ACC557 Homework 5
Due Week 9 and worth 50 points
Directions: Answer the following questions on a
separate Microsoft Word or Excel document. Explain how you reached the answer
or show your work if a mathematical calculation is needed, or both. Submit your
assignment using the assignment link in Blackboard.
Exercises
E13-3.Cushenberry Corporation
had the following transactions.
1. Sold land (cost $12,000) for $15,000.
2. Issued common stock at par for $20,000.
3. Recorded depreciation on buildings for $17,000.
4. Paid salaries of $9,000.
5. Issued 1,000 shares of $1 par value common stock
for equipment worth $8,000.
6. Sold equipment (cost $10,000, accumulated
depreciation $7,000) for $1,200.
Instructions
For each transaction above, (a) prepare the journal
entry, and (b) indicate how it would affect the statement of cash flows using
the indirect method.
E13-4.Gutierrez Company reported
net income of $225,000 for 2015. Gutierrez also reported depreciation expense
of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative
balance sheet shows a decrease in accounts receivable of $15,000 for the year,
a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid
expenses.
Instructions
Prepare the operating activities section of the
statement of cash flows for 2015. Use the indirect method.
Problems
P13-3A.The income
statement of Whitlock Company is presented here.
Whitlock Company
Income Statement
For the Year Ended November 30, 2015
|
Sales revenue
|
|
$7,700,000
|
|
Cost of goods sold
|
|
|
|
Beginning Inventory
|
$1,900,000
|
|
|
Purchases
|
4,400,000
|
|
|
Goods available for sale
|
6,300,000
|
|
|
Ending inventory
|
1,400,000
|
|
|
Total cost of goods sold
|
|
4,900,000
|
|
Gross profit
|
|
2,800,000
|
|
Operating expenses
|
|
1,150,000
|
|
Net income
|
|
$1,650,000
|
Additional information:
Accounts receivable increased $200,000 during the
year, and inventory decreased $500,000.
Prepaid expenses increased $150,000 during the
year.
Accounts payable to suppliers of merchandise
decreased $340,000 during the year.
Accrued expenses payable decreased $100,000 during
the year.
Operating expenses include depreciation expense of
$70,000.
Instructions
Prepare the operating activities section of the
statement of cash flows for the year ended November 30, 2015, for Whitlock
Company, using the indirect method.
P13-7A.Presented below
are the financial statements of Nosker Company.
NOSKER COMPANY
Comparative balance Sheet
December 31
|
Assets
|
2015
|
2014
|
|
Cash
|
$38,000
|
$20,000
|
|
Accounts receivable
|
30,000
|
14,000
|
|
Inventory
|
27,000
|
20,000
|
|
Equipment
|
60,000
|
78,000
|
|
Accumulated depreciation – equipment
|
(29,000)
|
$108,000
|
|
Total
|
$126,000
|
$108,000
|
|
Liabilities and Stockholders Equity
|
|
|
|
Accounts payable
|
$24,000
|
$15,000
|
|
Income taxes payable
|
7,000
|
8,000
|
|
Bonds payable
|
27,000
|
33,300
|
|
Common stock
|
18,000
|
14,000
|
|
Retained earnings
|
50,000
|
38,000
|
|
Total
|
$126,000
|
$108,000
|
NOSKER COMPANY
Income Statement
For the year Ended December 31, 2015-12-03
Sales revenue
$242,000
Cost of goods sold
175,000
Gross profit
67,000
Operating expenses
24,000
Income from
operation
43,000
Intrest expense
3,000
Income before income taxes 40,000
Income tax expense
8,000
Net income
$32,000
Additional data:
Dividends declared and paid were $20,000.
During the year equipment was sold for $8,500 cash.
This equipment cost $18,000 originally and had a book value of $8,500 at the
time of sale.
All depreciation expense, $14,500, is in the
operating expenses.
All sales and purchases are on account.
Instructions
Prepare a statement of cash flows using the indirect
method.
Compute free cash flow.
TUTORIAL PREVIEW
1.
(a)
Cash...............................................................
15,000
Land ...................................................... 12,000
Gain on Disposal .............................. 3,000
(b)
The cash receipt ($15,000) is reported in the investing section. The gain ($3,000)
is deducted from net income in the operating section.
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