Cash Flow-Kazaam Company

Soal 1

kazaam  company, a merchandiser, recently completed its calender-year 2011 operations. For the year, 1. all sales are credit sales,  2. all credits to account receivable reflect cash receipt from customer. 3. all purchases of inventory are on credit, 4. all debits to accounts payable reflect cash payments for inventory, and 5. other expenses are paid in advance and are initially debited to prepaid expenses. The company's balance sheets and income statement follow :

KAZAAM COMPANY

Comparative Balance Sheet

December 31 2011 and 2010

Assets	2011	2010
Cash	$ 53875	$76625
Account Receivable	65000	49625
Merchandise inventory	273750	252500
Prepaid expenses	5375	6250
Equipment	159500	110000
Accumulated depreciation-equipment	(34625)	(44000)
Total assets	522875	451000
Liabilities and equity
Account payable	$88125	116625
Short term note payable	10000	6250
Long term note payable	93750	53750
Common stock, $5 par value	168750	156250
Paid in capital in excess of par, common stock	32500	0
Retained earnings	129750	118125
Total liabilities and equity	522875	451000

KAZAAM COMPANY

Income Statement

For the year ended December 31 2011

Sales		$496250
Cost of goods sold		250000
Gross profit		246250
Operating expenses
Depreciation expense	18750
Other expense	136500	155250
Other gain ( losses)
Loss on sale of equipment		5125
Income before tax		85875
Income tax expense		12125
Net income		$73750

Additional Information on Year 2011 Transactions

a. The loss on the cash sale of equipment was $5125 (details in b)

b. Sold equipment costing $46875, with accumulated depreciation of $28125 for $13625 cash

c. Purchased equipment costing $96375 by paying $25000 cash and signing a long term note payable for the balance

d. Borrowed $3750 cash by signing a short term note payable

e. Paid $31375 cash to reduce the long term notes payable

f. Issued 2500 shares of common stock for $18 cash per share

g. Declared and paid cash dividends of $62125

Required

Prepare a complete statement of cash flows, report its operating activities using indirect method. Disclose any noncash investing and financing activities in a note.

Jawaban

KAZAAM Company

Statement Of Cash Flow

For the year ended December 31 2011

Cash flow from operating activities
Net income					73750
Adjusting to reconcile net income to net cash flow from operating activities
Depreciation	18750
Loss on sale equipment	5125
Change in current operating assets and liabilities :
Increase in account receivable	(15375)
Increase in merchandise inventory	(21250)
Decrease in prepaid expenses	875
Decrease in account payable	(28500)
Increase in short term note payable	3750				(36625)
Net cash flow from operating activities					37125
Cash flow from investing activities
Cash received from sale of equipment		13625
Less : cash payment to purchase equipment		(25000)
Net cash flow used for investing activities				(11375)
Cash flow from financing activities
Cash received from issuing common stock		45000
Less : cash payment to reduce long term note payable		(31375)
Cash payment for dividends		(62125)
Net cash flow provided by financing activites				(48500)
Decrease in cash				(22750)
Cash at the beginning of the year				76625
Cash at the end of the year				53875

Statement to disclose noncash investing and financing activities

Issuing long term note payable to purchased equipment                                              71375