Deck 14: Managerial Accounting

Question 1

Theater by Design and Showcase Cinemas are asking you to recommend their stock to your clients. Because Theater by Design and Showcase earn about the same net income and have similar financial positions, your decision depends on their cash flow statements, summarized as follows:

Requirement
1. Based on their cash flows, which company looks better Give your reasons.

Answer 1

Based on the cash flow statement of Theater by Design and Showcase Cinemas, we can conclude that Showcase Cinemas' stock is more appealing.
a) Showcase Cinemas has more cash coming from operating activities which provides assurance of stability. The cash flow from operating activities should be the main creator of cash for a company that wants to grow.
b) Showcase Cinemas is investing more money, particularly into plant assets, which will yield a better opportunity for long-term growth in the future.
c) Theater of Design cash flow has increased through investing activities more than it has through operating activities - the company has made more money through selling its physical assets than through operations, which causes an uncertainty in the company's future, from investor's point of view.
d) Showcase Cinemas has raised equity through common stock issuance and Theater of Design has paid off debt. Financing activities of both companies provide a positive outlook on their economic strength.

Question 2

Computing operating activities cash flow-indirect method
The accounting records of DVD Sales, Inc., include the following accounts:

Requirement
1. Compute DVD's net cash provided by (used for) operating activities during July. Use the indirect method.

Answer 2

Before we prepare the statement of cash flows we need to complete the accounting records:
Depreciation:
Accounts receivable decrease:
Inventory increase:
Accounts payable increase:

Question 3

Preparing the statement of cash flows-indirect method
This exercise continues the Lawlor Lawn Service, Inc., situation from Exercise 13-36 of Chapter 13. Refer to the comparative balance sheet for Lawlor Lawn Service.

Requirement
1. Prepare the statement of cash flows using the indirect method. Assume no dividends were declared or paid during the year.

Answer 3

Let us assume that there were no dividends paid or collected during the year. Before we prepare the statement of cash flows we need to complete the accounting records:
Net income (given that no dividends were paid or collected):
Accumulated depreciation:
Common stock:

Question 4

Preparing the statement of cash flows-direct method
To prepare the statement of cash flows, accountants for E-Mobile, Inc., have summarized 2012 activity in the Cash account as follows:

Requirement
1. Prepare E-Mobile's statement of cash flows for the year ended December 31, 2012, using the direct method to report operating activities.

Question 5

Classifying cash flow items
Cash flow items must be categorized into one of four categories: financing, investing noncash, or operating.
Requirement
1. Answer the following questions about the statement of cash flows:
a. List the categories of cash flows in the order they appear in the statement of cash flows.
b. What is the "key reconciling figure" for the statement of cash flows Where do you get this figure
c. What is the first dollar amount reported on the indirect method statement of cash flows

Question 6

Preparing the statement of cash flows-indirect method
The income statement of Minerals Plus, Inc., follows:

Additional data follow:
a. Acquisition of plant assets is $11.8,000. Of this amount, $100,000 is paid in cash and $18,000 by signing a note payable.
b. Cash receipt from sale of land totals $28,000. There was no gain or loss.
c. Cash receipts from issuance of common stock total $29,000.
d. Payment of note payable is $18,000.
e. Payment of dividends is $8,000.
f. From the balance sheet:

Requirement
1. Prepare Minerals Plus's statement of cash flows for the year ended September 30, 2012, using the indirect method. Include a separate section for noncash investing and financing activities.

Question 7

Preparing the statement of cash flows-indirect method
This problem continues the Draper Consulting, Inc., situation from Problem 13-37 of Chapter 13. Refer to the comparative balance sheet for Draper Consulting.

Requirement
1. Prepare the statement of cash flows using the indirect method.

