19.

Grand Investments Inc. had the following transactions:

Transaction	Classification	Cash inflow or outflow
Paid account payable $5,000.	O	- $5,000
Sold equipment with a cost of $5,000 and a carrying amount of $2,800 for $1,500.
Prepaid insurance for one year $3,600.
Provided services for cash, $7,500.
Collected accounts receivable $8,700.
Purchased a patent for $400,000.
Purchased inventory for cash $16,000.
Repurchased common shares with a cost of $90,000 for $95,000.
Sold a trading security for $10,000. The security had originally cost $12,000.
Converted preferred shares with a cost of $50,000 to common shares.
Acquired an automobile valued at $45,000 by entering into a capital lease.

Instructions

Complete the above table (as demonstrated by item 1) indicating:

(a) Whether each transaction should be classified as an Operating (O), Investing (I) or Financing (F) activity; and

(b) The amount of cash inflow (+), outflow (-) or if it has no effect on cash (NE).

20.

The Fisheries Processing Corporation prepared the following income statement and comparative balance sheet for 2011.

FISHERIES PROCESSING CORPORATION

Income Statement

Year Ended December 31, 2011

Sales.............................................................................................................. $1,800,000

Cost of goods sold......................................................................................... 880,000

Gross profit......................................................................................................... 920,000

Depreciation expense......................................................................................... 227,000

Other operating expenses.................................................................................. 197,000

Interest expense................................................................................................. 160,000

Loss on fair value adjustment on trading securities............................................... 5,000

Loss on sale of land....................................................................................... 120,000

Income before taxes........................................................................................... 211,000

Income taxes................................................................................................. 70,800

Profit............................................................................................................... $ 140,200

FISHERIES PROCESSING CORPORATION

Comparative Balance Sheet

Assets 2011 2010

Cash ................................................................................ $ 385,200 $ 200,000

Accounts receivable.................................................................. 180,000 350,000

Trading securities..................................................................... 460,000 320,000

Merchandise inventory.............................................................. 2,336,000 2,090,000

Property, plant, and equipment................................................ 880,000 800,000

Less: Accumulated depreciation.............................................. (787,000) (560,000)

Goodwill.................................................................................... 219,000 219,000

Total Assets.............................................................................. $3,673,200 $3,419,000

Liabilities and Shareholders' Equity

Accounts payable..................................................................... $ 389,000 $ 265,000

Other accrued payables............................................................ 160,000 240,000

Dividends payable.................................................................... 80,000 80,000

Income taxes payable............................................................... 27,000 42,000

Note payable (long-term).......................................................... 180,000 560,000

Bonds payable.......................................................................... 900,000 400,000

Common shares........................................................................ 1,600,000 1,600,000

Retained earnings..................................................................... 337,200 232,000

Total Liabilities & Shareholders' Equity.................................... $3,673,200 $3,419,000

Additional data:

(1) Trading securities were purchased for $145,000.

(2) Equipment was purchased for $400,000.

(3) Land was sold for cash proceeds of $200,000.

(4) The company sold bonds of $500,000 and made $380,000 of principal payments on notes payable.

Instructions

Prepare a cash flow statement for 2011, using the indirect method.

21.

The general ledger of Hubert Corporation provides the following information:

End of Year Beginning of Year

Accounts Receivable $125,000 $ 94,000

Inventory 280,000 210,000

Accounts Payable 130,000 65,000

The company's net sales for the year were $2,850,000 and cost of goods sold amounted to $1,650,000.

Instructions

Calculate the following:

(a) Cash receipts from customers.

(b) Cash payments to suppliers.

22. The financial statements of Granger Inc. appear below:

GRANGER INC.

Comparative Balance Sheet

December 31

2011 2010

Assets

Cash..................................................................................... $ 27,000 $ 23,000

Accounts receivable............................................................. 31,000 34,000

Merchandise inventory......................................................... 32,000 15,000

Property, plant, and equipment............................................ 50,000 78,000

Accumulated depreciation.................................................... (20,000) (24,000)

Total............................................................................ $120,000 $126,000

Liabilities and Shareholders' Equity

Accounts payable................................................................. $ 20,000 $ 23,000

Income taxes payable.......................................................... 10,000 8,000

Bonds payable..................................................................... 7,000 33,000

Common shares, 10,000 shares issued.............................. 39,000 24,000

Retained earnings................................................................ 44,000 38,000

Total............................................................................ $120,000 $126,000

GRANGER INC.

Income Statement

Year Ended December 31, 2011

Sales.................................................................................... $470,000

Cost of goods sold............................................................... 400,000

Gross profit........................................................................... 70,000

Operating expenses............................................................. 36,000

Profit from operations........................................................... 34,000

Interest expense................................................................... 4,000

Profit before income taxes................................................... 30,000

Income tax expense............................................................. 10,000

Profit..................................................................................... $ 20,000

The following additional data were provided:

1. Dividends declared and paid were $14,000.

2. During the year, equipment was sold for $12,000 cash. This equipment cost $23,000 originally and had a carrying amount of $7,000 at the time of sale.

3. All depreciation expense is in the operating expenses category.

4. All sales and purchases are on account.

5. Accounts payable pertain to merchandise suppliers.

6. All operating expenses except for depreciation were paid in cash.

Instructions

(a) Prepare a cash flow statement for Granger Inc., using the direct method.

