Acc302 Intermediate Accounting: Unit 8 Homework (E22-2, E22-4, E22-10, P22-6)

Acc302 Intermediate Accounting 
Unit 8 Homework (E22-2, E22-4, E22-10, P22-6) 

E22-2 Net Cash Flow From Operating Activities 
The following is accounting information taken from the Hyde Company’s records for 2010: 
1. Amortization of premium on bonds payable, $600 8. Gain on sale of land, $8,000 
2. Purchase of equipment, $6,000 9. Increase in prepaid assets, $500 
3. Depreciation expense, $7,400 10. Declaration and payment of cash dividends, $1,800 
4. Decrease in accounts receivable, $800 11. Increase in wages payable, $300 
5. Decrease in accounts payable, $2,800 12. Patent amortization expense, $1,000 
6. Issuance of long-term note for cash, $4,200 13. Net income, $10,800 
7. Increase in inventories, $7,500 

Required 
Prepare the net cash flow from operating activities section of the 2010 statement of cash flows for the Hyde Company 

E22-4 Statement of Cash Flows 
The following is a list of items for the 2010 statement of cash flows of the Witts Company: 
1. Receipt from sale of equipment, $2,700 8. Loss on sale of equipment, $2,200 
2. Increase in inventory, $3,900 9. Payment of dividends, $5,200 
3. Net income, $13,500 10. Decrease in accounts receivable, $1,700 
4. Payment for purchase of building, $29,000 11. Issuance of common stock for land, $6,900 
5. Depreciation expense, $8,700 12. Decrease in accounts payable, $1,500 
6. Receipt from issuance of bonds, $8,000 13. Beginning cash balance, $10,200 
7. Increase in prepaid expenses, $800 

Required 
1. Prepare the statement of cash flows. 
2. Under IFRS, what alternative treatment of the payment of dividends is allowed? How would this affect the statement of cash flows? 
Under IFRS, the payment of (1) may be classified as either a cash (2) for (3) activities or a cash (4) for (5) activities. If it is classified as a cash outflow for (6) activities, Witt Company would report net cash provided by operating activities of $14,700 ($19,900 - $5,200) and net cash provided by (7) activities of $8,000. 
Complete the paragraph above by selecting the word, number or phrase that best fits the corresponding number (you may use the answer more than once). 

E22-10 Erroneous Statement of Cash Flows 
The 2010 statement of cash flows for the Andell Company, as developed by its bookkeeper, is shown here: 
Cash Flows Statement 
December 31, 2010 
Inflows of Cash 
Operating Activities 
Net income 10,600 
Add: Proceeds from sale of equipment 4,400 
Proceeds from issuance of stock 4,300 
Less: Payment for investment in bonds (6,000) 
Payment of long-term note (5,000) 
Net cash inflows from operations 8,300 

Balance Sheet 
January 1, 2010 
Cash 900 Accounts payable 1,600 
Accounts receivable 2,300 Notes payable 3,900 
Land 4,900 Common stock, $5 par 4,500 
Equipment 20,000 Additional paid-in capital 1,800 
Less: Accumulated depreciation (9,100) 10,900 Retained earnings 7,200 
Total Assets 19,000 Total Liabilities and Stockholders’ Equity 19,000 

Other Inflows 
Decrease in accounts receivable 2,100 
Depreciation expense 4,800 
Total other inflows of cash 6,900 
Total inflows of cash 15,200 
Outflows of Cash 
Payment for purchase of land (5,200) 
Decrease in accounts payable (2,800) 
Payment of dividends (3,000) 
Gain on sale of equipment (700) 
Total outflows of cash (11,700) 
Net Increase in Cash 3,500 
Cash, December 31, 2010 11,700 
Cash, January 1, 2010 8,200 
You determine that the amounts of the items listed on the statement are correct, but in certain circumstances, incorrectly classified. 

Required 
Prepare a corrected 2010 statement of cash flows for the Andell Company 

P22-6 Partially Completed Worksheet (Spreadsheet) 
The following partially completed worksheet has been prepared for the 2010 statement of cash flows of the Perrin Company: 
Balances Change Worksheet Entries 
Account Titles 12/31/09 12/31/10 Increase (Decrease) Debit Credit 
Debits 
Cash 800 1,540 
Noncash Accounts: 
Accounts receivable 1,500 2,180 
Inventory 3,100 6,055 
Investments in stock - 2,800 
Land 6,000 9,200 
Buildings 20,000 20,000 
Office equipment 4,000 6,100 
Delivery equipment 3,000 5,900 
Treasury stock - 2,000 
Totals $38,400 $55,775 ? 
Credits 
Accumulated depreciation 7,000 8,500 
Accounts payable 3,300 3,695 
Wages payable 600 500 
Bonds payable - 5,000 
Premium on bonds payable - 240 
Common stock, $10 par 6,000 8,200 
Additional paid-in capital 9,000 13,640 
Retained earnings ? ? 3,500 
Totals $38,400 $55,775 ? 

Other relevant information: 
(a) Beginning retained earnings 12,500 
Plus: Net income 8,000 
20,500 
Less: Stock dividends 840 
Cash dividends 3,660 4,500 
Ending retained earnings $16,000 
(b) Accumulated depreciation is a contra account for all the depreciable assets. Depreciation on these assets totaled $2,200 for the year. 
(c) On January 1, 2010 the company issued 10% bonds with a face value of $5,000 at 106. Interest was paid semiannually on June 30 and December 31. The bonds mature on January 1, 2012. Straight-line amortization is used for bond discount or premium. Bond interest expense was $440. 
(d) Land was purchased for $3,200 during the year. 
(e) Two hundred shares of common stock were issued for delivery equipment valued at $2,900 and office equipment valued at $3,100. 
(f) Twenty shares of stock were issued as a stock dividend. The market price per share was $42. 
(g) Office equipment with a cost of $1,000 and a book value of $300 was sold for $50. 
(h) Fifty shares of its own common stock were reacquired by the company as treasury stock. The company purchased the shares for $40 per share. 
(i) One hundred shares of Doe Company stock were purchased for $28 per share at year-end. 

Required 
Complete the worksheet (spreadsheet).
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