FA Module 6: Articulation of income statement, balance sheet, cash flow statement – homework assignment

(The attached PDF file has better formatting.)

Homework assignment: Forming the cash flow statement: income vs cash flows

The homework assignment for this module is patterned on the ACME Corporation example in the textbook and the practice problems on the discussion forum. The final exam problems test pieces of this exercise.

A firm’s income statement and balance sheets show the following entries:

    Calendar Year 20X1    Calendar Year 20X2
Net revenue     270    275
Cost of goods sold     145    150
Wage expense    37    40
Depreciation expense    12    15
Other operating expenses    28    30
Gain (loss) on sale of equipment    -8    5
Interest expense    4    4
Tax expense    10    12


    December 31, 20X1    December 31, 20X2
Cash and marketable securities    20    ?
Accounts receivable    10    12
Inventory
        33    40
Prepaid expenses    2    1
Land    15    15
Buildings    30    30
Equipment    84    87
Accumulated depreciation    30    35
Accounts payable     32    35
Wages payable    4    6
Interest payable    6    4
Taxes payable    4    5
Other accrued liabilities    10    12
Long-term debt     36    31
Common stock + additional paid-in capital    44    38
Retained earnings     30    40


The questions below refer to 20X2 income statement items and the change from 12/31/20X1 to 12/31/20X2 for balance sheet items.

A.    What is the change in accounts receivable?
B.    What is the cash received from customers?
C.    What is the change in inventory?
D.    What are the purchases from suppliers?
E.    What is the change in accounts payable?
F.    What is the cash paid to suppliers?
G.    What is the change in wages payable?
H.    What are the cash paid to employees?
I.    What is the change in interest payable?
J.    What is the cash interest paid?
K.    What is the change in taxes payable?
L.    What is are the taxes paid?
M.    What is the change in the accrued liability for other operating expenses?
N.    What is the change in prepaid expenses?
O.    What is the cash paid for other operating expenses?
P.    What is the gross profit?
Q.    What are total operating expenses?
R.    What is the operating profit (operating income)?
S.    What is pre-tax income?
T.    What is net income?
U.    What is the change in retained earnings?
V.    What are shareholder dividends?




The practice problem on the discussion forum has the same format with solutions; the accounting entries differ, but the procedures are the same. Check your solution method with the practice problem.