ACCOUNTING HOMEWORK

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Brief Exercise 12-5

Manuel, Inc. reported net income of $2.9 million in 2014. Depreciation for the year was $159,110, accounts receivable decreased $343,160, and accounts payable decreased $289,200. Compute net cash provided by operating activities using the indirect approach. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Manuel, Inc. Statement of Cash Flows-Indirect Approach For the Year 2014

		$
Adjustments to reconcile net income to

	$



		$

Brief Exercise 12-6

The net income for Freeman Co. for 2014 was $292,700. For 2014, depreciation on plant assets was $49,590, and the company incurred a loss on disposal of plant assets of $21,540. Compute net cash provided by operating activities under the indirect method, assuming there were no other changes in the company’s accounts. (Show amounts that decrease cash flow with either a - sign e.g -15,000 or in parenthesis e.g. (15,000).)

Freeman Co. Statement of Cash Flows-Indirect Method For the Year 2014

		$
Adjustments to reconcile net income to

	$


		$

Brief Exercise 12-7

The comparative balance sheets for Lowery Company show these changes in noncash current asset accounts: accounts receivable decrease $90,400, prepaid expenses increase $22,610, and inventories increase $33,680. Compute net cash provided by operating activities using the indirect method, assuming that net income is $180,720. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Lowery Company Statement of Cash Flows-Indirect Method

		$
Adjustments to reconcile net income to

	$



		$

Warning

Exercise 12-1

Putnam Corporation had these transactions during 2014. Analyze the transactions and indicate whether each transaction resulted in a cash flow from operating activities, investing activities, financing activities, or noncash investing and financing activities.

(a)		Purchased a machine for $30,000, giving a long-term note in exchange.

(b)		Issued $50,000 par value common stock for cash.

(c)		Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000.

(d)		Declared and paid a cash dividend of $13,000.

(e)		Sold a long-term investment with a cost of $15,000 for $15,000 cash.

(f)		Collected $16,000 of accounts receivable.

(g)		Paid $18,000 on accounts payable.

Exercise 12-2

An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Judd Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate how each item should be classified in the statement of cash flows using these four major classifications: operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.

(a)		Payment of interest on notes payable.

(b)		Exchange of land for patent.

(c)		Sale of building at book value.

(d)		Payment of dividends.

(e)		Depreciation.

(f)		Conversion of bonds into common stock.

(g)		Receipt of interest on notes receivable.

(h)		Issuance of capital stock.

(i)		Amortization of patent.

(j)		Issuance of bonds for land.

(k)		Purchase of land.

(l)		Receipt of dividends on investment in stock.

(m)		Loss on disposal of plant assets.

(n)		Retirement of bonds.

Exercise 12-4

Cosi Company reported net income of $207,090 for 2014. Cosi also reported depreciation expense of $38,910 and a loss of $5,950 on the disposal of plant assets. The comparative balance sheet shows an increase in accounts receivable of $16,380 for the year, a $17,290 increase in accounts payable, and a $5,000 increase in prepaid expenses. Prepare the operating activities section of the statement of cash flows for 2014. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

COSI COMPANY Partial Statement of Cash Flows For the Year Ended December 31 , 2014

		$
Adjustments to reconcile net income to

	$





		$

Brief Exercise 13-4

Using these data from the comparative balance sheet of Ramirez Company, perform horizontal analysis. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 0 decimal places, e.g. 12%.)

			Increase or (Decrease)
	Dec. 31, 2014	Dec. 31, 2013	Amount	Percentage
Accounts receivable	$ 570,700	$ 386,700	$		%
Inventory	$ 789,100	$ 560,400	$		%
Total assets	$3,124,600	$2,754,400	$		%

Warning

Brief Exercise 13-5

Using these data from the comparative balance sheet of Ramirez Company, perform vertical analysis. (Round percentages to 1 decimal place, e.g. 12.5%.)

	Dec. 31, 2014	Dec. 31, 2013
	Amount	Percentage		Amount		Percentage
Accounts receivable	$ 521,600		%		$ 405,000		%
Inventory	$ 738,700		%		$ 602,200		%
Total assets	$3,124,700		%		$2,797,800

Exercise 13-3

Here is financial information for Spangles Inc.

	December 31, 2014	December 31, 2013
Current assets	$110,161	$ 92,230
Plant assets (net)	402,230	354,161
Current liabilities	101,230	69,161
Long-term liabilities	126,161	92,230
Common stock, $1 par	134,161	119,161
Retained earnings	150,839	165,839

Prepare a schedule showing a horizontal analysis for 2014, using 2013 as the base year. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.)