Question 8

Preparing the statement of cash flows-direct method
KSG, Inc., accountants have developed the following data from the company's accounting records for the year ended June 30, 2012:
a. Purchase of plant assets, $57,400.
b. Cash receipt from issuance of notes payable, $48,100.
c. Payments of notes payable, $45,000.
d. Cash receipt from sale of plant assets, $23,500.
e. Cash receipt of dividends, $4,300.
f. Payments to suppliers, $371,300.
g. Interest expense and payments, $13,500.
h. Payments of salaries, $92,000.
i. Income tax expense and payments, $38,000.
j. Depreciation expense, $56,000.
k. Collections from customers, $607,000.
l. Payment of cash dividends, $45,400.
m. Cash receipt from issuance of common stock, $65,900.
n. Cash balance: June 30, 2011, $39,300; June 30, 2012, $125,500.
Requirement
1. Prepare KSG's statement of cash flows for the year ended June 30, 2012. Use the direct method for cash flows from operating activities.

Question 9

Select a company and obtain its annual report, including all the financial statements. Focus on the statement of cash flows and, in particular, the cash flows from operating activities. Specify whether the company uses the direct method or the indirect method to report operating cash flows.

Question 10

Computing operating activities cash flow-indirect method
Consider the following facts for Espresso Place:
a. Beginning and ending Retained earnings are $44,000 and $70,000, respectively.
Net income for the period is $61,000.
b. Beginning and ending Plant assets, net, are $104,000 and $109,000, respectively. Depreciation for the period is $17,000, and acquisitions of new plant assets total $28,000. Plant assets were sold at a $5,000 gain.
Requirements
1. How much are cash dividends
2. What was the amount of the cash receipt from the sale of plant assets

Question 11

Preparing the direct method statement of cash flows
Jelly Bean, Inc., began 2012 with cash of $53,000. During the year Jelly Bean earned revenue of $597,000 and collected $621,000 from customers. Expenses for the year totaled $437,000, of which Jelly Bean paid $427,000 in cash to suppliers and employees. Jelly Bean also paid $145,000 to purchase equipment and a cash dividend of $54,000 to its stockholders during 2012.
Requirement
1. Prepare the company's statement of cash flows for the year ended December 31, 2012. Format operating activities by the direct method.

Question 12

Preparing the statement of cash flows-direct method
Use the National Reserve Rare Coins data from Problem 14-28B.
Requirements
1. Prepare National Reserve Rare Coins' income statement for the year ended December 31, 2012. Use the single-step format, with all revenues listed together and all expenses listed together.
2. Prepare National Reserve's balance sheet at December 31, 2012.
3. Prepare National Reserve's statement of cash flows for the year ended December 31, 2012. Format cash flows from operating activities by the direct method.

Question 13

Classifying items on the indirect statement of cash flows
Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the statement:
______a. Increase in accounts payable
______b. Payment of dividends
______c. Decrease in accrued liabilities
______d. Issuance of common stock
_____e. Gain on sale of building
______f. Loss on sale of land
____g. Depreciation expense
______h. Increase in inventory
______i. Decrease in accounts receivable
______j. Purchase of equipment
Requirement
1. Identify each item as a(n)
• Operating activity-addition to net income (O+), or subtraction from net income (O-)
• Investing activity-addition to cash flow (I+), or subtraction from cash flow (I-)
• Financing activity-addition to cash flow (F+), or subtraction from cash flow (F-)
• Activity that is not used to prepare the indirect cash flow statement (N)

Question 14

Computing the cash effect of acquiring assets
McKnight Exercise Equipment, Inc., reported the following financial statements for 2012:


Requirement
1. Compute the amount of McKnight Exercise's acquisition of plant assets.
McKnight Exercise sold no plant assets.

Question 15

Preparing operating activities using the direct method
Happy Tot's Learning Center has assembled the following data for the year ended June 30, 2012:

Requirement
1. Prepare the operating activities section of the business's statement of cash flows for the year ended June 30, 2012, using the direct method.

