Posted: July 19th, 2016

If these items had been included on the income statement as part of net income, what would have been the effect?

Following is the consolidated statement of shareholders’ equity of Wal-Mart Stores, Inc., for the year ended January 31, 2010:
1. Which items were included in comprehensive income? If these items had been included on the income statement as part of net income, what would have been the effect?

2. Would the concept of comprehensive income help to explain to Wal-Mart’s stockholders the impact of all events that took place in 2010? Why or why not?

Peeler Company was incorporated as a new business on January 1, 2012. The corporate charter approved on that date authorized the issuance of 1,000 shares of $100 par, 7% cumulative, non-participating preferred stock and 10,000 shares of $5 par common stock. On January 10, Peeler issued for cash 500 shares of preferred stock at $120 per share and 4,000 shares of common stock at $80 per share. On January 20, it issued 1,000 shares of common stock to acquire a building site at a time when the stock was selling for $70 per share.

During 2012, Peeler established an employee benefit plan and acquired 500 shares of common stock at $60 per share as treasury stock for that purpose. Later in 2012, it resold 100 shares of the stock at $65 per share.

On December 31, 2012, Peeler determined its net income for the year to be $40,000. The firm declared the annual cash dividend to preferred stockholders and a cash dividend of $5 per share to the common stockholders. The dividends will be paid in 2013.

Indicate how each transaction affects the cash flow of Peeler Company by preparing the Financing Activities section of the 2012 statement of cash flows. Provide an explanation for the exclusion of any of these transactions from the Financing Activities section of the statement.

Cash flows from financing activities:
Transaction # Stock x Cost

The following transactions would not appear in the Financing Activities section of the statement of cash flows:

XERCISE 12-19: Cash Flow Adequacy

On its most recent statement of cash flows, a company reported net cash provided by operating activities of $12 million. Its capital expenditures for the same year were $2 million. A note to the financial statements indicated that the total amount of debt that would mature over the next five years was $20 million.