ACCT10001 Lecture Notes - Lecture 6: Cash Flow Statement, Cash Flow, Accounts Payable

Golden Corp., a merchandiser, recently completed its 2015operations. For the year, (1) all sales are credit sales, (2) allcredits to Accounts Receivable reflect cash receipts fromcustomers, (3) all purchases of inventory are on credit, (4) alldebits to Accounts Payable reflect cash payments for inventory, (5)Other Expenses are all cash expenses, and (6) any change in IncomeTaxes Payable reflects the accrual and cash payment of taxes. Thecompany’s balance sheets and income statement follow.

[The following information applies to the questions displayedbelow.] Golden Corp., a merchandiser, recently completed its 2017operations. For the year, (1) all sales are credit sales, (2) allcredits to Accounts Receivable reflect cash receipts fromcustomers, (3) all purchases of inventory are on credit, (4) alldebits to Accounts Payable reflect cash payments for inventory, (5)Other Expenses are all cash expenses, and (6) any change in IncomeTaxes Payable reflects the accrual and cash payment of taxes. Thecompany’s balance sheets and income statement follow. GOLDENCORPORATION Comparative Balance Sheets December 31, 2017 and 20162017 2016 Assets Cash $ 176,000 $ 120,200 Accounts receivable101,000 83,000 Inventory 619,000 538,000 Total current assets896,000 741,200 Equipment 367,300 311,000 Accum.depreciation—Equipment (164,000 ) (110,000 ) Total assets $1,099,300 $ 942,200 Liabilities and Equity Accounts payable $111,000 $ 83,000 Income taxes payable 40,000 31,100 Total currentliabilities 151,000 114,100 Equity Common stock, $2 par value616,000 580,000 Paid-in capital in excess of par value, commonstock 208,000 178,000 Retained earnings 124,300 70,100 Totalliabilities and equity $ 1,099,300 $ 942,200 GOLDEN CORPORATIONIncome Statement For Year Ended December 31, 2017 Sales $ 1,852,000Cost of goods sold 1,098,000 Gross profit 754,000 Operatingexpenses Depreciation expense $ 54,000 Other expenses 506,000560,000 Income before taxes 194,000 Income taxes expense 38,800 Netincome $ 155,200 Additional Information on Year 2017Transactions

1) Purchased equipment for $56,300 cash.

2) Issued 13,200 shares of common stock for $5 cash pershare.

3) Declared and paid $101,000 in cash dividends.

Required: Prepare a complete statement of cash flows; report itscash inflows and cash outflows from operating activities accordingto the indirect method. (Amounts to be deducted should be indicatedwith a minus sign.)

Multiple Choice:

21. All the following are true regarding Quotesexcept:

a. Quotes post entries to general ledger accounts

b. Quotes can be transferred to create an invoice

c. Quotes can be linked to customer jobs

d. Quotes can be linked to items

22. If a customer was overcharged for theservices, the customer's invoice can be reduced by posting a:

a. Sales invoice

b. Customer receipt

c. Debit memo

d. Credit memo

23. On the statement of cash flows, the cashflows from operating activities section would include:

a. Receipts from the issuance of capital stock

b. Receipts from the sale of investments

c. Payments for the acquisition of investments

d. Net income

24.The Income Statement will include thefollowing accounts:

a. Revenues less Expenses (ordered largest to smallest amount)with Other Expenses listed last
b. Revenues less Expenses (ordered smallest to largest amounts.With Miscellaneous Expenses listed last

c. Revenues less Expenses (ordered in alphabetical order) withOther Expenses listed last

d. Revenues less Expenses (order is not important)

25. The Statement of Cash Flows answers all ofthe following except:

a. Where the receipts come from

b. Where the cash payments were used for

c. What the overall change in cash was

d. If there will be enough cash to pay the currentliabilities

26. On the Navigation Bar, make the followingselections to enter a sales invoice:

a. Customers & Sales Navigation Center, click on theCustomers icon and select View and Edit Customers

b. Customers & Sales Navigation Center, click on the SalesInvoices icon and select Set up Invoice Defaults

c. Tasks; Purchases/Receive Inventory

d. Customers & Sales Navigation Center, click on the SalesInvoices icon and select New Sales Invoice

27. The following would be included in theheading of an income statement:

a. Title of the statement

b. Name of the business

c. Period of time covered by the statement

d. All of the above

. 28. A departmentalized accounting systemprovides information that can be used to:

a. Custom design departmental statements

b. Evaluate profitability and cost effectiveness

c. Evaluate current assets

d. Modify PCA's standard forms

29. In Peachtree, information about a sale isrecorded in the:

a. Purchase window

b. Inventory window

c. Purchases/Receive Inventory window

d. Sales/Invoicing window

30. The sample company, Bellwether GardenSupply, uses which method of posting?

a. Batch posting

b. Real-time posting

c. Cash basis posting

d. Accrual basis posting