Question 16

Preparing the statement of cash flows-direct method
Use the All Wired data from Problem 14 31B.
Requirements
1. Prepare the 2012 statement of cash flows by the direct method.
2. How will what you learned in this problem help you evaluate an investment

Question 17

Computing cash flows from operating activities-indirect method
OMD Equipment, Inc., reported the following data for 2012:

Requirement
1. Compute OMD's net cash provided by operating activities-indirect method.

Question 18

Computing the cash effect of transactions
Use the McKnight Exercise Equipment data in Exercise 14-19.
Requirement
1. Compute the following:
a. New borrowing or payment of long-term notes payable, with McKnight Exercise having only one long-term note payable transaction during the year.
b. Issuance of common stock, with McKnight Exercise having only one common stock transaction during the year.
c. Payment of cash dividends.

Question 19

Preparing the direct method statement of cash flows
Use the data in Short Exercise 14A-2 and your results.
Requirement
1. Prepare the business's complete statement of cash flows for the year ended June 30, 2012, using the direct method for operating activities. Stop after determining the net increase (or decrease) in cash.

Question 20

Preparing the statement of cash flows-direct method
To prepare the statement of cash flows, accountants for I-M-Mobile, Inc., have sum marized 2012 activity in the Cash account as follows:

Requirement
1. Prepare 1-M-Mobile's statement of cash flows for the year ended December 31, 2012, using the direct method to report operating activities.

Question 21

Computing cash flows from operating activities-indirect method
One Way Cellular accountants have assembled the following data for the year ended September 30, 2012:

Requirement
1. Prepare the operating activities section using the indirect method for One Way Cellular's statement of cash flows for the year ended September 30, 2012.

Question 22

Computing the cash effect of transactions
Use the McKnight Exercise Equipment data in Exercises 14-19 and 14-20.
Requirement
1. Prepare the company's statement of cash flows-indirect method-for the year ended December 31, 2012.

Question 23

Preparing the direct method statement of cash flows
Rouse Toy Company reported the following comparative balance sheet:

Requirement
1. Compute the following for Rouse Toy Company:
a. Collections from customers during 2012. Sales totaled $143,000.
b. Payments for inventory during 2012. Cost of goods sold was $80,000

Question 24

Preparing the statement of cash flows-indirect method
The 2012 comparative balance sheet and income statement of Appleton Group, Inc., follow. Appleton had no noncash investing and financing transactions during 2012.


Requirement
1. Prepare the spreadsheet for the 2012 statement of cash flows. Format cash flows from operating activities by the indirect method.

Question 25

Computing cash flows-indirect method
Use the data in Short Exercise 14-5 to complete this exercise.
Requirement
1. Prepare One Way Cellular's statement of cash flows using the indirect method for the year ended September 30, 2012. Stop after determining the net increase (or decrease) in cash.

Question 26

Identifying and reporting noncash transactions
Dirtbikes, Inc., identified the following selected transactions that occurred during 2012:

Requirement
1. Identify any noncash transactions that occurred during the year and show how they would be reported in the noncash section of the cash flow statement.

Question 27

Identifying activity categories-direct method
Consider the following transactions:

Requirement
1. Identify each of the transactions as a(n)
• Operating activity (O)
• Investing activity (I)
• Financing activity (F)
• Noncash investing and financing activity (NIF)
• Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases (-) cash. The direct method is used for cash flows from operating activities.

Question 28

Preparing the statement of cash flows-indirect method
Review the data from P14-27A.
Requirements
1. Prepare the spreadsheet for Rolling Hills' 2012 statement of cash flows. Format cash flows from operating activities by the indirect method.

Question 29

Computing investing and financing cash flows
Kyler Media Corporation had the following income statement and balance sheet for 2012:


Requirement
1. Compute for Kyler Media Corporation during 2012 the
a. acquisition of equipment. The business sold no equipment during the year.
b. payment of a long-term note payable. During the year, the business issued a $5,300 note payable.

