ACCT 302 Connect Homework 21 The Statement of Cash Flows Revised Assignment solutions answers

ACCT 302 Connect Homework 21 The Statement of Cash Flows Revised Assignment solutions complete answers 

 

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April Wood Products' accounts receivable increased during the year by $6.0 million.

Required: 
What is the amount of cash April Wood Products received from customers during the reporting period if its sales were $35.0 million? Prepare a summary entry that represents the net effect of the selling and collection activities during the reporting period.

 

LaRoe Lawns’ inventory increased during the year by $5.5 million. Its accounts payable increased by $4.7 million during the same period.

Required: 
What is the amount of cash LaRoe paid to suppliers of merchandise during the reporting period if its cost of goods sold was $33 million? Prepare a summary entry that represents the net effect of merchandise purchases during the reporting period.

 

Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $1,340 million on July 1, 2021, at a price of $1,310 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semi-annually on June 30 and December 31.

Required: 
Prepare the journal entry to record interest at the effective interest rate at December 31. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2021, if it uses the direct method?

 

Sanders Awnings reported net income of $96.5 million. Included in that number were depreciation expense of $1.4 million and a loss on the sale of equipment of $2.9 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $2.4 million, $3.4 million, and $2.4 million, respectively.

Required: 
What were Sanders’ cash flows from operating activities? (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

 

On January 1, 2021, Beilich Enterprises bought 20% of the outstanding common stock of Wolfe Construction Company for $400.0 million cash. Wolfe’s net income for the year ended December 31, 2021, was $200.0 million. During 2021, Wolfe declared and paid cash dividends of $40.0 million. Beilich recorded the investment as follows:
 

 
($ in millions)
Purchase
 
 
Investment in Wolfe Construction shares
400.0
 
Cash
 
400.0
 
 
 
Net income
 
 
Investment in Wolfe Construction shares (20% × $200.0 million)
40.0
 
Investment revenue
 
40.0
 
 
 
Dividends
 
 
Cash (20% × $40.0 million)
8.0
 
Investment in Wolfe Construction shares.
 
8.0
 

Required:
What would be the pretax amounts related to the investment that Beilich would report in its statement of cash flows for the year ended December 31, 2021? (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). Cash outflows should be indicated by a minus sign.)

 

The statement of retained earnings of Gary Larson Publishers is presented below.
 

GARY LARSON PUBLISHERS
Statement of Retained Earnings
For the Year Ended December 31, 2021
($ in millions)
Retained earnings, January 1
$
235
 
Add:
Net income
 
95
 
Deduct:
Cash dividend
 
(15
)
 
Stock dividend (1 million shares of $1 par common stock)
 
(18
)
 
Property dividend (Garfield Company preferred stock held
as a short-term investment)
 
(16
)
 
Sale of treasury stock (cost $44 million)
 
(15
)
Retained earnings, December 31
$
266
 
 

Required:
For the transactions that affected Larson’s retained earnings, reconstruct the journal entries that can be used to determine cash flows to be reported in a statement of cash flows. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

 

The income statement and the cash flows from the operating activities section of the statement of cash flows are provided below for Syntric Company. The merchandise inventory account balance neither increased nor decreased during the reporting period. Syntric had no liability for insurance or deferred income taxes at any time during the period.

 

SYNTRIC COMPANY
Income Statement
For the Year Ended December 31, 2021
($ in thousands)
Sales
 
 
 
$
285.1
 
Cost of goods sold
 
 
 
 
(167.8
)
Gross margin
 
 
 
 
117.3
 
Salaries expense
$
30.2
 
 
 
 
Insurance expense
 
18.9
 
 
 
 
Depreciation expense
 
12.5
 
 
 
 
Depletion expense
 
5.5
 
 
 
 
Interest expense
 
12.5
 
 
(79.6
)
Gains and losses:
 
 
 
 
 
 
Gain on sale of equipment
 
 
 
 
18.5
 
Loss on sale of land
 
 
 
 
(7.4
)
Income before tax
 
 
 
 
48.8
 
Income tax expense
 
 
 
 
(24.4
)
Net income
 
 
 
$
24.4
 
Cash Flows from Operating Activities:
 
 
 
 
 
 
Cash received from customers
 
 
 
$
238.0
 
Cash paid to suppliers
 
 
 
 
(155.0
)
Cash paid to employees
 
 
 
 
(25.0
)
Cash paid for interest
 
 
 
 
(10.5
)
Cash paid for insurance
 
 
 
 
(14.4
)
Cash paid for income tax
 
 
 
 
(12.6
)
Net cash flows from operating activities
 
 
 
$
20.5
 
 

Required:
Prepare a schedule to reconcile net income to net cash flows from operating activities. (Enter your answers in thousands rounded to 1 decimal place (i.e., 5,500 should be entered as 5.5). Amounts to be deducted should be indicated with a minus sign.)

 

The accounting records of Baddour Company provided the data below.
 

 
 
 
 
Net loss
$
5,050
 
Depreciation expense
 
5,650
 
Increase in salaries payable
 
535
 
Decrease in accounts receivable
 
2,300
 
Increase in inventory
 
2,275
 
Amortization of patent
 
400
 
Reduction in discount on bonds
 
300
 
 

Prepare a reconciliation of net income to net cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign.)

 

Comparative balance sheets for 2021 and 2020 and a statement of income for 2021 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.
 

METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2021 and 2020
($ in thousands)
 
 
2021
 
2020
Assets
 
 
 
 
 
 
 
 
Cash
$
390
 
 
$
170
 
 
Accounts receivable
 
370
 
 
 
200
 
 
Inventory
 
520
 
 
 
355
 
 
Land
 
525
 
 
 
500
 
 
Building
 
900
 
 
 
900
 
 
Less: Accumulated depreciation
 
(250
)
 
 
(225)
 
 
Equipment
 
2,550
 
 
 
2,210
 
 
Less: Accumulated depreciation
 
(346
)
 
 
(320
)
 
Patent
 
1,100
 
 
 
1,300
 
 
 
$
5,759
 
 
$
5,090
 
 
Liabilities
 
 
 
 
 
 
 
 
Accounts payable
$
620
 
 
$
470
 
 
Accrued liabilities
 
160
 
 
 
130
 
 
Lease liability—land
 
130
 
 
 
0
 
 
Shareholders' Equity
 
 
 
 
 
 
 
 
Common stock
 
3,120
 
 
 
3,000
 
 
Paid-in capital—excess of par
 
750
 
 
 
715
 
 
Retained earnings
 
979
 
 
 
775
 
 
 
$
5,759
 
 
$
5,090
 
 
 
 

METAGROBOLIZE INDUSTRIES
Income Statement
For the Year Ended December 31, 2021
($ in thousands)
Revenues
 
 
 
 
 
 
Sales revenue
$
2,512
 
 
 
 
Gain on sale of land
 
35
 
$
2,547
 
Expenses
 
 
 
 
 
 
Cost of goods sold
$
820
 
 
 
 
Depreciation expense—building
 
25
 
 
 
 
Depreciation expense—equipment
 
188
 
 
 
 
Loss on sale of equipment
 
15
 
 
 
 
Amortization of patent
 
200
 
 
 
 
Operating expenses
 
500
 
 
1,748
 
Net income
 
 
 
$
799
 
 

Additional information from the accounting records:

a.   Annual payments of $20,000 on the finance lease liability are paid each January 1, beginning in 2021.

b.   During 2021, equipment with a cost of $180,000 (90% depreciated) was sold.

c.    The statement of shareholders' equity reveals reductions of $155,000 and $440,000 for stock dividends and cash dividends, respectively.


Required:
Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2021. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e., 10,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

 

The income statement and a schedule reconciling cash flows from operating activities to net income are provided below for Mike Roe Computers.
 

MIKE ROE COMPUTERS
Income Statement
For the Year Ended December 31, 2021
($ in millions)
Sales
 
 
 
$
150.20
 
 
Cost of goods sold
 
 
 
 
(90.10
)
 
Gross margin
 
 
 
 
60.10
 
 
Salaries expense
$
20.20
 
 
 
 
 
Insurance expense
 
12.20
 
 
 
 
 
Depreciation expense
 
5.10
 
 
 
 
 
Interest expense
 
6.10
 
 
(43.60
)
 
Gains and losses:
 
 
 
 
 
 
 
Gain on sale of equipment
 
 
 
 
12.20
 
 
Loss on sale of land
 
 
 
 
(3.20
)
 
Income before tax
 
 
 
 
25.50
 
 
Income tax expense
 
 
 
 
(12.75
)
 
Net income
 
 
 
$
12.75
 
 
 
 

Reconciliation of Net Income
to Net Cash Flows
from Operating Activities
($ in millions)
Net income
$
12.75
 
 
Adjustments for noncash effects:
 
 
 
 
Decrease in accounts receivable
 
5.10
 
 
Gain on sale of equipment
 
(12.20
)
 
Increase in inventory
 
(6.10
)
 
Increase in accounts payable
 
9.10
 
 
Increase in salaries payable
 
3.10
 
 
Depreciation expense
 
5.10
 
 
Decrease in bond discount
 
3.05
 
 
Decrease in prepaid insurance
 
2.10
 
 
Loss on sale of land
 
3.20
 
 
Increase in income tax payable
 
6.10
 
 
Net cash flows from operating activities
$
31.30
 
 
 

Required:
1. Provide the summary journal entries which shows the cash flow for each of the following for Mike Roe Computers during the reporting period: (a) received from customers, (b) paid to suppliers, (c) paid to employees, (d) paid for interest, (e) paid for insurance, (f) paid for income taxes.
2. Prepare the cash flows from operating activities section of the statement of cash flows (direct method).

 

The comparative balance sheets for 2021 and 2020 are given below for Surmise Company. Net income for 2021 was $62 million.
 

SURMISE COMPANY
Comparative Balance Sheets
December 31, 2021 and 2020
($ in millions)
 
2021
 
2020
 
Assets
 
 
 
 
 
 
 
 
Cash
$
46
 
 
$
56
 
 
Accounts receivable
 
80
 
 
 
88
 
 
Less: Allowance for uncollectible accounts
 
(14
)
 
 
(3
)
 
Prepaid expenses
 
8
 
 
 
7
 
 
Inventory
 
138
 
 
 
125
 
 
Long-term investment
 
80
 
 
 
50
 
 
Land
 
80
 
 
 
80
 
 
Buildings and equipment
 
329
 
 
 
225
 
 
Less: Accumulated depreciation
 
(109
)
 
 
(90
)
 
Patent
 
15
 
 
 
16
 
 
 
$
653
 
 
$
554
 
 
Liabilities
 
 
 
 
 
 
 
 
Accounts payable
$
9
 
 
$
23
 
 
Accrued liabilities
 
3
 
 
 
11
 
 
Notes payable
 
30
 
 
 
0
 
 
Lease liability
 
95
 
 
 
0
 
 
Bonds payable
 
55
 
 
 
105
 
 
Shareholders’ Equity
 
 
 
 
 
 
 
 
Common stock
 
60
 
 
 
50
 
 
Paid-in capital—excess of par
 
251
 
 
 
205
 
 
Retained earnings
 
150
 
 
 
160
 
 
 
$
653
 
 
$
554
 
 
 
 
Required:
Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2021. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful.  (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are paid at January 1 of each year starting in 2021.) (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)