ADMS 2500 Lecture Notes - Accounts Payable, Deferral, Retained Earnings

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lilackangaroo206

1 Jul 2014

School

York University

Department

Administrative Studies

Course

ADMS 2500

Professor

all

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ADMS 2500 Full Course Notes

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Sales less increase in accounts receivable = ,000 46,000 = ,000. Cost of goods sold less decrease in inventory less increase in accounts payable = ,000 - ,000 - ,000 = ,000 note: assumes the change in accounts payable all relates to merchandise purchases. Rent expense adjusted for change in prepaid rent (no change) = ,000. Wages expense plus decrease in wages payable = ,000 + ,000 = ,000. Insurance expense plus increase in prepaid insurance = ,000 + ,000 = ,000. *capital assets increased by only ,000 although ,000 of capital assets were acquired therefore a disposal of capital assets with an original cost of ,000 must have occurred. The accumulated depreciation of the assets disposed is the amount by which the change in the accumulated depreciation account is less than the depreciation expense. Depreciation expense was ,000 so the accumulated depreciation of the capital asset disposed of, at the time of disposition was ,000.

Related Questions

Statement of Cash FlowsâIndirect Method

The comparative balance sheet of Amelia Enterprises, Inc. atDecember 31, 2014 and 2013, is as follows:

		Dec. 31, 2014	Dec. 31, 2013
Assets
Cash		$72,150	$88,890
Accounts receivable (net)		110,870	119,830
Merchandise inventory		158,400	148,510
Prepaid expenses		6,450	4,500
Equipment		322,640	266,100
Accumulated depreciation-equipment		(83,890)	(65,260)
	Total	$586,620	$562,570

Liabilities and Stockholders'Equity
Accounts payable (merchandise creditors)		$123,190	$117,580
Mortgage note payable		0	168,770
Common stock, $1 par		19,000	12,000
Paid-in capital in excess of par-common stock		278,000	159,000
Retained earnings		166,430	105,220
	Total	$586,620	$562,570

Additional data obtained from the income statement and from anexamination of the accounts in the ledger for 2014 are asfollows:

Net income, $156,700.

Depreciation reported on the income statement, $40,720.

Equipment was purchased at a cost of $78,630, and fullydepreciated equipment costing $22,090 was discarded, with nosalvage realized.

The mortgage note payable was not due until 2016, but the termspermitted earlier payment without penalty.

7,000 shares of common stock were issued at $18 for cash.

Cash dividends declared and paid, $95,490.

Required:

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Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities. Use the minus signto indicate cash out flows, cash payments, decreases in cash andfor any adjustments, if required.

Amelia Enterprises, Inc.

Statement of Cash Flows

For the Year Ended December 31, 2014

Cash flows from operating activities:

Common stock

Depreciation

Inventory

Net income

Prepaid expenses

Retained earnings

Correct 5

Correct 6

Adjustments to reconcile net income to net cash flow fromoperating activities:

Cash paid for dividends

Decrease in accounts receivable

Depreciation

Increase in accounts receivable

Net income

Retained earnings

Correct 8

Correct 9

Changes in current operating assets and liabilities:

Decrease in accounts payable

Decrease in accounts receivable

Decrease in inventory

Depreciation

Increase in accounts receivable

Correct 11

Correct 12

Decrease in accounts payable

Decrease in merchandise inventory

Decrease in prepaid expenses

Depreciation

Increase in accounts receivable

Increase in merchandise inventory

Correct 13

Correct 14

Decrease in accounts payable

Decrease in inventory

Decrease in prepaid expenses

Increase in prepaid expenses

Correct 15

Correct 16

Decrease in accounts payable

Decrease in prepaid expenses

Depreciation

Increase in accounts payable

Net income

Retained earnings

Correct 17

Correct 18

Net cash flow from operating activities

Correct 20

Cash flows from investing activities:

