ACC-557 Homework 5 – Chapter 13

ACC-557 Homework 5 – Chapter 13. Directions: Answer the following questions on a separate Microsoft Word or Excel document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in Blackboard.

 

Exercises

 

E13-3.Cushenberry Corporation had the following transactions.

 

1. Sold land (cost $12,000) for $15,000.
2. Issued common stock at par for $20,000.
3. Recorded depreciation on buildings for $17,000.
4. Paid salaries of $9,000.
5. Issued 1,000 shares of $1 par value common stock for equipment worth $8,000.
6. Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200.

 

Instructions

For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the statement of cash flows using the indirect method.

 

E13-4.Gutierrez Company reported net income of $225,000 for 2015. 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 2015. Use the indirect method.

 

Problems

 

P13-3A.The income statement of Whitlock Company is presented here.

Additional information:

1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Operating expenses include depreciation expense of $70,000.

 

Instructions

Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2015, for Whitlock Company, using the indirect method.

 

P13-7A.Presented below are the financial statements of Nosker Company.

 

Additional data:

1. Dividends declared and paid were $20,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.

 

Instructions

1. Prepare a statement of cash flows using the indirect method.
2. Compute free cash flow.

 

 ACC-557 Homework 5 – Chapter 13

 

Directions: Answer the following questions on a separate Microsoft Word or Excel document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in Blackboard.

 

Exercises

 

E11-7. Quay Co. had the following transactions during the current period.

 

Mar. 2               Issued 5,000 shares of $5 par value common stock to attorneys in payment of a bill for $30,000 for services performed in helping the company to incorporate.

June 12             Issued 60,000 shares of $5 par value common stock for cash of $375,000.

July 11              Issued 1,000 shares of $100 par value preferred stock for cash at $110 per share.

Nov. 28             Purchased 2,000 shares of treasury stock for $80,000.

 

Instructions

Journalize the transactions.

 

E11-13. On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

 

Apr. 1               Issued 25,000 additional shares of common stock for $17 per share.

June 15             Declared a cash dividend of $1 per share to stockholders of record on June 30.

July 10              Paid the $1 cash dividend.

Dec. 1              Issued 2,000 additional shares of common stock for $19 per share.

15                     Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of record on December 31.

 

Instructions

1. Prepare the entries, if any, on each of the three dividend dates.
2. How are dividends and dividends payable reported in the financial statements prepared at December 31?

 

 ACC-557 Homework 5 – Chapter 13

 

E12-8. Presented below are two independent situations.

 

1. Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At December 31, the market price of Nevins Fashion was $15 per share. The stock is classified as available-for-sale.
2. Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan reported a net income of $80,000 for the year.

 

Instructions

Prepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.

 

E12-12.Uttinger Company has the following data at December 31, 2015.

 

The available-for-sale securities are held as a long-term investment.

 

Instructions

1. Prepare the adjusting entries to report each class of securities at fair value.
2. Indicate the statement presentation of each class of securities and the related unrealized gain (loss) accounts.

 

 

Problems

 

P11-3A.The stockholders’ equity accounts of Castle Corporation on January 1, 2015, were as follows.

Preferred Stock (8%, $50 par, cumulative, 10,000 shares authorized)             $  400,000

Common Stock ($1 stated value, 2,000,000 shares authorized)                      1,000,000

Paid-in Capital in Excess of Par—Preferred Stock                                        100,000

Paid-in Capital in Excess of Stated Value—Common Stock                          1,450,000

Retained Earnings                                                                                       1,816,000

Treasury Stock (10,000 common shares)                                                      50,000

 

 ACC-557 Homework 5 – Chapter 13

During 2015, the corporation had the following transactions and events pertaining to its stockholders’ equity.

 

Feb. 1               Issued 25,000 shares of common stock for $120,000.

Apr. 14                         Sold 6,000 shares of treasury stock—common for $33,000.

Sept. 3                         Issued 5,000 shares of common stock for a patent valued at $35,000.

Nov. 10             Purchased 1,000 shares of common stock for the treasury at a cost of $6,000.

Dec. 31             Determined that net income for the year was $452,000.

No dividends were declared during the year.

 

Instructions

1. Journalize the transactions and the closing entry for net income.
2. Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. (Use J5 for the posting reference.)
3. Prepare a stockholders’ equity section at December 31, 2015, including the disclosure of the preferred dividends in arrears.

 

 

P12-6A.The following data, presented in alphabetical order, are taken from the records of Nieto Corporation.

 

The investment in Sasse common stock is considered to be a long-term available-for-sale security.

 

Instructions

Prepare a classified balance sheet at December 31, 2015.

 ACC-557 Homework 5 – Chapter 13

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