ACC 557 Homework 5 – Chapter 13

ACC 557 Homework 5 – Chapter 13

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ACC 557 Homework 5 – Chapter 13

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.

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 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.

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

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

2.     Compute free cash flow.