Acc557 Financial Accounting: Week 9 Chapter 13 (E13-3, E13-4, E13-6, P13-3A)

Acc557 Financial Accounting
Week 9 Chapter 13 (E13-3, E13-4, E13-6, P13-3A)

EXERCISE 13-3
Tim Latimer Corporation had the following transactions.
1. Sold land (cost $12,000) for $10,000.
2. Issued common stock at par value for $22,000.
3. Recorded depreciation on buildings for $14,000.
4. Paid salaries of $7,000.
5. Issued 1,000 shares of $1 par value common stock for equipment worth $9,000.
6. Sold equipment (cost $10,000, accumulated depreciation $8,000) for $3,200.

Instructions:
For each transaction above, prepare the journal entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

EXERCISE 13-4
Bracewell Company reported net income of $195,000 for 2014. Bracewell also reported depreciation expense of $40,000 and a gain of $5,000 on disposal of plant assets. The comparative balance sheet shows an increase 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 2014. Use the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

EXERCISE 13-6
The three accounts shown below appear in the general ledger of Chaudry Corp. during 2014.
Equipment
Date Debit Credit Balance
Jan. 1 Balance 160,000
31-Jul 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
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 plant assets was $5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

PROBLEM 13-3A
The income statement of Toby Zed Company is presented here
Toby Zed Company
Income Statement
For the Year Ended November 30, 2014
Sales revenue 7,500,000
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 2,600,000
Operating expenses 1,150,000
Net income 1,450,000

Additional information:
1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $175,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $105,000 during the year.
5. Operating expenses include depreciation expense of $85,000.

Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2014, for Toby Zed Company, 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).)
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