Question 30

Analyzing free cash flow
Use the McKnight Exercise Equipment data in Exercises 14-19 and 14-20. McKnight plans to purchase a truck for $29,000 and a forklift for $121,000 next year.
Requirement
1. Calculate the amount of free cash flow McKnight has for 2012.

Question 31

Identifying activity categories of transactions-direct method
Consider the following transactions:

Requirement
1. Indicate where, if at all, each of the transactions would be reported on a statement of cash flows prepared by the direct method and the accompanying schedule of noncash investing and financing activities.

Question 32

Preparing the statement of cash flows-indirect method
The 2012 comparative balance sheet and income statement of Attleboro Group, Inc. follow. Attleboro had no noncash investing and financing transactions during 2012.


Requirement
1. Prepare the spreadsheet for the 2012 statement of cash flows. Format cash flows from operating activities by the indirect method.

Question 33

Preparing the statement of cash flows-indirect method
Use the Kyler Media Corporation data in Short Exercise 14-7 and the results you calculated from the requirements.
Requirement
1. Prepare Kyler Media's statement of cash flows-indirect method-for the year ended December 31, 2012.

Question 34

Purpose of the statement and preparing the statement of cash flows-indirect method
Classic Reserve Rare Coins (CRRC) was formed on January 1, 2012. Additional data for the year follows:

Requirements
1. What is the purpose of the cash flow statement
2. Prepare CRRC's income statement for the year ended December 31, 2012. Use the single-step format, with all revenues listed together and all expenses listed together.
3. Prepare CRRC's balance sheet at December 31, 2012.
4. Prepare CRRC's statement of cash flows using the indirect method for the year ended December 31, 2012.

Question 35

Preparing operating activities cash flow-direct method
The accounting records of Fuzzy Dice Auto Parts reveal the following:

Requirement
1. Compute cash flows from operating activities using the direct method.

Question 36

Preparing the statement of cash flows-indirect method
Review the data from P14-31B.
Requirement
1. Prepare the spreadsheet for All Wired's 2012 statement of cash flows. Format cash flows from operating activities by the indirect method.

Question 37

In 60 words or fewer, explain the difference between operating, investing, and financing activities.

Question 38

Computing the change in cash; identifying noncash transactions
Judy's Makeup Shops earned net income of $22,000, which included depreciation of $14,000. Judy's acquired a $119,000 building by borrowing $119,000 on a long-term note payable.
Requirements
1. How much did Judy's cash balance increase or decrease during the year
2. Were there any noncash transactions for the company If so, show how they would be reported in the statement of cash flows.

Question 39

Preparing the statement of cash flows-indirect method
Accountants for Johnson, Inc., have assembled the following data for the year ended December 31, 2012:


Requirement
1. Prepare Johnson's statement of cash flows using the indirect method. Include an accompanying schedule of noncash investing and financing activities.

Question 40

Identifying activity categories of transactions-direct method
Selected accounts of Printing Networks, Inc., show the following:

Requirement
1. For each account, identify the item or items that should appear on a statement of cash flows prepared by the direct method. Also state each item's amount and where to report the item.

Question 41

The 2014 comparative income statement and the 2014 comparative balance sheet of Golf America, Inc., have just been distributed at a meeting of the company's board of directors. The members of the board of directors raise a fundamental question: Why is the cash balance so low This question is especially hard to understand because 2014 showed record profits. As the controller of the company, you must answer the question.


Requirements
1. Prepare a statement of cash flows for 2014 in the format that best shows the relationship between net income and operating cash flow. The company sold no plant assets or long-term investments and issued no notes payable during 2014. There were no noncash investing and financing transactions during the year. Show all amounts in thousands.
2. Considering net income and the company's cash flows during 2014, was it a good year or a bad year Give your reasons.