SPANGLES INC. Condensed Balance Sheet December 31
			Increase or (Decrease)
	2014	2013	Amount	Percentage
Assets
Current Assets	$110,161	$92,230	$		%
Plant assets (net)	402,230	354,161			%
Total assets	$512,391	$446,391	$		%
Liabilities
Current Liabilities	$101,230	$69,161	$		%
Long-term liabilities	126,161	92,230			%
Total liabilities	$227,391	$161,391	$		%
Stockholders’ Equity
Common stock, $1 par	134,161	119,161			%
Retained earnings	150,839	165,839			%
Total stockholders’ equity	285,000	285,000			%
Total liabilities and stockholders’ equity	$512,391	$446,391	$

Exercise 13-4

Operating data for Jacobs Corporation are presented below.

	2014	2013
Sales revenue	$833,700	$641,200
Cost of goods sold	530,100	413,600
Selling expenses	127,900	78,600
Administrative expenses	73,100	51,800
Income tax expense	37,600	24,700
Net income	65,000	72,500

Prepare a schedule showing a vertical analysis for 2014 and 2013. (Round percentages to 1 decimal place, e.g. 12.1%.)

JACOBS CORPORATION Condensed Income Statement For the Years Ended December 31
	2014	2013
	Amount	Percent		Amount		Percent
Sales	$833,700		%		$641,200		%
Cost of goods sold	530,100		%		413,600		%
Gross profit	303,600		%		227,600		%
Selling expenses	127,900		%		78,600		%
Administrative expenses	73,100		%		51,800		%
Total operating expenses	201,000		%		130,400		%
Income before income taxes	102,600		%		97,200		%
Income tax expense	37,600		%		24,700		%
Net income	$ 65,000		%		$ 72,500

Exercise 13-5

Suppose the comparative balance sheets of Nike, Inc. are presented here.

NIKE, INC. Condensed Balance Sheet May 31 ($ in millions)
	2014	2013
Assets
Current Assets	$9,633	$8,745
Property, plant, and equipment (net)	2,033	1,967
Other assets	1,466	1,609
Total assets	$13,132	$12,321
Liabilities and Stockholders' Equity
Current Liabilities	$3,300	$3,346
Long-term liabilities	1,268	1,287
Stockholders’ equity	8,564	7,688
Total liabilities and stockholders' equity	$13,132	$12,321

(a) Prepare a horizontal analysis of the balance sheet data for Nike, using 2013 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.)

NIKE, INC. Condensed Balance Sheet May 31 ($ in millions)
	2014	2013	Increase (Decrease)	Percentage Change from 2013
Assets
Current Assets	$9,633	$8,745	$		%
Property, plant, and equipment (net)	2,033	1,967			%
Other assets	1,466	1,609			%
Total assets	$13,132	$12,321	$		%
Liabilities and Stockholders' Equity
Current Liabilities	$3,300	$3,346	$		%
Long-term liabilities	1,268	1,287			%
Stockholders’ equity	8,564	7,688			%
Total liabilities and stockholders' equity	$13,132	$12,321	$		%

(b) Prepare a vertical analysis of the balance sheet data for Nike for 2014.

NIKE, INC. Condensed Balance Sheet May 31, 2014
	$ (in millions)	Percent
Assets
Current Assets	$9,633		%
Property, plant, and equipment (net)	2,033		%
Other assets	1,466		%
Total assets	$13,132		%
Liabilities and Stockholders' Equity
Current Liabilities	$3,300		%
Long-term Liabilities	1,268		%
Stockholders’ equity	8,564		%
Total liabilities and stockholders' equity	$13,132

Exercise 13-6

Here are the comparative income statements of Eudaley Corporation.

EUDALEY CORPORATION Comparative Income Statement For the Years Ended December 31

	2014	2013
Net sales	$603,830	$504,950
Cost of goods sold	451,800	392,980
Gross Profit	152,030	111,970
Operating expenses	70,150	36,180
Net income	$ 81,880	$ 75,790

Warning

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Prepare a horizontal analysis of the income statement data for Eudaley Corporation, using 2013 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.)

EUDALEY CORPORATION Comparative Income Statement For the Years Ended December 31
			Increase or (Decrease) During 2014
	2014	2013	Amount	Percentage
Net sales	$603,830	$504,950	$		%
Cost of goods sold	451,800	392,980			%
Gross Profit	152,030	111,970			%
Operating expenses	70,150	36,180			%
Net income	$ 81,880	$ 75,790	$		%

Warning

Prepare a vertical analysis of the income statement data for Eudaley Corporation for both years. (Round percentages to 1 decimal place, e.g. 12.1%.)

EUDALEY CORPORATION Comparative Income Statements For the Years Ended December 31
	2014	2013
	$	Percent		$		Percent
Net sales	$603,830		%		$504,950		%
Cost of goods sold	451,800		%		392,980		%
Gross Profit	152,030		%		111,970		%
Operating expenses	70,150		%		36,180		%
Net income	$ 81,880		%		$ 75,790

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