MGAB02H3 Study Guide - Final Guide: Profit Margin, Retained Earnings, Effective Interest Rate

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16 Oct 2018

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2011 fall b06 final exam review questions solution page 1. Question 2 : prepare the journal entries to record the above transactions. June 15 common stock (1,500 x ) Nov. 30 retained earnings ([18,500 x 1. 1 x 2 x sh. 20) 8,140 (b) prepare the shareholders" equity section of the balance sheet at december 31, 2010. Share capital common shares; 100,000 authorized, 40,700 * issued. 2011 fall b06 final exam review questions solution page 2. Question 3: what is the amortization expense for each of the years ended december 31, 2008 and 2009, using both units-of-production and the declining balance method. 400,000 x 20% = 80,000: prepare the adjusting entry on december 31st 2009 assuming the company used the units-of-production method. Explain why. declining balance higher expense first year therefore a lower profit, lower expense second year and therefore a higher profit: greene company decided to sell the equipment for ,000 as of january 1, 2010.

Related Questions

EXERCISE 14-3 Calculating Free Cash Flow (L014-3] Apex Company prepared the statement of cash flows for the current year that is shown below: i $ 40,000 (6,000 34,000 Apex Company Statement of Cash Flows-Indirect Method Operating activities: Net income ................................ Adjustments to convert net income to cash basis: Depreciation ...... $ 22,000 Increase in accounts receivable .......... (60,000) Increase in inventory .... (25,000) Decrease in prepaid expenses .......... 9,000 Increase in accounts payable ............... 55,000 Decrease in accrued liabilities .......... (12,000) Increase in income taxes payable ......... 5,000 Net cash provided by operating activities ......... Investing activities: Proceeds from the sale of equipment ............. 14,000 Loan to Thomas Company ........ (40,000) Additions to plant and equipment ................ (110,000 Net cash used for investing activities ......... Financing activities: Increase in bonds payable .. 90,000 Increase in common stock ........... 40,000 Cash dividends (30,000) Net cash provided by financing activities. Net decrease in cash ..... Beginning cash balance........... Ending cash balance ...................... (136,000) 100,000 (2,000) 27,000 $ 25,000 Required: Compute Apex Company's free cash flow for the current year.

Statement of Cash Flows

The following is a list of the items to be included in thepreparation of Warrick Company's 2016 statement of cash flows:

Net income, $59,200

Payment for purchase of building, $98,000

Increase in accounts receivable, $7,400

Proceeds from issuance of common stock, $37,100

Increase in accounts payable, $4,500

Proceeds from sale of land, $7,000

Depreciation expense, $12,600

Payment of dividends, $36,000

Gain on sale of land, $5,300

Decrease in inventory, $3,700

Payment for purchase of long-term investments, $9,600

Amortization of discount on bonds payable, $1,900

Proceeds from issuance of note, $18,000

Increase in deferred taxes payable, $5,000

Equipment acquired by capital lease, $19,500

Decrease in salaries payable, $2,300

Beginning cash balance, $20,300

Required

1. Prepare the statement of cash flows.

WARRICK COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
Operating Activities:
Net income	$
Adjustment for noncash income items:
Add: Depreciation expense
Add: Amortization of discount on bonds payable
Add: Accumulated depreciation
Less: Gain on sale of land
Adjustments for cash flow effects from working capital items:
Increase in accounts receivable
Decrease in inventory
Increase in accounts payable
Decrease in salaries payable
Net cash provided by operating activities		$
Investing Activities:
Payment for purchase of building	$
Proceeds from sale of land
Payment for purchase of long-term investments
Net cash used for investing activities
Financing Activities:
Proceeds from issuance of common stock	$
Payment of accounts payable
Proceeds from issuance of note
Net cash provided by financing activities
Net Decrease in Cash		$
Cash, January 1, 2016
Cash, December 31, 2016		$

Investing and Financing Activities Not Affecting Cash
Investing Activities:
Acquisition of equipment under capital lease		$
Financing Activities:
Incurrence of capital lease obligation for equipment

DO IT! 12-2b

Prepare statement of cash flowsâindirect method.

(LO 2), AP

Alex Company reported the following information for 2017.

ALEX COMPANY Comparative Balance Sheets December 31
Assets	2017	2016	Change Increase/Decrease
Cash	$ 59,000â	$ 36,000â	$ 23,000 Increase
Accounts receivable	62,000â	22,000â	â40,000 Increase
Inventory	44,000â	-0-	â44,000 Increase
Prepaid expenses	6,000â	4,000â	2,000 Increase
Land	55,000â	70,000â	15,000 Decrease
Buildings	200,000â	200,000â	â-0-
Accumulated depreciationâbuildings	(21,000)	(14,000)	7,000 Increase
Equipment	183,000â	68,000â	115,000 Increase
Accumulated depreciationâequipment	(28,000)	(10,000)	18,000 Increase
Totals	$560,000â	$376,000â
Liabilities and Stockholders' Equity
Accounts payable	$ 43,000â	$ 40,000â	$ââ3,000 Increase
Accrued expenses payable	-0-	10,000â	10,000 Decrease
Bonds payable	100,000â	150,000â	50,000 Decrease
Common stock ($1 par)	230,000â	60,000â	170,000 Increase
Retained earnings	187,000â	116,000â	71,000 Increase
Totals	$560,000â	$376,000â

ALEX COMPANY Income Statement For the Year Ended December 31, 2017
Sales revenue		$941,000
Cost of goods sold	$475,000
Operating expenses	231,000
Interest expense	12,000
Loss on disposal of equipment	2,000	720,000
Income before income taxes		221,000
Income tax expense		65,000
Net income		$156,000

Additionalinformation:

1.Operating expenses include depreciation expense of$40,000.

2.Land was sold at its book value for cash.

3.Cash dividends of $85,000 were declared and paid in 2017.

4.Equipment with a cost of $166,000 was purchased for cash.Equipment with a cost of $51,000 and a book value of $36,000 wassold for $34,000 cash.

5.Bonds of $50,000 were redeemed at their face value forcash.

6.Common stock ($1 par) of $170,000 was issued for cash.

Use this information to prepare a statement of cash flows usingthe indirect method. Answer the following questions:

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

I need the statement of cash flows for the Operating,Investingand Financing activities

coppermanatee125

MGAB02H3 Study Guide - Final Guide: Profit Margin, Retained Earnings, Effective Interest Rate

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