ACC557 Homework 5 -- E13-3 E13-4 P13-3A P13-7A
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Submit Date: March 4, 2016, 12:25 am
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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.
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.
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.
Prepare the operating activities section of the statement of cash ﬂows for 2015. Use the indirect method.
P13-3A.The income statement of Whitlock Company is presented here.
For the Year Ended November 30, 2015
Cost of goods sold
Goods available for sale
Total cost of goods sold
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.
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.
Comparative balance Sheet
Accumulated depreciation – equipment
Liabilities and Stockholders Equity
Income taxes payable
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
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.
Prepare a statement of cash ﬂows using the indirect method.
Compute free cash ﬂow
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