ACCOUNTING

Exercise 12-10 Preparation of statement of cash flows (indirect) L.O. P1

[The following information applies to the questions displayed below.]

Use the following financial statements and additional information.

 

GECKO INC.
Comparative Balance Sheets
June 30, 2011 and 2010
  2011     2010    
  Assets                
  Cash $ 85,800     $ 45,000    
  Accounts receivable, net   70,000       52,000    
  Inventory   66,800       96,800    
  Prepaid expenses   5,400       5,200    
  Equipment   130,000       120,000    
  Accum. depreciation—Equipment   (28,000 )     (10,000 )  
 



 



 
  Total assets $ 330,000     $ 309,000    
 






 






 
  Liabilities and Equity                
  Accounts payable $ 26,000     $ 32,000    
  Wages payable   7,000       16,000    
  Income taxes payable   2,400       3,600    
  Notes payable (long term)   40,000       70,000    
  Common stock, $5 par value   230,000       180,000    
  Retained earnings   24,600       7,400    
 



 



 
  Total liabilities and equity $ 330,000     $ 309,000    
 






 






 

 

GECKO INC.
Income Statement
For Year Ended June 30, 2011
  Sales       $ 668,000  
  Cost of goods sold         412,000  
       


 
  Gross profit         256,000  
  Operating expenses            
       Depreciation expense $ 58,600        
       Other expenses   67,000        
 


       
  Total operating expenses         125,600  
       


 
          130,400  
  Other gains (losses)            
       Gain on sale of equipment         2,000  
       


 
  Income before taxes         132,400  
  Income taxes expense         45,640  
       


 
  Net income       $ 86,760  
       




 

 

Additional Information

 

a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
b. The only changes affecting retained earnings are net income and cash dividends paid.
c. New equipment is acquired for $58,600 cash.
d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain.
e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
f. All purchases and sales of merchandise inventory are on credit.

 

Exercise 12-10 Part 1

(1) Prepare a statement of cash flows for the year ended June 30, 2011, using the indirect method.(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

 

 

Exercise 12-10 Part 2

(2) Compute the company’s cash flow on total assets ratio for its fiscal year 2011. (Round your answer to 1 decimal place. Omit the “%” sign in your response.)

 

  Cash flow on total assets ratio

 

Exercise 12-13B Preparation of statement of cash flows (direct) from Cash T-account L.O. P1

[The following information applies to the questions displayed below.]

The following summarized Cash T-account reflects the total debits and total credits to the Cash account of Texas Corporation for calendar year 2011.

 

Cash

 


 

  Balance, Dec. 31, 2010   135,200    
  Receipts from customers   6,000,000   Payments for merchandise 1,590,000
  Receipts from dividends   208,400   Payments for wages 550,000
  Receipts from land sale   220,000   Payments for rent 320,000
  Receipts from machinery sale   710,000   Payments for interest 218,000
  Receipts from issuing stock   1,540,000   Payments for taxes 450,000
  Receipts from borrowing   2,600,000   Payments for machinery 2,236,000
        Payments for long-term investments 2,260,000
        Payments for note payable 386,000
        Payments for dividends 500,000
        Payments for treasury stock 218,000


Balance, Dec. 31, 2011 $ ?    
 




   

6. Exercise 12-13B Part 1

(1) Use this information to prepare a complete statement of cash flows for year 2011. The cash provided or used by operating activities should be reported using the direct method(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

 

7. Exercise 12-13B Part 2

(2) Refer to the statement of cash flows in part 1 to answer the following questions a through d:

 

a. (i) Which section shows the largest cash inflow?
   
   
   

 

  (ii) Which section shows the largest cash outflow?
 
   
   

 

b. What is the largest individual item among the investing cash outflows?
   
   
   

 

c. The cash proceeds are larger from
   
   
   

 

d. From borrowing activities the company has
 

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