Question 42

Computing free cash flow
Cooper Lopez Company expects the following for 2012:
• Net cash provided by operating activities of $158,000.
• Net cash provided by financing activities of $60,000.
• Net cash used for investing activities of $80,000 (no sales of long-term assets).
• Cash dividends paid to shareholders was $10,000.
Requirement
1. How much free cash flow does Lopez expect for 2012

Question 43

Preparing the statement of cash flows-indirect method, evaluating cash flows, and measuring free cash flows
The comparative balance sheet of Jackson Educational Supply at December 31, 2012, reported the following:

Jackson's transactions during 2012 included the following:

Requirements
1. Prepare the statement of cash flows of Jackson Educational Supply for the year ended December 31, 2012. Use the indirect method to report cash flows from operating activities.
2. Evaluate Jackson's cash flows for the year. Mention all three categories of cash flows and give the reason for your evaluation.
3. If Jackson plans similar activity for 2013, what is its expected free cash flow

Question 44

Preparing the statement of cash flows-direct method
The income statement and additional data of Best Corporation follow:

Additional data follow:
a. Collections from customers are $15,500 more than sales.
b. Dividend revenue, interest expense, and income tax expense equal their cash amounts.
c. Payments to suppliers are the sum of cost of goods sold plus advertising expense.
d. Payments to employees are $1,000 more than salary expense.
c. Acquisition of plant assets is $102,000.
f. Cash receipts from sale of land total $24,000.
g. Cash receipts from issuance of common stock total $32,000.
h. Payment of long-term note payable is $17,000.
i. Payment of dividends is $10,500.
j. Cash balance, June 30, 2011, was $25,000; June 30, 2012 was $28,000.
Requirement
1. Prepare Best Corporation's statement of cash flows for the year ended June 30, 2012. Use the direct method

Question 45

Moss Exports is having a bad year. Net income is only $60,000. Also, two important overseas customers are falling behind in their payments to Moss, and Moss's accounts receivable are ballooning. The company desperately needs a loan. The Moss Exports board of directors is considering ways to put the best face on the company's financial statements. Moss's bank closely examines cash flow from operations. Daniel Peavey, Moss's controller, suggests reclassifying the receivables from the slow-paying clients as long-term. He explains to the board that removing the $80,000 rise in accounts receivable from current assets will increase net cash provided by operations. This approach may help Moss get the loan.
Requirements
1. Using only the amounts given, compute net cash provided by operations, both without and with the reclassification of the receivables. Which reporting makes Moss look better
2. Under what condition would the reclassification of the receivables be ethical Unethical

Question 46

Predicting future cash flows
Anderson's Armoires reported net loss for the year of $25,000; however, it reported an increase in cash balance of $50,000. The CFO states, "Anderson's Armoires would have shown a profit were it not for the depreciation expense recorded this year."
Requirements
1. Can the CFO be right Why
2. Based on the information provided, what would you predict future cash flows to be

Question 47

Preparing the statement of cash flows-indirect method with noncash transactions
The 2012 comparative balance sheet and income statement of Rolling Hills, Inc., follow:


Additionally, Rolling Hills purchased land of $23,600 by financing it 100% with long-term notes payable during 2012. During the year, there were no sales of land ox equipment, no additional issuances of notes payable, no retirements of stock, and no treasury stock transactions.
Requirements
1. Prepare the 2012 statement of cash flows, formatting operating activities by the indirect method.
2. How will what you learned in this problem help you evaluate an investment

Question 48

Computing cash flow items-direct method
Consider the following facts:
a. Beginning and ending Accounts receivable are $20,000 and $24,000, respectively. Credit sales for the period total $62,000.
b. Cost of goods sold is $76,000. Beginning Inventory balance is $27,000, and ending Inventory balance is $22,000. Beginning and ending Accounts payable are $14,000 and $9,000, respectively.
Requirements
1. Compute cash collections from customers.
2. Compute cash payments for inventory.

