2nh3 @l CHAPTER 12 HOMEI,\IORK Kazaam Company, a merchandiser, recently condeted its calendar-year2011 operations. For he year. (1) all sales are credit sales, (2) all credits to Accounts Receiiable reflect cash receipts fom custonrers, (3) all purchases of inwnlory are on credil, (4) all debits to Accounts Payable reiect cash paymenls for inwntory, and {5) Olhil Expenses are paid in adraance and are initially dabited to Prepaid Expenses. The company's balance sheels and income statement bllolil. 9. KAZAAM COMPAT.IY Comparatir,e Balance Sheets December 31, 2011 and 2010 Assets Cash S Accounts receirable Merchandise inrrentory Prepakl expenses Equipment Accurn. dspraciation-E quiprnent Total assets Liabili6es and Equity Accounts payable Short-term notes payable Longterm notes payabls Comnron stock, $5 par \6luB Paid-in capital in excass of par, common stock Retained earnings Total liabilities and equity 2011 2010 49,800 S 73,000 65,860 54,000 277,540 252,500 1,000 1,800 157,500 1m,500 (41,750] 152,ffi0',) $ 509,910 5435,800 $ 66,485 $ 114,000 9,000 7.000 62,500 49,000 162,250 150,500 35,250 0 174.425 115.300 $ 509,910 S435,800 KAZAAM COMPANY klcome Statement For Year Ended December 31, 201 1 Sales Cost ofgoods sold Gross profit Op€rating expenses Depr€ciation expense Other expenses Other gains (lossesf Loss on sale of equipment lncome bebre taxes lncome taxes expense N€t income g 111,425 Additional hformation on Year 2011 fransac!'ons. a. The loss on the cash sale ofequipme0t.was gS,t2S (details in b). b. sold equipment costing $46,875; with accumulated depreciation of $3o,250, br $11,[email protected] cash_ c. Purchased equiprnent costing $97,875 by paying 530,@0 cash and signing a long-term note payable for the balance. d. Borrowed $2,000 cash by signing a slmrt-term note payable_ e. Paid 554,375 cash to reduce the long-tern notes payable, f. lssued 2,350 shares of common stock frr $20 cash per share. g. Declare,d and paid cash djvidends of 952,300_ Requiredl Prcpare a complete statern€nt of cash flovrrs using a spreadsheet report its operating actilities using the indirect r$[Dpd. (Leave no cells blank - be certain to anter "0" wherever requireo. Omit tha "S" srgn tn your response.) a. Net income was 5111,425. b. Accounts recehrablG increased s 583,000 289,000 294,000 $ 20,000 133,200 153,200 5.125 r35,675 24.250 1t2 217113 CHAPTER l2HOMEWORK c. Merchandise in\Entory increased. d. Prepaid expenses decreased. e. Accounts Wyab/,e decreased. f. Depreciation expense was $20,000. g. Sold equipment cosling $46,875, with accumulated depreciation of$30,250, for 911,500 cash- This yielded a loss of$5,125. h- Purchased equipment costing 997,875 by paying $30,000 cash and (i.) by signing a long-term note payable for the balance. j. Borrowed $2,000 cash by signing a short-term note payable. k. Paid $54,375 cash to reduce the long-term notes payable. l. lssued 2,350 shares of common stock for 920 cash per share. .

1. 2nh3
@l
CHAPTER 12 HOMEI,IORK
Kazaam Company, a merchandiser, recently condeted its
calendar-year2011 operations. For he year. (1)
all sales are credit sales, (2) all credits to Accounts Receiiable
reflect cash receipts fom custonrers, (3) all
purchases of inwnlory are on credil, (4) all debits to Accounts
Payable reiect cash paymenls for inwntory,
and {5) Olhil Expenses are paid in adraance and are initially
dabited to Prepaid Expenses. The company's
balance sheels and income statement bllolil.
9.
KAZAAM COMPAT.IY
Comparatir,e Balance Sheets
December 31, 2011 and 2010
Assets
Cash S
Accounts receirable
Merchandise inrrentory
Prepakl expenses
Equipment
Accurn. dspraciation-E quiprnent
Total assets

