Acc557 homework 5 — e13-3 e13-4 p13-3a p13-7a

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

"We Offer Paper Writing Services on all Disciplines, Make an Order Now and we will be Glad to Help"