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Chapter 23: Q11Q (page 1392)
Question: Collinsworth Co. reported sales on an accrual basis of \(100,000. If accounts receivable increased \)30,000 and the allowance for doubtful accounts increased \(9,000 after a write-off of \)2,000, compute cash sales.
Answer
The business entity has cash sales of$68,000.
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Krauss Company’s income statement for the year ended December 31, 2017, contained the following condensed information.
Service revenue \(840,000
Operating expenses (excluding depreciation) \)624,000
Depreciation expense 60,000
Loss on sale of equipment 26,000 710,000
Income before income taxes 130,000
Income tax expense 40,000
Net income \( 90,000
Krauss’s balance sheet contained the following comparative data at December 31.
2017 2016
Accounts receivable \)37,000 $54,000
Accounts payable 41,000 31,000
Income taxes payable 4,000 8,500
(Accounts payable pertains to operating expenses.)
Instructions Prepare the operating activities section of the statement of cash flows using the direct method.
Question: The net income for Fallon Company for 2017 was \(320,000. During 2017, depreciation on plant assets was \)124,000, amortization of patent was \(40,000, and the company incurred a loss on sale of plant assets of \)21,000. Compute net cash flow from operating activities.
Springsteen Co. had the following activity in its most recent year of operations.
Instructions Classify the items as (1) operating—add to net income, (2) operating—deduct from net income, (3) investing, (4) financing, or (5) significant non-cash investing and financing activities. Use the indirect method.
Following are selected statement of financial position accounts of Sander Bros. Corp. at December 31, 2017 and 2016, and the increases or decreases in each account from 2016 to 2017. Also presented is selected income statement information for the year ended December 31, 2017, and additional information.
Selected statement of financial position accounts
2017 | 2016 | Increase (Decrease) | |
Assets | |||
Property, plant, and equipment | \(277,000 | \)247,000 | \(30,000 |
Accumulated depreciation | (178,000) | (167,000) | (11,000) |
Accounts receivable | 34,000 | 24,000 | 10,000 |
Equity and liabilities | |||
Share capital—ordinary, \)1 par | \( 22,000 | \) 19,000 | \( 3,000 |
Share premium—ordinary | 9,000 | 3,000 | 6,000 |
Retained earnings | 104,000 | 91,000 | 13,000 |
Bonds payable | 49,000 | 46,000 | 3,000 |
Dividends payable | 8,000 | 5,000 | 3,000 |
| Selected income statement information for the year ended December 31, 2017 | |||
Sales revenue | \)155,000 | ||
Depreciation | 38,000 | ||
Gain on sale of equipment | 14,500 | ||
Net income | 31,000 | ||
Additional information:
There was no amortization of bond discount or premium.
Instructions Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items.
What are some of the key obstacles for the FASB and IASB within their accounting guidance in the area of cash flow reporting? Explain.
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