Professional Documents
Culture Documents
EXERCISES
Exercise 4-1Requirement 1
$3,400,000
35,000
30,000
3,465,000
$2,250,000
450,000
150,000
400,000
20,000
3,270,000
195,000
78,000
117,000
(180,000)
$ (63,000)
$ .23
(.36)
$.(13)
* 40% x $195,000
$3,400,000
2,250,000
1,150,000
$450,000
150,000
400,000
1,000,000
150,000
35,000
30,000
(20,000)
45,000
195,000
78,000
117,000
(180,000)
$ (63,000)
$ .23
(.36)
$.(13)
* 40% x $195,000
Exercise 4-2
The McGraw-Hill Companies, Inc., 2013
4-2
BILIBONG COMPANY
Income Statement
For the Year Ended December 31, 2013
Income from continuing operations .....................................
Discontinued operations:
Loss from operations of discontinued component
(including gain on disposal of $300,000) *.................................
Income tax benefit .............................................................
Loss on discontinued operations .......................................
Net income ..........................................................................
$ 500,000
(80,000)
32,000
(48,000)
$ 452,000
$ 2.50
(.24)
$ 2.26
$300,000
(380,000)
(80,000)
32,000
$ (48,000)
Exercise 4-3Requirement 1
OTTOBONI CORPORATION
Income Statement
For the Year Ended December 31, 2013
Income from continuing operations .....................................
$600,000
Discontinued operations:
Alternate Exercises and Problem Solutions
(470,000)
188,000
(282,000)
$318,000
$ (270,000)
(200,000)
(470,000)
188,000
$ (282,000)
$ 600,000
Discontinued operations:
Loss from operations of discontinued component *
Income tax benefit ............................................................
Loss on discontinued operations .......................................
Net income ..........................................................................
(270,000)
108,000
(162,000)
$ 438,000
* Includes only the loss from operations during the year. There is no impairment
loss.
Exercise 4-4
Exercise
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
a_
a_
a_
b _
c_
b _
a_
b _
c_
a_
1.___ d
4-5exchange for a note payable.
$2,122,000
$(54,000)
114,000
60,000
$2,182,000
Purchase of equipment in
Payment of rent.
Collection of cash from customers.
Payment of interest on debt.
Purchase of a bond of another company.
Issuance of common stock for cash.
Sale of land for cash.
Receipt of interest on a note receivable.
Receipt of principal on a note receivable.
Payment of cash dividends to shareholders.
Payment to suppliers of inventory.
Exercise 4-6Requirement 1
Siegfried & Royce
Statement of Cash Flows
For the Year Ended December 31, 2013
The McGraw-Hill Companies, Inc., 2013
4-6
($ in thousands)
Cash flows from operating activities:
Net income
$1,410
Adjustments for noncash effects:
Depreciation expense
400
Changes in operating assets and liabilities:
Increase in accounts receivable
(270)
Increase in inventory
(80)
Increase in prepaid rent
(50)
Decrease in accounts payable
(80)
Decrease in administrative & other payables
(50)
Increase in income taxes payable
100
Net cash flows from operating activities
$1,380
Cash flows from investing activities:
Purchase of plant and equipment
(400)
1,980
Cash, January 1
Cash, December 31
1,300
$3,280
Requirement 2
Siegfried & Royce
Statement of Cash Flows
For the Year Ended December 31, 2013
($ in thousands)
Cash flows from operating activities:
Collections from customers
$12,230 (1)
Payment of rent
(300) (2)
Payment to inventory suppliers
(7,460) (3)
Payment for administrative & other exp.
(2,250) (4)
Payment of income taxes
(840) (5)
Net cash flows from operating activities
$ 1,380
(1) $12,500 less $270 increase in accounts receivable.
(2) $250 plus $50 increase in prepaid rent.
(3) $7,300 plus $80 increase in inventory plus $80 decrease in accounts payable.
(4) $2,200 plus $50 decrease in payables for admin. and other expenses.
(5) $940 less $100 increase in taxes payable.
PROBLEMS
Problem 4-1
AJAX COMPANY
Income Statement
For the Year Ended December 31, 2013
Sales revenue ......................................................
Cost of goods sold ..............................................
Gross profit .........................................................
$6,200,000
3,500,000
2,700,000
Operating expenses:
Administrative and selling ................................ $1,500,000
Restructuring costs ...........................................
250,000
Loss from landslide damage .............................
75,000
Total operating expenses ..............................
Operating income ...............................................
Other income (expense):
Interest revenue ................................................
Interest expense ...............................................
Loss on sale of equipment ................................
Income before income taxes and extraordinary
item...................................................................
Income tax expense ............................................
Income before extraordinary item .......................
Extraordinary item:
Gain on sale of land (net of $800,000 tax expense) ...
Net income .........................................................
100,000
(150,000)
(40,000)
1,825,000
875,000
(90,000)
785,000
314,000
471,000
1,200,000
$1,671,000
Note:
1. The restructuring costs are not an extraordinary item.
2. The loss caused by the landslide is not an extraordinary item.
Problem 4-2Requirement 1
2012
$3,475,000
1,390,000
2,085,000
325,000
130,000
195,000
$2,280,000
[1]
2013
$(455,000)
800,000
$ 345,000
2012
$ 325,000
$325,000