Mastery Problem

$1.$ Prepare a statement of cash flows explaining the change in cash and cash equivalents.

$2.$ Reconcile cash and cash equivalents at the bottom of the statement of cash flows.

Statement of Cash Flows Instructions

Score: $90/251$

Peachfield Corporation

Statement of Cash Flows

For Year Ended December $31,20-2$

$1$

Cash flows from operating activities:

$2$

$(1)$ Net income

$$116,764\mathrm{.}00$

$3$

Adjustments for changes in current assets and liabilities related to operating activities:

$4$

$(2)$ Increase in accounts receivable

$5$

$(3)$ Increase in merchandise inventory

$6$

$(4)$ Decrease in supplies and prepayments

$7,000\mathrm{.}00$

$7$

$8$

$(6)$ Decrease in accounts payable

$9$

$(7)$ Increase in income tax payable

$2,000\mathrm{.}00$

$10$

$(8)$ Increase in accrued and withheld payroll taxes

$1,116\mathrm{.}00$

$11$

$(9)$ Decrease in accrued interest payable

$12$

Noncash expenses and other adjustments:

$13$

$(10)$ Gain on sale of office equipment

$14$

$15$

$16$

Cash flows from investing activities:

$17$

$(10)$ Purchased store equipment

$18$

$(12)$ Purchased delivery equipment

$19$

$(13)$ Sold office equipment

$20$

$21$

$22$

Cash flows from financing activities:

$23$

$24$

$25$

$26$

$27$

$28$

Cash and cash equivalents, January $1,20-2$

$29$

Cash and cash equivalents, December $31,20-2$

$30$

Schedule of Noncash Investing and Financing Activities:

$31$

$32$

Supplemental Disclosures of Cash Flow Information:

$33$

Cash paid during the year for interest

$34$

Cash paid during the year for income taxes

Points:

$18\mathrm{.}29/51$

Check My Work

Refer to Figure $23-12$ in the text.

Mastery Problem

Instructions

Labels and Amount Descriptions

T$-$Accounts

Statement of Cash Flows

Instructions

Financial statements for Peachfield Corporation as well as additional information relevant to cash flows during the period follow.

Peachfield Corporation

Income Statement

For Year Ended December $31,20-2$

$1$

Net sales

$$

$$985,000\mathrm{.}00$

$2$

Cost of goods sold

$$

$515,000\mathrm{.}00$

$3$

Gross profit

$$

$$470,000\mathrm{.}00$

$4$

Operating expenses

$$

$299,400\mathrm{.}00$

$5$

Operating income

$$

$$170,600\mathrm{.}00$

$6$

Other revenues and expenses:

$$

$$

$7$

Gain on sale of office equipment

$$5,000\mathrm{.}00$

$$

$8$

Interest revenue

$2,100\mathrm{.}00$

$$

$9$

Interest expense

$(436\mathrm{.}00)$

$6,664\mathrm{.}00$

$10$

Income before taxes

$$

$$177,264\mathrm{.}00$

$11$

Income tax expense

$$

$60,500\mathrm{.}00$

$12$

Net income

$$

$$116,764\mathrm{.}00$

Peachfield Corporation

Statement of Retained Earnings

For Year Ended December $31,20-2$

$1$

Retained earnings, January $1,20-2$

$$

$$141,973\mathrm{.}00$

$2$

Net income

$$116,764\mathrm{.}00$

$$

$3$

Less dividends

$20,000\mathrm{.}00$

$$

$4$

Net increase in retained earnings

$$

$96,764\mathrm{.}00$

$5$

Retained earnings, December $31,20-2$

$$

$$238,737\mathrm{.}00$

Peachfield Corporation

Comparative Balance Sheet

December $31,20-2$ and $20-1$

$1$

$$

$$

$2002$

$$

$2001$

INCREASE $($DECREASE$)$

$2$

Assets

$$

$$

$$

$$

$$

$3$

Current assets:

$$

$$

$$

$$

$$

$4$

Cash

$$102,072\mathrm{.}00$

$$

$$27,200\mathrm{.}00$

$$

$$74,872\mathrm{.}00$

$5$

Government notes

$3,600\mathrm{.}00$

$$

$12,000\mathrm{.}00$

$$

$(8,400\mathrm{.}00)$

$6$

Accrued interest receivable

$320\mathrm{.}00$

$$

$250\mathrm{.}00$

$$

$70\mathrm{.}00$

$7$

Accounts receivable $($net$)$

$152,945\mathrm{.}00$

$$

$140,905\mathrm{.}00$

$$

$12,040\mathrm{.}00$

$8$

Merchandise inventory

$355,490\mathrm{.}00$

$$

$295,400\mathrm{.}00$

$$

$60,090\mathrm{.}00$

$9$

Supplies and prepayments

$14,500\mathrm{.}00$

$$

$21,500\mathrm{.}00$

$$

$(7,000\mathrm{.}00)$

$10$

Total current assets

$$

$$628,927\mathrm{.}00$

$$

$$497,255\mathrm{.}00$

$131,672\mathrm{.}00$

$11$

Property, plant, and equipment:

$$

$$

$$

$$

$$

$12$

Store equipment

$$308,000\mathrm{.}00$

$$