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Accounting (51)
ACCTG414 (6)
Chapter 5

Chapter 5 In Class Questions_solutions.docx

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Department
Accounting
Course
ACCTG414
Professor
Jocelyn King
Semester
Fall

Description
Assignment 5-9 Requirement 1 HKL COMPANY Statement of Cash Flow Year ended 31 December 20x8 Operating activities  Net earnings .............................................$ 1,000...paid (18)  Adjustments for non-cash items:   Depreciation ..............................................10,000......   Loss on sale of capital assets ........................paid 2,000 (1  Changes in current assets and current liabilities:   Increase in accounts receivable .....................paid (3,000) (18)   Increase in inventory .....................................(5,000) (18)   Decrease in prepaid insurance ......................paid 1,000 (18)   Increase in accounts payable .........................paid 3,000 (18)   Decrease in wages payable ...........................paid (3,000) (18)   Increase in rent payable ........................ends paid 6,000 (18) Net cash provided by operations $ 12,000 Investing activities  Sale of equipment (NBV of $6,000; loss of $2,000) 4,000 paid............................................................................ (18)  Purchase of land ..........................................(20,000)id (16,000) (18) Financing activities  Issued long-term note ...............................ends pa10,000 (18)  Issued common shares .............................ends paid 22,000 (18)  Cash dividends paid ($24,000 + $1,000 vs. (2,000) 30,000 $23,000)..................................................................paid (18) Net increase (decrease) in cash 26,000 Cash balance, beginning of the year .....................paid 35,000 (18) Cash balance, end of the year ..............................paid $ 61,000 (18) Assignment 5-9, continued Requirement 2 HKL COMPANY Statement of Cash Flow Year ended 31 December 20x8 Operating activities  Net earnings ..............................................$ 1,000..paid (18)  Adjustments :   Depreciation ..............................................10,000......   Loss on sale of capital assets.........................paid 2,000 (1 Interest expense ....................................……….2,000 Income tax expense ......................................3,000  Changes in current assets and current liabilities:   Increase in accounts receivable .....................paid (3,000) (18)   Increase in inventory ......................................(5,000) (18)   Decrease in prepaid insurance ......................paid 1,000 (18)   Increase in accounts payable .........................paid 3,000 (18)   Decrease in wages payable ...........................paid (3,000) (18)   Increase in rent payable ........................ends paid 6,000 (18) Cash paid for interest .............................……….. (2,000) Cash paid for income tax..................................(3,000) Net cash provided by operations $ 12,000 Investing activities  Sale of equipment (NBV of $6,000; loss of $2,000) 4,000 paid............................................................................ (18)  Purchase of land ..........................................(20,000)id (16,000) (18) Financing activities  Issued long-term note ...............................ends pa10,000 (18)  Issued common shares .............................ends paid 22,000 (18)  Cash dividends paid ($24,000 + $1,000 vs. (2,000) 30,000 $23,000)..................................................................paid (18) Net increase (decrease) in cash 26,000 Cash balance, beginning of the year .....................paid 35,000 (18) Cash balance, end of the year ..............................paid $ 61,000 (18) Note: Identical to prior solution except as bolded. Assignment 5-15 JUNE LTD Statement of Cash Flow For the year ended 31 December 20x4 Operating activities: Net earnings.................................................................... $223,000 Plus: Depreciation expense ($241,000 – $70,000 on asset sold = $171,000 versus $276,500)..........................105,500 Gain on sale of capital assets ................(36,000) 292,500 Increase in accounts receivable........................(95,600) Increase in inventory ................(45,400) Decrease in accounts payable................(17,000) Net cash from operations ............................. $134,5
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