ACC 363 P14-7A The financial statements of Ernest Banks Company appear below. indirect method.
ACC 363 P14-8A Data for Ernest Banks Company is presented in P14-7A. Further analysis reveals the following. Direct method.
ACC 363 P14-8A Data for Ernest Banks Company is presented in P14-7A. Further analysis reveals the following. Direct method.
Problem P14-7A, Prepare a statement of cash flows—indirect method.
Problem P14-8A, Prepare a statement of cash flows — Direct method.
ACC 363 P14-7A P14-8A Ernest Banks Company
Axia College of University of Phoenix (UoP)
Financial Accounting: Weygandt, Kieso, and Kimmel, 5th Edition
Financial Accounting II
Problem P14-7A, Prepare a statement of cash flows—indirect method.
P14-7A The financial statements of Ernest Banks Company appear below.
The financial statements of Ernest Banks Company appear below.
Ernest Banks Company
Comparative Balance Sheets
December 31
Assets 2006 2005
Cash $23,000 $13,000
Accounts Receivable 24,000 33,000
Merchandise inventory 20,000 27,000
Prepaid expenses 20,000 13,000
Land 40,000 40,000
Property, plant and equipment 200,000 225,000
Less: Accumulated Depreciation (50,000) (67,500)
Total $277, 000 $283,500
Liabilities and Stockholders' Equity
Accounts Payable $9,000 $18,500
Accrued expenses payable 9,500 7,500
Interest payable 1,000 1,500
Income taxes payable 3,000 2,000
Bonds Payable 50,000 80,000
Common stock 123,000 105,000
Retained earnings 81,500 69,000
Total $277,000 $283,500
Ernest Banks Company
Income Statement
For the Year Ended December 31, 2006
Revenues
Sales $600,000
Gain on sale of plant assets 2,500 $602,500
Less: Expenses
Cost of goods sold 500,000
Operating expenses (excluding
Depreciation) 60,000
Depreciation Expense 7,500
Interest Expense 5,000
Income tax expense 9,000 581,500
Net Income $21,000
Additional Information:
1. Plant assets were sold at a sales price of $62,500.
2. Additional equipment was purchased at a cost of $60,000.
3. Dividends of $8,500 were paid.
4. All sales and purchases were on account.
5. Bonds were redeemed at face value.
6. Additional shares of stock were issued for cash.
Instructions
Prepare a statement of cash flows for Ernest Banks Company for the year ended December 31, 2006, using the indirect method.
Hints:
(a) Cash receipts from customers $206,000
Net cash provided by operating activities $28,000
Investing activities provided $2,500
Problem P14-8A, Prepare a statement of cash flows — Direct method.
P14-8A Data for Ernest Banks Company is presented in P14-7A. Further analysis reveals the following.
1. Accounts payable relates to merchandise creditors.
2. All operating expenses, except depreciation expense, were paid in cash.
Instructions
Prepare a statement of cash flows for Ernest Banks Company for the year ended December 31, 2006, using the direct method.
Hints: Net cash provided by operating activities $28,000
Investing activities provided $2,500
File name:
ACC-363-P14-7A-P14-8A-Ernest-Banks-Company.xls File type: application/vnd.ms-excel Price:
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