1. Refer to the information in Exercise 12-11. Using the direct method, prepare the statement of…

1. Refer to the information in Exercise 12-11. Using the direct method, prepare the statement of cash flows for the year ended June 30, 2017.

Exercise 12-11:

The following financial statements and additional information are reported

g.       A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.

h.       The only changes affecting retained earnings are net income and cash dividends paid.

i.         New equipment is acquired for $57,600 cash.

j.         Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain.

k.       Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

l.          All purchases and sales of inventory are on credit.


1.       Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method.

2.       Compute the company’s cash flow on total assets ratio for its fiscal year 2017.

2. Complete the following spreadsheet in preparation of the statement of cash flows. (The statement of cash flows is not required.) Prepare the spreadsheet as in Exhibit 12A.1; report operating activities under the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following transactions and events a through h.

a.       Net income for the year was $100,000.

b.      Dividends of $80,000 cash were declared and paid.

c.       Scoreteck’s only noncash expense was $70,000 of depreciation.

d.      The company purchased plant assets for $70,000 cash.

e.      Notes payable of $20,000 were issued for $20,000 cash.

f.        Change in accounts receivable.

g.       Change in inventory.

h.       Change in accounts payable.

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