SOLUTIONS TO EXERCISES

EXERCISE 17-1
(a) Financing activities.
(b) Noncash investing and financing activities.
(c) Noncash investing and financing activities.
(d) Financing activities.
(e) Investing activities.
(f) Operating activities.
(g) Operating activities.

EXERCISE 17-2
(a) Operating activity. (i) Operating activity.
(b) Noncash investing and (j) Noncash investing and financing
financing activity. activity.
(c) Investing activity. (k) Investing activity.
(d) Financing activity. (l) Noncash investing and financing
(e) Operating activity. activity.
(f) Operating activity. (m) Operating activity (loss); investing
(g) Operating activity. activity (cash proceeds from sale).
(h) Financing activity. (n) Financing activity.

EXERCISE 17-4

GUTIERREZ COMPANY
Partial Statement of Cash Flows
For the Year Ended December 31, 2017

Cash flows from operating activities

Net income................................................................ $225,000
Adjustments to reconcile net income to net
  cash provided by operating activities
Depreciation expense...................................... $45,000
Loss on disposal of equipment.......................   5,000
Decrease in accounts receivable....................  15,000
Decrease in prepaid expenses........................   4,000
Increase in accounts payable.......................... 17,000  86,000
Net cash provided by operating activities........ $311,000
EXERCISE 17-5

SCOGGIN INC.
Partial Statement of Cash Flows
For the Year Ended December 31, 2017

Cash flows from operating activities......................

Net income............................................................ $153,000
Adjustments to reconcile net income to net
  cash provided by operating activities
Depreciation expense................................... $24,000)
Increase in accounts receivable..................  (21,000)
Decrease in inventory..................................  14,000)
Increase in prepaid expenses......................   (5,000)
Decrease in accounts payable.................... (7,000)
Increase in accrued expenses payable......  10,000) 15,000
Net cash provided by operating activities..... $168,000

EXERCISE 17-6

HERRICK CORP
Partial Statement of Cash Flows
For the Year Ended December 31, 2017

Cash flows from operating activities

Net income......................................................... $ 77,000)
Adjustments to reconcile net income
  to net cash provided by operating
  activities
Depreciation expense................................ $ 28,000)
Loss on disposal of equipment................ 7,000)  
35,000)
Net cash provided by operating
  activities...................................................  112,000)

Cash flows from investing activities

Sale of equipment..............................................  12,000*
Construction of equipment............................... (53,000)
Purchase of equipment.....................................   (70,000)
 Net cash used by investing activities...... (111,000)

Cash flows from financing activities

Payment of cash dividends..............................  (14,000)

*Cost of equipment sold................................... $ 49,000)

*Accumulated depreciation.............................. (30,000)
*Book value........................................................  19,000)
*Loss on sale of equipment..............................   (7,000)
*Cash proceeds................................................. $ 12,000)

EXERCISE 17-7

(a) ROJAS CORPORATION

Statement of Cash Flows
For the Year Ended December 31, 2017

Cash flows from operating activities

Net income........................................................... $ 22,630)
Adjustments to reconcile net income
  to net cash provided by operating activities
Depreciation expense.................................. $ 5,000)
Loss on disposal of land.............................   1,100
Decrease in accounts receivable................ 2,200
Decrease in accounts payable.................... (18,730)  
(10,430)
Net cash provided by operating activities......... 12,200

Cash flows from investing activities

Sale of land..........................................................  4,900

Cash flows from financing activities

Issuance of common stock................................. $ 6,000
Payment of dividends.......................................... (19,500)
Net cash used by financing activities................ (13,500)

Net increase in cash...................................................   3,600

Cash at beginning of period...................................... 10,700
Cash at end of period................................................. $ 14,300
(b) $12,200 – $0 – $19,500 = ($7,300)
EXERCISE 17-8

VELO COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017

Cash flows from operating activities

Net income................................................... $93,000)
Adjustments to reconcile net income
  to net cash provided by operating
  activities
Depreciation expense.......................... $34,000)
Increase in accounts receivable.........   (9,000)
Decrease in inventory..........................  19,000)
Decrease in accounts payable............   (8,000)   
36,000)
Net cash provided by operating
  activities..............................................  129,000)
Cash flows from investing activities
Sale of land...................................................  25,000)
Purchase of equipment............................... (70,000)
Net cash used by investing
  activities..............................................  (45,000)

Cash flows from financing activities

Issuance of common stock.........................  42,000)
Payment of cash dividends......................... (35,000)
Redemption of bonds..................................  (50,000)
Net cash used by financing
  activities..............................................  (43,000)

Net increase in cash............................................   41,000)

Cash at beginning of period...............................   22,000)
Cash at end of period.......................................... $ 63,000)
EXERCISE 17-9

(a) RODRIQUEZ CORPORATION

Statement of Cash Flows
For the Year Ended December 31, 2017

Cash flows from operating activities

Net income.................................................... $ 18,300)
Adjustments to reconcile net income
  to net cash provided by operating
  activities
Depreciation expense........................... $ 5,200* )
Loss on disposal of equipment............ 5,500**
Increase in accounts receivable.......... (2,900)
Increase in accounts payable...............   3,500
11,300 ))
Net cash provided by operating activities.....  29,600)

Cash flows from investing activities

Sale of equipment.........................................  3,300)
Purchase of investments............................. (4,000)
Net cash used by investing activities............  (700)

Cash flows from financing activities

Issuance of common stock..........................  $ 5,000
Payment of dividends................................... (16,400)
Retirement of bonds.....................................  (20,000)
Net cash used by financing activities............  (31,400)

Net increase in cash.............................................    (2,500) )

Cash at beginning of period................................ 17,700
Cash at end of period........................................... $ 15,200

*[$14,000 – ($10,000 – $1,200)] **[$3,300 – ($10,000 – $1,200)]

(b) $29,600 – $0 – $16,400 = $13,200