ASHFORD ACC206 WEEK 2 E14-13 P14-25A E15-18 P15-26A

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E14-13
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 (0)
• 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 indirect method is used to report cash flows from operating activities.

___ a. Loss on sale of land.
___ b. Acquisition of equipment by issuance of note payable.
___ c. Payment of long-term debt.
___ d. Acquisition of building by issuance of common stock. J
___ e. Increase in salary payable.
___ f. Decrease in inventory.
___ g. Increase in prepaid expenses.
___ h. Decrease in accrued liabilities.
___ i. Cash sale of land.
___ j. Issuance of long-term note payable to borrow cash.
___ k. Depreciation
___ 1. Purchase of treasury stock.
___ m. Issuance of common stock.
___ n. Increase in accounts payable.
___ o. Net income.
___ p. Payment of cash dividend.

P14-25A
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:
Prepare Johnson's statement of cash flows using the indirect method. Include an accompanying schedule of noncash investing and financing activities.

E15-18
Analyzing the ability to pay liabilities
Large Land Photo Shop has asked you to determine whether the company's ability to
Pay current liabilities and total liabilities improved or deteriorated during 2012. To
Answer this question, you gather the following data:
2012 2011
Cash ……………………………………………………………………………………………… $ 58,000 $ 57,000
Short-term investments ……………………………………………………………... 31,000 ---
Net receivables ……………………………………………………………………………. 110,000 132,000
Inventory …………………………………………………………………………………….. 247,000 297,000
Total assets ………………………………………………………………………………….. 585,000 535,000
Total current liabilities ………………………………………………………………... 255,000 222,000
Long-term note payable ………………………………………………………………. 46,000 48,000
Income from operations ……………………………………………………………... 180,000 153,000
Interest expense …………………………………………………………………………. 52,000 39,000
Requirements:
Compute the following ratios for 2012 and 2011:
a. Current ratio
b. Acid-test ratio
c. Debt ratio
d. Debt to equity ratio

P15-26A
Using ratios to evaluate a stock investment
Comparative financial statement data of Danfield, Inc., follow:
DANFIELD, INC.
Comparative Income Statement
Years Ended December 31, 2012 and 2011
2012 2011
Requirements:
1. Compute the following ratios for 2012 and 2011:
a. Current ratio
b. Times-interest-earned ratio
c. Inventory turnover
d. Gross profit percentage
e. Debt to equity ratio
f. Rate of return on common stockholders' equity
g. Earnings per share of common stock
h. Price/earnings ratio
Decide (a) whether of Danfield's ability to pay debts and to sell inventory improved or deteriorated during 2012 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.