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
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