases of inwnlory are on credil, (4) all debits to Accounts Payable reiect cash paymenls for inwntory, and {5) Olhil Expenses are paid in adraance and are initially dabited to Prepaid Expenses. The company's balance sheels and income statement bllolil.

9.

KAZAAM COMPAT.IY Comparatir,e Balance Sheets December 31, 2011 and 2010

Assets Cash S Accounts receirable Merchandise inrrentory Prepakl expenses Equipment Accurn. dspraciation-E quiprnent

Total assets

Liabili6es and Equity Accounts payable Short-term notes payable Longterm notes payabls Comnron stock, $5 par \6luB Paid-in capital in excass of par, common stock Retained earnings

Total liabilities and equity

2011 2010

49,800 S 73,000 65,860 54,000

277,540 252,500 1,000 1,800

157,500 1m,500 (41,750] 152,ffi0',)

$ 509,910 5435,800

$ 66,485 $ 114,000 9,000 7.000

62,500 49,000 162,250 150,500 35,250 0

174.425 115.300

$ 509,910 S435,800

KAZAAM COMPANY klcome Statement

For Year Ended December 31, 201 1 Sales Cost ofgoods sold

Gross profit Op€rating expenses

Depr€ciation expense Other expenses

Other gains (lossesf Loss on sale of equipment

lncome bebre taxes lncome taxes expense

N€t income g 111,425

Additional hformation on Year 2011 fransac!'ons. a. The loss on the cash sale ofequipme0t.was gS,t2S (details in b). b. sold equipment costing $46,875; with accumulated depreciation of $3o,250, br $11,s@ cash_ c. Purchased equiprnent costing $97,875 by paying 530,@0 cash and signing a long-term note payable for

the balance. d. Borrowed $2,000 cash by signing a slmrt-term note payable_ e. Paid 554,375 cash to reduce the long-tern notes payable, f. lssued 2,350 shares of common stock frr $20 cash per share. g. Declare,d and paid cash djvidends of 952,300_

Requiredl Prcpare a complete statern€nt of cash flovrrs using a spreadsheet report its operating actilities using the indirect r$[Dpd. (Leave no cells blank - be certain to anter "0" wherever requireo. Omit tha "S" srgn tn your response.)

a. Net income was 5111,425. b. Accounts recehrablG increased

s 583,000 289,000

294,000

$ 20,000 133,200 153,200

5.125

r35,675 24.250

1t2

217113 CHAPTER l2HOMEWORK

c. Merchandise in\Entory increased. d. Prepaid expenses decreased. e. Accounts Wyab/,e decreased. f. Depreciation expense was $20,000. g. Sold equipment cosling $46,875, with accumulated depreciation of$30,250, for 911,500 cash- This

yielded a loss of$5,125. h- Purchased equipment costing 997,875 by paying $30,000 cash and (i.) by signing a long-term note

payable for the balance. j. Borrowed $2,000 cash by signing a short-term note payable. k. Paid $54,375 cash to reduce the long-term notes payable. l. lssued 2,350 shares of common stock for 920 cash per share. m. Declared and paid cash dtuidends of$52,300.

#7 u,t/d

KATAAM COMPANY Spreadsheet for Statement of Cash Flows

For Year Ended December 31, 201 1

December 1":lf ls ot cfan91;-

December 31,2010 Debit Credit 31,2011

Balance sheet-debit bal. accounts Cash

Accounts receirable

Merchandise in\€ntory

Prepaid expenses

Equipment

Balance sheet-cnedit bal. accounts

Accum. depreciation-Equip.

Accounts payable

Short-term notes payable

Long{erm notes payable

Common stock, $5 parralue Paid-in capital in excess of par ralue, common stock

Retained eamings

$ 73,ooo $ 54,000 11,860

252,500 25,000 1,800

$ 23,2oo^ $ 49,s00 65,860

277,500

800 1,000 106,500 51,000 F 24,oo0 f- 157,500

$ 487,800 $ 551,660

$ 52,ooo 1o2,2so i 114,000 47,515

7,000

49,000

150,500

0

115,3:0

$ 487,800

$ 41,750 66,485

2,000 9,000 13,500 f 62,500 11,750 162,250

35,250 35,250 59,125 A 1743V5

$ 551,660

Statement of cash flows Operating activities

Net income fi1,425 f lncrease in accts. receiwble 11,860 T lncrease in merch. in\entory 25,000 t Decrease in prepaid expenses gO0 .| Decrease in accounts payable 47,515 + Depreciation expense 20,000 1 Loss on sale ofequipment 5,125 *

lnlestlng actir,ities Receipt from sale ofequipment 11,500 1 Payment to purchase equipment 30,000 "l