2. Liabili6es and Equity
Accounts payable
Short-term notes payable
Longterm notes payabls
Comnron stock, $5 par 6luB
Paid-in capital in excass of par, common stock
Retained earnings
Total liabilities and equity
2011 2010
49,800 S 73,000
65,860 54,000
277,540 252,500
1,000 1,800
157,500 1m,500
(41,750] 152,ffi0',)
$ 509,910 5435,800
$ 66,485 $ 114,000
9,000 7.000
62,500 49,000
162,250 150,500
35,250 0
174.425 115.300
$ 509,910 S435,800
KAZAAM COMPANY
klcome Statement

3. For Year Ended December 31, 201 1
Sales
Cost ofgoods sold
Gross profit
Op€rating expenses
Depr€ciation expense
Other expenses
Other gains (lossesf
Loss on sale of equipment
lncome bebre taxes
lncome taxes expense
N€t income g 111,425
Additional hformation on Year 2011 fransac!'ons.
a. The loss on the cash sale ofequipme0t.was gS,t2S (details in
b).
b. sold equipment costing $46,875; with accumulated
depreciation of $3o,250, br $11,[email protected] cash_
c. Purchased equiprnent costing $97,875 by paying 530,@0 cash
and signing a long-term note payable for
the balance.
d. Borrowed $2,000 cash by signing a slmrt-term note payable_
e. Paid 554,375 cash to reduce the long-tern notes payable,
f. lssued 2,350 shares of common stock frr $20 cash per share.
g. Declare,d and paid cash djvidends of 952,300_
Requiredl
Prcpare a complete statern€nt of cash flovrrs using a
spreadsheet report its operating actilities using the

4. indirect r$[Dpd. (Leave no cells blank - be certain to anter "0"
wherever requireo. Omit tha "S"
srgn tn your response.)
a. Net income was 5111,425.
b. Accounts recehrablG increased
s 583,000
289,000
294,000
$ 20,000
133,200 153,200
5.125
r35,675
24.250
1t2
217113 CHAPTER l2HOMEWORK
c. Merchandise inEntory increased.
d. Prepaid expenses decreased.
e. Accounts Wyab/,e decreased.
f. Depreciation expense was $20,000.
g. Sold equipment cosling $46,875, with accumulated
depreciation of$30,250, for 911,500 cash- This
yielded a loss of$5,125.
h- Purchased equipment costing 997,875 by paying $30,000
cash and (i.) by signing a long-term note

5. payable for the balance.
j. Borrowed $2,000 cash by signing a short-term note payable.
k. Paid $54,375 cash to reduce the long-term notes payable.
l. lssued 2,350 shares of common stock for 920 cash per share.
m. Declared and paid cash dtuidends of$52,300.
#7 u,t/d
KATAAM COMPANY
Spreadsheet for Statement of Cash Flows
For Year Ended December 31, 201 1
December 1":lf ls
ot cfan91;-
December
31,2010 Debit Credit 31,2011
Balance sheet-debit bal. accounts
Cash
Accounts receirable
Merchandise in€ntory
Prepaid expenses
Equipment
Balance sheet-cnedit bal. accounts
Accum. depreciation-Equip.
Accounts payable

6. Short-term notes payable
Long{erm notes payable
Common stock, $5 parralue
Paid-in capital in excess of
par ralue, common stock
Retained eamings
$ 73,ooo $
54,000 11,860
252,500 25,000
1,800
$ 23,2oo^ $ 49,s00
65,860
277,500
800 1,000
106,500 51,000 F 24,oo0 f- 157,500
$ 487,800 $ 551,660
$ 52,ooo 1o2,2so i
114,000 47,515
7,000
49,000
150,500

7. 0
115,3:0
$ 487,800
$ 41,750
66,485
2,000 9,000
13,500 f 62,500
11,750 162,250
35,250 35,250
59,125 A 1743V5
$ 551,660
Statement of cash flows
Operating activities
Net income fi1,425 f
lncrease in accts. receiwble 11,860 T
lncrease in merch. inentory 25,000 t
Decrease in prepaid expenses gO0 .|
Decrease in accounts payable 47,515 +
Depreciation expense 20,000 1
Loss on sale ofequipment 5,125 *
lnlestlng actir,ities
Receipt from sale ofequipment 11,500 1
Payment to purchase equipment 30,000 "l
Financing acti,ities
Bonowed on short{erm note 2,000 t
Payment on long-term note U,375 f