(b) Calculate free cash flow.

19. Grand Investments Inc. had the following transactions: Transaction Classification 1. Paid account payable $5,000. 2. Sold equipment with a cost of $5,000 and a carrying amount of $2,800 for $1,500. 3. Prepaid insurance for one year $3,600. 4. Provided services for cash, $7,500. 5. Collected accounts receivable $8,700. 6. Purchased a patent for $400,000. 7. Purchased inventory for cash $16,000. 8. Repurchased common shares with a cost of $90,000 for $95,000. 9. Sold a trading security for $10,000. The security had originally cost $12,000. 10. Converted preferred shares with a cost of $50,000 to common shares. 11. Acquired an automobile valued at $45,000 by entering into a capital lease. O Cash inflow or outflow - $5,000 Instructions Complete the above table (as demonstrated by item 1) indicating: (a) Whether each transaction should be classified as an Operating (O), Investing (I) or Financing (F) activity; and (b) The amount of cash inflow (+), outflow (-) or if it has no effect on cash (NE). 20. The Fisheries Processing Corporation prepared the following income statement and comparative balance sheet for 2011. FISHERIES PROCESSING CORPORATION Income Statement Year Ended December 31, 2011 Sales.................................................................................................... Cost of goods sold............................................................................... Gross profit.......................................................................................... Depreciation expense.......................................................................... Other operating expenses................................................................... Interest expense.................................................................................. Loss on fair value adjustment on trading securities............................ Loss on sale of land............................................................................. $1,800,000 880,000 920,000 227,000 197,000 160,000 5,000 120,000 1 Income before taxes............................................................................ Income taxes....................................................................................... Profit..................................................................................................... 211,000 70,800 $ 140,200 FISHERIES PROCESSING CORPORATION Comparative Balance Sheet Assets Cash ................................................................................. 200,000 Accounts receivable.................................................................. 350,000 Trading securities...................................................................... 320,000 Merchandise inventory.............................................................. 2,090,000 Property, plant, and equipment................................................. 800,000 Less: Accumulated depreciation............................................... (560,000) Goodwill..................................................................................... 219,000 Total Assets............................................................................... $3,419,000 Liabilities and Shareholders' Equity Accounts payable...................................................................... 265,000 Other accrued payables............................................................ 240,000 Dividends payable..................................................................... 80,000 Income taxes payable............................................................... 42,000 Note payable (long-term).......................................................... 560,000 Bonds payable.......................................................................... 400,000 Common shares........................................................................ 1,600,000 Retained earnings..................................................................... 232,000 Total Liabilities & Shareholders' Equity..................................... $3,419,000 2011 $ 385,200 2010 $ 180,000 460,000 2,336,000 880,000 (787,000) 219,000 $3,673,200 $ 389,000 $ 160,000 80,000 27,000 180,000 900,000 1,600,000 337,200 $3,673,200 Additional data: (1) Trading securities were purchased for $145,000. (2) Equipment was purchased for $400,000. (3) Land was sold for cash proceeds of $200,000. (4) The company sold bonds of $500,000 and made $380,000 of principal payments on notes payable. 2 Instructions Prepare a cash flow statement for 2011, using the indirect method. 21. The general ledger of Hubert Corporation provides the following information: End of Year $125,000 280,000 130,000 Accounts Receivable Inventory Accounts Payable Beginning of Year $ 94,000 210,000 65,000 The company's net sales for the year were $2,850,000 and cost of goods sold amounted to $1,650,000. Instructions Calculate the following: (a) Cash receipts from customers. (b) Cash payments to suppliers. 22. The financial statements of Granger Inc. appear below: GRANGER INC. Comparative Balance Sheet December 31 2011 2010 Assets Cash..................................................................................... Accounts receivable............................................................. Merchandise inventory......................................................... Property, plant, and equipment............................................ Accumulated depreciation.................................................. (24,000) Total............................................................................. $ 27,000 31,000 32,000 50,000 (20,000) $ 23,000 34,000 15,000 78,000 $120,000 $126,000 $ 20,000 10,000 7,000 39,000 44,000 $120,000 $ 23,000 8,000 33,000 24,000 38,000 $126,000 Liabilities and Shareholders' Equity Accounts payable................................................................. Income taxes payable.......................................................... Bonds payable...................................................................... Common shares, 10,000 shares issued.............................. Retained earnings............................................................ Total............................................................................. GRANGER INC. Income Statement Year Ended December 31, 2011 Sales..................................................................................... Cost of goods sold................................................................ Gross profit........................................................................... Operating expenses............................................................. Profit from operations........................................................... Interest expense................................................................... $470,000 400,000 70,000 36,000 34,000 4,000 3 Profit before income taxes................................................... Income tax expense............................................................. Profit..................................................................................... 30,000 10,000 $ 20,000 The following additional data were provided: 1. Dividends declared and paid were $14,000. 2. During the year, equipment was sold for $12,000 cash. This equipment cost $23,000 originally and had a carrying amount of $7,000 at the time of sale. 3. All depreciation expense is in the operating expenses category. 4. All sales and purchases are on account. 5. Accounts payable pertain to merchandise suppliers. 6. All operating expenses except for depreciation were paid in cash. Instructions (a) Prepare a cash flow statement for Granger Inc., using the direct method. (b) Calculate free cash flow. 4