Question 49

Frank Lou had recently been promoted to construction manager at a development firm. He was responsible for dealing with contractors who were bidding on a multi-million dollar excavation job for the new high-rise. Times were tough, several contractors had gone under recently, and the ones left standing were viciously competitive. That morning, four bids were sitting on Frank's desk. The deadline was midnight, and the bids would be opened the next morning. The first bidder, Bo Freely, was a tough but personable character that Frank had known for years. Frank had lunch with him today, and after a few beers, Bo hinted that if Frank "inadvertently mentioned the amount of the lowest bid, he'd receive a "birthday card" with a gift of cash. After lunch, Frank carefully unsealed the bids and noticed that another firm had underbid Bo's company by a small margin. Frank took Bo's bid envelope, wrote the low bid amount in pencil on it, and carried it downstairs where Bo's son William was waiting. Later that afternoon, a new bid came in from Bo's company. The next day, Bo's company got the job, and Frank got a birthday card in his mailbox.
Requirements
1. Was Frank's company hurt in any way by this fraudulent action
2. How could this action hurt Frank
3. How can a business protect against this kind of fraud

Question 50

Classifying cash flow items
Consider the following transactions:
a. Purchased equipment for $130,000 cash.
b. Issued $14 par preferred stock for cash.
c. Cash received from sales to customers of $35,000.
d. Cash paid to vendors, $17,000.
e. Sold building for $19,000 gain for cash.
f. Purchased common treasury shares for $28,000.
g. Paid a notes payable with 1,250 of the company's common shares.
Requirement
1. Identify the category of the statement of cash flows in which each transaction would be reported.

Question 51

Purpose of the statement and preparing the statement of cash flows-indirect method
National Reserve Rare Coins (NRRC) was formed on January 1, 2012. Additional data for the year follows:

Requirements
1. What is the purpose of the cash flow statement
2. Prepare NRRC's income statement for the year ended December 31, 2012. Use the single-step format, with all revenues listed together and all expenses listed together.
3. Prepare NRRC's balance sheet at December 31, 2012.
4. Prepare NRRC's statement of cash flows using the indirect method for the year ended December 31, 2012.

Question 52

Computing cash flow items-direct method
Superb Mobile Homes reported the following in its financial statements for the year ended December 31, 2012:

Requirement
1. Determine the following for Superb Mobile Homes during 2012:
a. Collections from customers.
b. Payments for inventory.
c. Payments of operating expenses.
d. Acquisitions of property and equipment (no sales of property during 2012).
e. Borrowing, with Superb paying no long-term liabilities.
f. Cash receipt from issuance of common stock.
g. Payment of cash dividends.

Question 53

Use the Amazon.com statement of cash flows, along with the company's other financial statements at the end of this book, to answer the following questions.
Requirements
1. Which method does Amazon use to report net cash flows from operating activities How can you tell
2. Amazon earned net income during 2009. Did operations provide cash or use cash during 2009 Give the amount. How did operating cash during 2009 compare with 2008
3. Evaluate 2009 in terms of net income, cash flows, balance sheet position, and overall results. Be specific.

Question 54

Classifying items on the indirect statement of cash flows
The cash flow statement categorizes like transactions for optimal reporting.
Requirement
1. Identify each of the following transactions as one of the following:
• Operating activity (O)
• Investing activity (1)
• Financing activity (F)
• Noncash investing and financing activity (NIF)
• Transaction that is not reported on the statement of cash flows (N)
For each cash flow, indicate whether the item increases (+) or decreases ( ) cash. The indirect method is used to report cash flows from operating activities.

Question 55

Preparing the statement of cash flows-indirect method
Accountants for Smithson, Inc., have assembled the following data for the year ended December 31, 2012:


Requirement
1. Prepare Smithson's statement of cash flows using the indirect method. Include an accompanying schedule of noncash investing and financing activities.

