ACC 560 WEEK 9 HOMEWORK

ACC 560 WEEK 9 HOMEWORK

Week 9 Homework

 

  • Week 9 Chapter 13: Exercises 4, 6, and 7; Problem 1

 

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 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 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     30,000                          41,000

Dec.     31         Depreciation for year                                                     28,000             69,000

Retained Earnings

Date                                                                                    Debit    Credit               Balance

Jan.      1          Balance                                                                                                105,000

Aug.     23         Dividends (cash)                                               14,000                          91,000

Dec.     31         Net income                                                                   77,000             168,000

 

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 $7,000. (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:

  • Net income was $22,630. Dividends declared and paid were $19,500
  • No noncash investing and financing activities occurred during 2017.
  • The land was sold for cash of $4,900.

 

Instructions

 

  1. Prepare a statement of cash flows for 2017 using the indirect method.

 

P13-1A You are provided with the following transactions that took place during a recent fiscal year.

Transaction                                                                                           Statement of                         Cash Inflow,

Cash Flow                             Outflow,or

Activity Affected                   No Effect?

(a)           Recorded depreciation expense on the plant assets.                                                                 

(b)           Recorded and paid interest expense.                                                                                            

(c)           Recorded cash proceeds from a disposal of plant assets.                                                        

(d)           Acquired land by issuing common stock.                                                                                      

(e)           Paid a cash dividend to preferred stockholders.                                                                          

(f)            Paid a cash dividend to common stockholders.                                                                          

(g)           Recorded cash sales.                                                                                                                        

(h)           Recorded sales on account.                                                                                                             

(i)            Purchased inventory for cash.                                                                                                         

(j)            Purchased inventory on account.                                                                                                    

 

Instructions

 

Complete the table indicating whether each item (1) affects operating (O) activities, investing (I) activities, financing (F) activities, or is a noncash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.

 

 
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