balance sheet data of Macaroni & Cheese

Meatloaf Inc. had January 1 and December 31 balances as follows:

1/1/2015 12/31/2015

Inventory $95,000 $113,000

Accounts Payable $61,000 $69,000

For 2015, cost of goods sold was $500,000. Compute Meatloaf Inc.’s 2015 cash payments to suppliers. Assume all inventory is purchased on account and accounts payable is only used for inventory purchases.

Question 2 (Cash Provided by Investing Activities)

The balance sheet data of Macaroni & Cheese at the end of 2015 and 2014 are shown below.

Land was acquired for $30,000 in exchange for common stock, par $30,000. During the year, all equipment was purchased for cash. Equipment costing $13,000 was sold for $3,000. Book value of the equipment was $6,000. Cash dividends of $9,000 were declared and paid during the year.

Compute net cash provided (used) by Investing Activities

Question 3 (Cash Provided by Financing Activities)

Using the same information presented above, compute net cash provided (used) by Financing Activities.

Question 4 (Indirect Method – Operating Activities)

Chicken Parmesan reported net income of $50,000 in 2016. Depreciation expense was $17,000. The following working capital accounts changed.

Accounts Receivable $11,000 increase

Available-for-sale Securities $16,000 increase

Inventory $7,400 increase

Nontrade Long-Term Note Payable $15,000 decrease

Accounts Payable $12,300 increase

Compute net cash provided by operating activities.

Question 5 (Direct Method – Operating Activities)

Presented below is data taken from the records of BBQ Brisket Company.

Dec. 31, 2014 Dec. 31, 2013

Cash $15,000 $10,000

Current Assets (non cash) $85,000 $58,000

Long-Term Investments $10,000 $53,000

Plant Assets $335,000 $215,000

Accumulated depreciation ($20,000) ($20,000)

Total Assets $425,000 $296,000

Current Liabilities $40,000 $22,000

Bonds Payable $75,000 $0

Common Stock $254,000 $254,000

Retained Earnings $56,000 $20,000

Total Liabilities & Equity $425,000 $296,000

Additional information:

  1. Depreciation charged for the year was $28,000.
  2. Dividends paid during the year were $10,000.
  3. Net income as reported on the income statement for the year were $59,000.
  4. Plant assets that cost $60,000 and were 80% depreciated were sold during 2012 for $8,000. The loss was incorrectly charged directly to Retained Earnings.
  5. HTM securities carried at a cost of $43,000 on December 31, 2011 were sold in 2012 for $34,000. The loss was incorrectly charged directly to Retained Earnings.

Prepare the operating activities section of the Statement of Cash flows using the indirect method.

Question 6 (Segment Reporting)

Chinese Corporation is a diversified company that operates in five different industries: Cashew Chicken, Beef & Broccoli, Mongolian Beef, Sweet & Sour Pork, and Sesame Chicken. The following information relating to each segment is available for 2014.

Determine which of the segments are reportable.

SECTION B

Question 7 (Statement of Cash Flows – Direct Method)

Pepperoni Pizza uses the direct method to prepare its statement of cash flows. Pepperoni Pizza’s trial balances at December 31, 2014 and 2013, are as follows.

December 31, 2014 2013

Debits

Cash $ 84,000 $ 5,000

Accounts receivable 270,000 298,000

Inventory 187,000 171,000

Property, plant, & equipment 690,000 592,100

Cost of goods sold 1,205,000 1,080,000

Selling expenses 181,500 106,000

G&A expenses 285,000 189,500 Interest expense 8,500 10,200

Income tax expense 170,300 161,800

$3,081,300 $2,613,600

Credits

Allowance for doubtful accounts $ 9,600 $ 8,100 Accumulated depreciation 80,500 65,000

Trade accounts payable 95,000 118,500

Income taxes payable 21,000 8,600

Deferred income taxes 54,200 45,600 Unamortized bond premium 4,500 5,000

10% convertible bonds payable 100,000 100,000 Common stock 110,000 100,000 Additional paid-in capital 75,000 56,000

Retained earnings 425,700 318,300

Sales 2,105,800 1,788,500

$3,081,300 $2,613,600

Additional information:

Pepperoni Pizza purchased a major piece of equipment for $97,900 during 2014. Pepperoni Pizza allocated one-half of its depreciation expense to cost of goods sold and the remainder to general and administrative expenses. Bad debt expense for 2014 was $10,000 and is included in general and administrative expenses.

Determine what amounts Pepperoni Pizza should report in its statement of cash flows for the year ended December 31, 2014, for the following items.

(a) Cash collected from customers.

(b) Cash paid for income taxes.

(c) Cash paid to suppliers.

(d) Cash paid for general and administrative expenses.

(e) Cash paid for interest.

Question 8 (Statement of Cash Flows – Indirect Method)

Condensed financial data of chicken fingers and curly fries for 2014 and 2013 are presented below.

CHICKEN FINGERS & CURLY FRIES
COMPARATIVE BALANCE SHEET

AS OF DECEMBER 31,

2014 2013

Cash $ 800 $ 600

Investments –0– 200

Receivables 2,250 2,100

Inventory 1,600 1,200

Plant assets 1,600 1,200

Accumulated depreciation (600) (455)

$5,650 $4,845

Accounts payable $ 750 $1,200

Accrued liabilities 330 520

Bonds payable 800 1,000

Capital stock 1,500 1,400

Retained earnings 2,270 725

$5,650 $4,845

CHICKEN FINGERS & CURLY FRIES
INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2014

Sales $15,200

Cost of goods sold 10,400

Gross margin 4,800

Selling and administrative expense 1,205

Income from operations 3,595

Other revenues and gains

Loss on sale of investments 50

Income before income tax 3,545

Income tax expense 1,400

Net income 2,145

Cash dividends 600

Income retained in business $ 1,545

During the year, $100 of common stock was issued in exchange for land. No plant assets were sold in 2014. Prepare a statement of cash flows using the indirect method.

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