Question 56

Preparing the statement of cash flows-direct method
MPG, Inc., accountants have developed the following data from the company's accounting records for the year ended April 30, 2012:
a. Purchase of plant assets, $59,400.
b. Cash receipt from issuance of notes payable, $46,100.
c. Payments of notes payable, $44,000.
d. Cash receipt from sale of plant assets, $24,500.
e. Cash receipt of dividends, $4,800,
f. Payments to suppliers, $374,300.
g. Interest expense and payments, $12,000.
h. Payments of salaries, $88,000.
i. Income tax expense and payments, $37,000.
j. Depreciation expense, $59,900.
k. Collections from customers, $605,500.
l. Payment of cash dividends, $49,400.
m. Cash receipt from issuance of common stock, $64,900.
n. Cash balance: April 30, 2011, $40,000; April 30, 2012, $121,700.
Requirement
1. Prepare MPG's statement of cash flows for the year ended April 30, 2012. Use the direct method for cash flows from operating activities.

Question 57

Purposes of the statement of cash flows
Financial statements all have a goal. The cash flow statement does as well.
Requirement
1. Describe how the statement of cash flows helps investors and creditors perform each of the following functions:
a. Predict future cash flows.
b. Evaluate management decisions.
c. Predict the ability to make debt payments to lenders and to pay dividends to stockholders.

Question 58

Classifying transactions on the statement of cash flows-indirect method
Consider the following transactions:

Requirement
1. Indicate whether each transaction would result in an operating activity, an investing activity, or a financing activity for an indirect method statement of cash flows and the accompanying schedule of noncash investing and financing activities.

Question 59

Preparing the statement of cash flows-indirect method, evaluating cash flows, and measuring free cash flows
The comparative balance sheet of Morgensen Educational Supply at December 31, 2012, reported the following:

Morgensen's transactions during 2012 included the following:

Requirements
1. Prepare the statement of cash flows of Morgensen Educational Supply for the year ended December 31, 2012. Use the indirect method to report cash flows from operating activities.
2. Evaluate Morgensen's cash flows for the year. Mention all three categories of cash flows and give the reason for your evaluation.
3. If Morgensen plans similar activity for 2013, what is its expected free cash flow

Question 60

Preparing the statement of cash flows-direct method
Use the Classic Reserve Rare Coins data from Problem 14-24A.
Requirements
1. Prepare Classic Reserve Rare Coins' income statement for the year ended December 31, 2012. Use the single-step format, with all revenues listed together and all expenses listed together.
2. Prepare Classic Reserve's balance sheet at December 31, 2012.
3. Prepare Classic Reserve's statement of cash flows for the year ended December 31, 2012. Format cash flows from operating activities by the direct method.

Question 61

Each member of the team should obtain the annual report of a different company. Select companies in different industries. Evaluate each company's trend of cash flows for the most recent two years. In your evaluation of the companies' cash flows, you may use any other information that is publicly available: for example, the other financial statements (income statement, balance sheet, statement of stockholders' equity, and the related notes) and news stories from magazines and newspapers. Rank the companies' cash flows from best to worst and write a two-page report on your findings.

Question 62

Computing operating acitivites cash flow-indirect method
The records of McKnight Color Engraving reveal the following:

Requirements
1. Compute cash flows from operating activities by the indirect method.
2. Evaluate the operating cash flow of McKnight Color Engraving. Give the reason for your evaluation.

Question 63

Preparing the statement of cash flows-indirect method with noncash transactions
The 2012 comparative balance sheet and income statement of All Wired, Inc., follow:


Additionally, All Wired purchased land of $24,500 by financing it 100% with long-term notes payable during 2012. During the year, there were no sales of land or equipment, no additional issuances of notes payable, no retirements of stock, and no treasury stock transactions.
Requirements
1. Prepare the 2012 statement of cash flows, formatting operating activities by the indirect method.
2. How will what you learned in this problem help you evaluate an investment

Question 64

Reparing the statement of cash flows-direct method
Use the Rolling Hills data from Problem 14-27A.
Requirements
1. Prepare the 2012 statement of cash flows by the direct method.
2. How will what you learned in this problem help you evaluate an investment