Acc 560 week 9 chapter 13 exercises acc560 week 9 chapter 13

ACC 560 WEEK 9 CHAPTER 13 EXERCISES ACC560 Week 9 CHAPTER 13 EXERCISES ACC/560 Week 9 CHAPTER 13 EXERCISES

Chapter 13 Exercises 4, 6, 7, Problem 1A.

The text book used is Managerial Accounting: Tools for Business Decision Making – 7th Edition Jerry J. Weygandt; Paul D. Kimmel; Donald E. Kieso

 

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.

Prepare the operating activities section—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.)

Prepare statement of cash flows and compute free cash flow.

 

 

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:

1.     Net income was $22,630. Dividends declared and paid were $19,500.

2.     No noncash investing and financing activities occurred during 2017.

3.     The land was sold for cash of $4,900.

Instructions

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

2.                 Compute free cash flow.

Prepare a statement of cash flows—indirect method.

 

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

 

Transaction


Statement of 
Cash Flow 
Activity Affected


Cash Inflow, 
Outflow, or 
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.

Determine cash flow effects of changes in equity accounts.

 

 

 

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