Financial Accounting: An Integrated Statements Approach, 2nd Edition

608 Chapter 13 Statement of Cash Flows

Balance Sheet Data (dollars in thousands):

Decrease in accounts receivable $ 6,025

Decrease in merchandise inventories 33,793

Increase in prepaid expense 4,511

Increase in accounts payable

and other accrued expenses 4,156

Increase in income tax payable 12,145

Prepare the cash flows from operating activities section of the statement of cash flows (using the

indirect method) for Williams Sonoma for the year.

The cash flows from operating activities are reported by the direct method on the statement of

cash flows. Determine the following:

a. If sales for the current year were $510,000 and accounts receivable decreased by $27,000

during the year, what was the amount of cash received from customers?

b. If income tax expense for the current year was $29,000 and income tax payable decreased

by $3,900 during the year, what was the amount of cash payments for income tax?

The cost of merchandise sold for Toys“R”Us, Inc., for a recent year was $7,604 million. The bal-

ance sheet showed the following current account balances (in millions):

Balance, Balance,

End of Year Beginning of Year

Merchandise inventories $2,041 $2,307

Accounts payable 878 1,152

Determine the amount of cash payments for merchandise.

Selected data taken from the accounting records of Floral Escape, Inc., for the current year ended

December 31 are as follows:

Balance, Balance,

December 31 January 1

Accrued expenses (operating expenses) $ 4,300 $ 4,900

Accounts payable (merchandise creditors) 32,100 36,800

Inventories 59,500 71,200

Prepaid expenses 2,500 3,500

During the current year, the cost of merchandise sold was $450,000, and the operating expenses

other than depreciation were $80,000. The direct method is used for presenting the cash flows

from operating activities on the statement of cash flows.

Determine the amount reported on the statement of cash flows for (a) cash payments for

merchandise and (b) cash payments for operating expenses.

The income statement of Heart Grain Bakeries, Inc., for the current year ended June 30 is as

follows:

Sales $645,000

Cost of merchandise sold 367,800

Gross profit $277,200

Operating expenses:

Depreciation expense $ 45,000

Other operating expenses 155,400

Total operating expenses 200,400

(continued)

Cash flows from operating

activities, $205,006

Exercise 13-18

Cash flows from operating

activities—direct method

Goal 3

a. $537,000

Exercise 13-19

Cash paid for merchandise

purchases

Goal 3

Exercise 13-20

Determining selected amounts

for cash flows from operating

activities—direct method

Goal 3

b. $79,600

Exercise 13-21

Cash flows from operating

activities—direct method

Goal 3

Cash flows from operating

activities, $97,000