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[answered] ACC 557 - Homework 5: Chapter 13 Directions: Answer the fol


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 ?ows for 2015. Use the indirect method.


Problems

P13-3A. The income statement of Whitlock Company is presented here.

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 ?ows for the year ended November 30, 2015, for Whitlock Company, using the indirect method.


P13-7A. Presented below are the ?nancial statements of Nosker Company.

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 ?ows using the indirect method.
  • Compute free cash ?ow.

ACC 557 ? Homework 5: Chapter 13

 

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.

 

2.

 

3.

 

4.

 

5.

 

6. Sold land (cost $12,000) for $15,000.

 

Issued common stock at par for $20,000.

 

Recorded depreciation on buildings for $17,000.

 

Paid salaries of $9,000.

 

Issued 1,000 shares of $1 par value common stock for equipment worth $8,000.

 

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 ?ows using the indirect method.

 

SOLUTION

 

1. (a) (b) Cash ...................................................................................... 15,000 Land.............................................................................. 12,000 Gain on Disposal of Plant Assets.................................. 3,000 The cash receipt ($15,000) is reported in the investing section. The gain ($3,000) is deducted from

 

net income in the operating section. 2. 3. (a) Cash ...................................................................................... 20,000 Common Stock............................................................. 20,000 (b) The cash receipt ($20,000) is reported in the financing section. (a) Depreciation Expense............................................................. 17,000 Accumulated Depreciation?

 

Buildings.................................................................... 4. 17,000 (b) Depreciation expense ($17,000) is added to net income in the operating section. (a) Salaries and Wages Expense.................................................................... 9,000 Cash............................................................................................... 9,000 (b) Salaries and wages expense is not reported separately on the statement of cash flows. It is

 

part of the computation of net income in the income statement, and is included in the net income

 

amount on the statement of cash flows. ACC 557 ? Homework 5: Chapter 13

 

5. (a) Equipment.................................................................................................. 8,000 Common Stock............................................................................... 1,000 Paid-in Capital in Excess of Par?

 

Common Stock...........................................................................

 

(b) 7,000 The issuance of common stock for equipment ($8,000) is reported as a noncash financing and

 

investing activity at the bottom of the statement of cash flows. 6. (a) Cash ........................................................................................................ 1,200 Loss on Disposal of Plant Assets............................................................... 1,800 Accumulated Depreciation?Equipment.................................................... 7,000 Equipment.......................................................................................

 

(b) 10,000 The cash receipt ($1,200) is reported in the investing section. The loss ($1,800) is added to net

 

income in the operating section. 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 ?ows for 2015. Use the indirect method. ACC 557 ? Homework 5: Chapter 13

 

Problems

 

P13-3A. The income statement of Whitlock Company is presented here. 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 ?ows for the year ended November 30,

 

2015, for Whitlock Company, using the indirect method. ACC 557 ? Homework 5: Chapter 13

 

P13-7A. Presented below are the ?nancial statements of Nosker Company. 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

 

a) Prepare a statement of cash ?ows using the indirect method.

 

b) Compute free cash ?ow.

 


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