Financing acti\,ities Bonowed on short{erm note 2,000 t Payment on long-term note U,375 f lssued common stock for cash 47,O00 a Payments ofcash diridends 52,300 f

Noncash inrcsting and financing acti$ties Purchase of equip. f nanced by longterm note payable

.. 67,875 67,875

$ 288,925 '), $ 265,725 {

{I>-t

212

in.structiorrs I help

11.tL- Problent 12-6M Cash f?ons spreadsheet (indirect ncthod) L.O. pl, pZ, F3. p4

Galley Corp., a merchandiser, recently completed its 2011 oparations. For the year, (1) all sales arecredit sales, (2) atl credits to Accounts Raceiveble r6tmt cash receipts from custorxlrs, (3) all punhasos ol inwntory are on crodit, (4) all debits to Accounts Payable rellect cash payments for inr,entory, (5) Other Expensos are all cash expenses, and (6) any changre in lncome Taxas Payable relects th6 accrual and cash payment of taxes- The company's balancG sh€ets and income staternent bllow.

GALLEY CORPORATION Comparat i\E Balance S heets December 31, 2011 and 2010

2011 2010 $ 188,120 S 127,512

95,644 88,044 670,112 582,912 416,452 324,852 (168,120) (111,320)

s 1,202,608 S 1,012,m0

Ascets Cash Accounts r6cei\able Merchandise in\entory Equipment Accum. depreciation-E quipment

Total assets

Liabililiesand Equity Accounts payable lncome laxes payabla Common stock, $2 par rialue Paid-in capital in excess of par ralue, common stock R6tained eamings

Total liabilities and aquity

s 130,192 30,112

585,700 213,500 243,',t04

s 66,792 26,312

559,700 177,100 182,096

s 1,202,608 $1,012,000

GALLEY CORPORATION lncome Statemsnt

For Year Endsd Dccembsr 31, 201 1 Sales Cost ofgoods sold

Gross profit Operating expenses

Depreciation expense other expenses

lncome before taxes Incometaxes expense

lrlot incorne s 153,008 r:1::::::]ffi :::;::fi :::;:::l-;;:t:::::*; :;:t:;::::;::H:x::T#

Additional hformation on Year mi1 Ta,nsl,ctions a. Purchased equiprnent for 992,000 cash. b. lssued 13,0O0 shans of common stock br $4_80 cash per share. c. Declared and paid $92,000 in cash dividends,

R€guired: Prepare a complete statement of cash flows using a spreadsheet; report oporating activities under the indirect method. {Leave no cells hlank - be certain to enter "0" wherever required. Omit the "S" sign in your response.)

a. Net income was $153"008. b. Accounts receinble increased. c. Merchandise in!€ntory increased, d. Accounts payable decreased- e. Income laxes payable increased. f. Depreciation expanse was 556,800. g. Purchased equipment br592,000 cash. h. lssued 1 3,000 shares at $4.80 cash per share. i. Dectared and paid $92,000 of cash dividends.

GALLEY CORPORAIPN Spreadsheet for Statement of Cash Flows

$2,053,500 1.273.170

780,330

$ 56.S00 533,458 5S0,258

194,072 37.@

1!2

21il13 h tl c*t/d" Balmce sheef,-det*t bd. accomts

Cash

Accqnts mcdnHe Merchandise inrntory EguFn€nt

Bdarce shed-crsdt bal. accounts Accum, degeciation-€qiip Accomts payaHe

hcqnetaxes payaHe

C.anrunm stock, $2 parudue

Paiclin excess of par rdue, cornmon stmk R€fained eamings

Stdemat dcash lows OpeEting actirities

Net irrcorne

lncrease in acco$ts r€ceiratle lncmese in merch. inr€ntory

Decmase in accomts payaHe

lncrese in incorne tax payaue

Degeciatim otpense fn€sting *tiritiee

Payment br eqJiprnent Financing actirities

lssued cqnrnon stock brcash Paid cash dMdends

For Year Ended E ecernber 31, 2011 December Anfysis dCfnrUeo 31.2010 D€tit Cradit

sL_ti?!c?rj

December 31,2011

si.E".,"i{

$[i,:aeo-l

i . -3,Sgj ;.-*-?[g*j , 36,4m: -llr,qelr

;lga'gqr+:r il |--****.i i ----$?.100*lt ;"1 nsmit i ._,g,ggeif :l'i

62,400 Y

$i -1-68J"Tl

L*ls*rgj i nj12iim i * ?19rej l--?r11!91i

$i-r,s-qJd

ir .I*--lsfrr i***gcgk*

i---_--i 99ei v

i*'--*---*--ira !,*!*'.# : 92,(XD' .1,

ssa,srz I

ezto.ntelold.ncg raurtill,ccrv?rrrtpx 2t2