8. lssued common stock for cash 47,O00 a
Payments ofcash diridends 52,300 f
Noncash inrcsting and financing acti$ties
Purchase of equip. f nanced
by longterm note payable
..
67,875 67,875
$ 288,925 '), $ 265,725 {
{I>-t
212
in.structiorrs I help
11.tL-
Problent 12-6M Cash f?ons spreadsheet (indirect ncthod) L.O.
pl, pZ, F3. p4
Galley Corp., a merchandiser, recently completed its 2011
oparations. For the year, (1) all sales arecredit
sales, (2) atl credits to Accounts Raceiveble r6tmt cash receipts
from custorxlrs, (3) all punhasos ol
inwntory are on crodit, (4) all debits to Accounts Payable rellect
cash payments for inr,entory, (5) Other
Expensos are all cash expenses, and (6) any changre in lncome
Taxas Payable relects th6 accrual and
cash payment of taxes- The company's balancG sh€ets and
income staternent bllow.
GALLEY CORPORATION

9. Comparat iE Balance S heets
December 31, 2011 and 2010
2011 2010
$ 188,120 S 127,512
95,644 88,044
670,112 582,912
416,452 324,852
(168,120) (111,320)
s 1,202,608 S 1,012,m0
Ascets
Cash
Accounts r6ceiable
Merchandise inentory
Equipment
Accum. depreciation-E quipment
Total assets
Liabililiesand Equity
Accounts payable
lncome laxes payabla
Common stock, $2 par rialue
Paid-in capital in excess of par ralue, common stock
R6tained eamings
Total liabilities and aquity
s 130,192
30,112
585,700
213,500

10. 243,',t04
s 66,792
26,312
559,700
177,100
182,096
s 1,202,608 $1,012,000
GALLEY CORPORATION
lncome Statemsnt
For Year Endsd Dccembsr 31, 201 1
Sales
Cost ofgoods sold
Gross profit
Operating expenses
Depreciation expense
other expenses
lncome before taxes
Incometaxes expense
lrlot incorne s 153,008
r:1::::::]ffi :::;::fi :::;:::l-;;:t:::::*; :;:t:;::::;::H:x::T#
Additional hformation on Year mi1 Ta,nsl,ctions
a. Purchased equiprnent for 992,000 cash.
b. lssued 13,0O0 shans of common stock br $4_80 cash per
share.
c. Declared and paid $92,000 in cash dividends,

11. R€guired:
Prepare a complete statement of cash flows using a spreadsheet;
report oporating activities under the
indirect method. {Leave no cells hlank - be certain to enter "0"
wherever required. Omit the "S"
sign in your response.)
a. Net income was $153"008.
b. Accounts receinble increased.
c. Merchandise in!€ntory increased,
d. Accounts payable decreased-
e. Income laxes payable increased.
f. Depreciation expanse was 556,800.
g. Purchased equipment br592,000 cash.
h. lssued 1 3,000 shares at $4.80 cash per share.
i. Dectared and paid $92,000 of cash dividends.
GALLEY CORPORAIPN
Spreadsheet for Statement of Cash Flows
$2,053,500
1.273.170
780,330
$ 56.S00
533,458 5S0,258
194,072
[email protected]
1!2
21il13 h tl c*t/d"
Balmce sheef,-det*t bd. accomts

12. Cash
Accqnts mcdnHe
Merchandise inrntory
EguFn€nt
Bdarce shed-crsdt bal. accounts
Accum, degeciation-€qiip
Accomts payaHe
hcqnetaxes payaHe
C.anrunm stock, $2 parudue
Paiclin excess of par rdue, cornmon stmk
R€fained eamings
Stdemat dcash lows
OpeEting actirities
Net irrcorne
lncrease in acco$ts r€ceiratle
lncmese in merch. inr€ntory
Decmase in accomts payaHe
lncrese in incorne tax payaue
Degeciatim otpense
fn€sting *tiritiee
Payment br eqJiprnent
Financing actirities

13. lssued cqnrnon stock brcash
Paid cash dMdends
For Year Ended E ecernber 31, 2011
December Anfysis dCfnrUeo
31.2010 D€tit Cradit
sL_ti?!c?rj
December
31,2011
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