Cash paid for common stock

Cash paid for equipment

Cash paid for dividends

Cash paid for merchandise inventory

Cash paid for prepaid expenses

Cash paid to retire mortgage note

Correct 22

Correct 23

Net cash flow used for investing activities

Correct 25

Cash flows from financing activities:

Cash received from customers

Cash received from depreciation

Cash received from dividends

Cash received from net income

Cash received from retained earnings

Cash received from sale of common stock

Correct 27

Correct 28

Less cash paid for accounts payable

Less cash paid for common stock

Less cash paid for dividends

Less cash paid for equipment

Less cash paid for inventory

Less cash paid for prepaid expenses

Correct 29

Correct 30

Less cash paid for accounts payable

Less cash paid for accumulated depreciation

Less cash paid for common stock

Less cash paid for depreciation

Less cash paid for inventories

Less cash paid to retire mortgage note payable

Correct 31

Correct 32

Correct 33

Net cash flow used in financing activities

Correct 35

Decrease in cash

Increase in cash

Correct 36

Correct 37

Cash at beginning of the year

Correct 39

Cash at end of the year

Correct 41

pinkgoat393

The chief accountant for Monster Inc. provides you (below) withthe firmâs most recent financial statements, with some missinginformation.

BALANCE SHEET (in $ millions)	12/31/13	12/31/12
Cash	X	X
Accounts Receivable	333	212
less: Allowance for Doubtful Accounts	(36)	(11)
Prepaid Rent	9	4
Inventory	177	100
Property, Plant & Equipment	660	886
less: Accumulated Depreciation	(323)	(270)
	X	X
Accounts Payable to Suppliers	65	70
Payables for Selling & Administration	X	X
Income Taxes Payable	47	X
Dividends Payable	39	33
Common Stock	X	X
Retained Earnings	237	102
	X	X

2013 Cash Flow Statement (in $ millions))
Cash collected from customers	407
Cash paid to suppliers
Cash paid in advance for rent	(40)
Cash paid for S & A costs	X
Cash paid for income taxes	(32)
NET CASH FLOW FROM OPERATING ACTIVITIES		X
Cash received from sale of equipment	250
NET CASH FLOW FROM INVESTING ACTIVITIES		250
Cash received from issue of common stock	X
Cash dividends paid to shareholders	??
NET CASH FLOW FROM FINANCING ACTIVITIES		X

2013 INCOME STATEMENT (in $ millions)
Sales Revenue	??
Cost Of Goods Sold	(210)
Bad Debts Expense	(30)
Depreciation Expense	X
Other Operating Expenses
Income before Taxes	X
Income Tax Expense	X
Gain on the Sale of Equipment (net of $15 tax on gain)	35
NET INCOME	174

REQUIRED: Compute the amounts below, placingyour answers in the spaces provided below.

Answers: (in $millions)

Cash dividends paid to shareholders during 2013
Accounts Receivable written off during 2013
Sales Revenue during 2013
Historical cost of the equipment sold during 2013
Net book value of the equipment sold during 2013

The Marchetti Soup Company entered into the following transactionsduring the month of June: (a) purchased inventory on account for$185,000 (assume Marchetti uses a perpetual inventory system); (b)paid $48,000 in salaries to employees for work performed during themonth; (c) sold merchandise that cost $136,000 to credit customersfor $240,000; (d) collected $220,000 in cash from credit customers;and (e) paid suppliers of inventory $165,000.

Post the above transactions in the T-accounts given below. Assumethat the opening balances in each of the accounts is zero exceptfor cash, accounts receivable, and accounts payable that hadopening balances of $69,000, $51,000, and $30,000,respectively.

Beginningand ending balance for....

cash, inventory, sales revenue, salaries expense, accountsrecievable, accounts payable, and costs of goods sold

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ADMS 2500 Lecture Notes - Accounts Payable, Deferral, Retained Earnings

ADMS 2500 Full Course Notes

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