Financial and Managerial Accounting: Week 9 (E13-3, E13-4, E13-6, E13-7, P13-3A and P13-7A)

Financial and Managerial AccountingWeek 9 Assignment (E13-3, E13-4, E13-6, E13-7, P13-3A and P13-7A)   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 2017. Gutierrez also reported depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative balance sheetshows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accountspayable, and a $4,000 decrease in prepaid expenses.   Instructions Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method.   E13-6 The three accounts shown below appear in the general ledger of Herrick Corp. during 2017. Equipment Date      Debit Credit Balance Jan. 1 Balance 160,000  July 31 Purchase of equipment 70,000 230,000  Sept. 2 Cost of equipment constructed 53,000 283,000  Nov. 10 Cost of equipment sold 49,000 234,000    Accumulated Depreciation—Equipment Date      Debit Credit Balance Jan. 1 Balance 71,000  Nov. 10 Accumulated depreciation on equipment sold 28,000 43,000  Dec. 31 Depreciation for year 23,000 66,000    Retained Earnings Date      Debit Credit Balance  Jan. 1 Balance 105,000  Aug. 23 Dividends (cash) 17,000 88,000  Dec. 31 Net income 67,000 155,000    Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of equipment was $5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)   E13-7 Rojas Corporation's comparative balance sheets are presented below. Rojas Corporation Comparative Balance Sheets December 31 2017 2016 Cash 14,300 10,700 Accounts receivable 21,200 23,400 Land 20,000 26,000 Buildings 70,000 70,000 Accumulated depreciation—buildings (15,000) (10,000)    Total $110,500 $120,100   Accounts payable 12,370 31,100 Common stock 75,000 69,000 Retained earnings 23,130 20,000    Total $110,500 $120,100   Additional information: 1. Net income was $22,630. Dividends declared and paid were $19,500. 2. No noncash investing and financing activities occurred during 2017. 3. The land was sold for cash of $4,900.   Instructions: a. Prepare a statement of cash flows for 2017 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000).) b. Compute free cash flow.   P13-3A Prepare the Operating Activities Section - Indirect Method The income statement of Whitlock Company is presented here. WHITLOCK COMPANY Income Statement For the Year Ended November 30, 2017 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: 1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $340,000 during the year. 4. Accrued expenses payable decreased $100,000 during the year. 5. 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, 2017, for Whitlock Company, using the indirect method.   P13-7A Prepare a Statement of Cash Flows - Indirect method, and compute free cash flow Presented below are the financial statements of Nosker Company. NOSKER COMPANY Comparative Balance Sheets December 31 Assets 2017 2016 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) (24,000) 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 33,000 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, 2017 Sales revenue 242,000 Cost of goods sold 175,000 Gross profit 67,000 Operating expenses 24,000 Income from operations 43,000 Interest expense 3,000 Income before income taxes 40,000 Income tax expense 8,000 Net income $32,000   Additional data: 1. Dividends declared and paid were $20,000. 2. 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. 3. All depreciation expense, $14,500, is in the operating expenses. 4. All sales and purchases are on account.   Instructions 1. Prepare a statement of cash flows using the indirect method. 2. Compute free cash flow.
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