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    Statement of Cash Flows Spreadsheet: Kazaam Company

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    Refer to the information reported about Kazaam Company in Problem 16-1A.
    Required
    Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report its operating
    activities using the indirect method. Identify the debits and credits in the Analysis of Changes
    columns with letters that correspond to the following list of transactions and events:
    a. Net income is $73,750.
    b. Accounts receivable increased.
    c. Merchandise inventory increased.
    d. Prepaid expenses decreased.
    e. Accounts payable decreased.
    f. Depreciation expense is $18,750.
    g. Sold equipment costing $46,875, with accumulated depreciation of $28,125, for $13,625 cash.
    This yielded a loss of $5,125.
    h. Purchased equipment costing $96,375 by paying $25,000 cash and (i.) by signing a long-term
    note payable for the balance.
    j. Borrowed $3,750 cash by signing a short-term note payable.
    k. Paid $31,375 cash to reduce the long-term notes payable.
    l. Issued 2,500 shares of common stock for $18 cash per share.
    m. Declared and paid cash dividends of $62,125.

    PROBLEM 16-1A
    Kazaam Company, a merchandiser, recently completed its calendar-year 2005 operations. For the year,
    (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers,
    (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash
    payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid
    Expenses. Kazaam's balance sheets and income statement follow:AAce Sheets
    December 31, 2005
    2005 2004
    Assets
    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 53,875 $ 76,625
    Accounts receivable . . . . . . . . . . . . . . . . . 65,000 49,625
    Merchandise inventory . . . . . . . . . . . . . . . 273,750 252,500
    Prepaid expenses . . . . . . . . . . . . . . . . . . . 5,375 6,250
    Equipment . . . . . . . . . . . . . . . . . . . . . . . . 159,500 110,000
    Accum. depreciation?Equipment . . . . . . . . (34,625) (44,000)
    Total assets . . . . . . . . . . . . . . . . . . . . . . . $522,875 $451,000
    Liabilities and Equity
    Accounts payable . . . . . . . . . . . . . . . . . . . $ 88,125 $116,625
    Short-term notes payable . . . . . . . . . . . . . 10,000 6,250
    Long-term notes payable . . . . . . . . . . . . . 93,750 53,750
    Common stock, $5 par value . . . . . . . . . . 168,750 156,250
    Contributed capital in excess
    of par, common stock . . . . . . . . . . . . . . 32,500 0
    Retained earnings . . . . . . . . . . . . . . . . . . . 129,750 118,125
    Total liabilities and equity . . . . . . . . . . . . . $522,875 $451,000

    Kazaam Company Income Statement Four year ended 12/31/2005

    Sales . . . . . . . . . . . . . . . . . . . . . . . . . $496,250
    Cost of goods sold . . . . . . . . . . . . . . 250,000
    Gross profit . . . . . . . . . . . . . . . . . . . . 246,250
    Operating expenses
    Depreciation expense . . . . . . . . . . . $ 18,750
    Other expenses . . . . . . . . . . . . . . . 136,500 155,250
    Other gains (losses)
    Loss on sale of equipment . . . . . . . 5,125
    Income before taxes . . . . . . . . . . . . . . $ 85,875
    Income taxes expense . . . . . . . . . . . . 12,125
    Net income . . . . . . . . . . . . . . . . . . . . $ 73,750
    Additional Information on Year 2005 Transactions
    a. The loss on the cash sale of equipment is $5,125 (details in b).
    b. Sold equipment costing $46,875, with accumulated depreciation of $28,125, for $13,625 cash.
    c. Purchased equipment costing $96,375 by paying $25,000 cash and signing a long-term note payable
    for the balance.
    d. Borrowed $3,750 cash by signing a short-term note payable.
    e. Paid $31,375 cash to reduce the long-term notes payable.
    f. Issued 2,500 shares of common stock for $18 cash per share.
    g. Declared and paid cash dividends of $62,125.

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    Please see the attached file

    Refer to the information reported about Kazaam Company in Problem 16-1A.
    Required
    Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report its operating
    activities using the indirect method. Identify the ...

    Solution Summary

    The solution explains how to prepare a statement of cash flows using a spreadsheet. The final statement is attached in the attached Excel file.

    $2.49

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