9. You have completed the field work in connection with your audit of Bridgeport Corporation for the year ended December 31, 2020. The balance sheet accounts at the beginning and end of the year are shown below. Dec. 31, 2020 Dec. 31, 2019 Increase or (Decrease) Cash $333,480 $357,600 ($24,120 ) Accounts receivable 563,309 423,600 139,709 Inventory 890,040 732,000 158,040 Prepaid expenses 14,400 9,600 4,800 Investment in subsidiary 132,600 0 132,600 Cash surrender value of life insurance 2,765 2,160 605 Machinery 248,400 228,000 20,400 Buildings 642,240 489,480 152,760 Land 63,000 63,000 0 Patents 82,800 76,800 6,000 Copyrights 48,000 60,000 (12,000 ) Bond discount and issue cost 5,402 0 5,402 $3,026,436 $2,442,240 $584,196 Income taxes payable $108,300 $95,520 $12,780 Accounts payable 359,136 336,000 23,136 Dividends payable 84,000 0 84,000 Bonds payable—8% 150,000 0 150,000 Bonds payable—12% 0 120,000 (120,000 ) Allowance for doubtful accounts 42,360 48,000 (5,640 ) Accumulated depreciation—buildings 508,800 480,000 28,800 Accumulated depreciation—machinery 207,600 156,000 51,600 Premium on bonds payable 0 2,880 (2,880 ) Common stock—no par 1,411,440 1,743,840 (332,400 ) Paid-in capital in excess of par—common stock 130,800 0 130,800 Retained earnings—unappropriated 24,000 (540,000 ) 564,000 $3,026,436 $2,442,240 $584,196 STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020 January 1, 2020 Balance (deficit) $(540,000 ) March 31, 2020 Net income for first quarter of 2020 30,000 April 1, 2020 Transfer from paid-in capital 510,000 Balance 0 December 31, 2020 Net income for last three quarters of 2020 108,000 Dividend declared—payable January 21, 2021 (84,000 ) Balance $24,000 Your working papers from the audit contain the following information: 1. On April 1, 2020, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock. 2. On November 1, 2020, 35,520 shares of no-par stock were sold for $308,400. The board of directors voted to regard $5 per share as stated capital. 3. A patent was purchased for $18,000. 4. During the year, machinery that had a cost basis of $19,680 and on which there was accumulated depreciation of $6,240 was sold for $10,800. No other plant assets were sold during the year. 5. The 12%, 20-year bonds were dated and issued on January 2, 2008. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2020. 6. The 8%, 40-year bonds were dated January 1, 2020, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,007. 7. Bridgeport Corporation acquired 70% control in Crimson Company on January 2, 2020, for $120,000. The income statement of Crimson Company for 2020 shows a net income of $18,000. 8. Major repairs to buildings of $8,640 were charged to Accumulated Depreciation—Buildings. 9. Interest paid in 2020 was $12,600 and income taxes paid were $40,800. From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to 0 decimal places, e.g. 2,500. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) BRIDGEPORT CORPORATION Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to $

9. You have completed the field work in connection with your audit of Bridgeport Corporation for the year ended December 31, 2020. The balance sheet accounts at the beginning and end of the year are shown below. Dec. 31, 2020 Dec. 31, 2019 Increase or (Decrease) Cash $333,480 $357,600 ($24,120 ) Accounts receivable 563,309 423,600 139,709 Inventory 890,040 732,000 158,040 Prepaid expenses 14,400 9,600 4,800 Investment in subsidiary 132,600 0 132,600 Cash surrender value of life insurance 2,765 2,160 605 Machinery 248,400 228,000 20,400 Buildings 642,240 489,480 152,760 Land 63,000 63,000 0 Patents 82,800 76,800 6,000 Copyrights 48,000 60,000 (12,000 ) Bond discount and issue cost 5,402 0 5,402 $3,026,436 $2,442,240 $584,196 Income taxes payable $108,300 $95,520 $12,780 Accounts payable 359,136 336,000 23,136 Dividends payable 84,000 0 84,000 Bonds payable—8% 150,000 0 150,000 Bonds payable—12% 0 120,000 (120,000 ) Allowance for doubtful accounts 42,360 48,000 (5,640 ) Accumulated depreciation—buildings 508,800 480,000 28,800 Accumulated depreciation—machinery 207,600 156,000 51,600 Premium on bonds payable 0 2,880 (2,880 ) Common stock—no par 1,411,440 1,743,840 (332,400 ) Paid-in capital in excess of par—common stock 130,800 0 130,800 Retained earnings—unappropriated 24,000 (540,000 ) 564,000 $3,026,436 $2,442,240 $584,196 STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020 January 1, 2020 Balance (deficit) $(540,000 ) March 31, 2020 Net income for first quarter of 2020 30,000 April 1, 2020 Transfer from paid-in capital 510,000 Balance 0 December 31, 2020 Net income for last three quarters of 2020 108,000 Dividend declared—payable January 21, 2021 (84,000 ) Balance $24,000 Your working papers from the audit contain the following information: 1. On April 1, 2020, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock. 2. On November 1, 2020, 35,520 shares of no-par stock were sold for $308,400. The board of directors voted to regard $5 per share as stated capital. 3. A patent was purchased for $18,000. 4. During the year, machinery that had a cost basis of $19,680 and on which there was accumulated depreciation of $6,240 was sold for $10,800. No other plant assets were sold during the year. 5. The 12%, 20-year bonds were dated and issued on January 2, 2008. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2020. 6. The 8%, 40-year bonds were dated January 1, 2020, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,007. 7. Bridgeport Corporation acquired 70% control in Crimson Company on January 2, 2020, for $120,000. The income statement of Crimson Company for 2020 shows a net income of $18,000. 8. Major repairs to buildings of $8,640 were charged to Accumulated Depreciation—Buildings. 9. Interest paid in 2020 was $12,600 and income taxes paid were $40,800. From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to 0 decimal places, e.g. 2,500. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) BRIDGEPORT CORPORATION Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You have completed the field work in connection with your audit of Bridgeport Corporation for the year ended December 31, 2020. The balance sheet accounts at the beginning and end of the year are shown below.

	Dec. 31, 2020	Dec. 31, 2019		Increase or (Decrease)
Cash	$333,480	$357,600			($24,120	)
Accounts receivable	563,309	423,600			139,709
Inventory	890,040	732,000			158,040
Prepaid expenses	14,400	9,600			4,800
Investment in subsidiary	132,600	0			132,600
Cash surrender value of life insurance	2,765	2,160			605
Machinery	248,400	228,000			20,400
Buildings	642,240	489,480			152,760
Land	63,000	63,000			0
Patents	82,800	76,800			6,000
Copyrights	48,000	60,000			(12,000	)
Bond discount and issue cost	5,402	0			5,402
	$3,026,436	$2,442,240			$584,196

Income taxes payable	$108,300	$95,520			$12,780
Accounts payable	359,136	336,000			23,136
Dividends payable	84,000	0			84,000
Bonds payable—8%	150,000	0			150,000
Bonds payable—12%	0	120,000			(120,000	)
Allowance for doubtful accounts	42,360	48,000			(5,640	)
Accumulated depreciation—buildings	508,800	480,000			28,800
Accumulated depreciation—machinery	207,600	156,000			51,600
Premium on bonds payable	0	2,880			(2,880	)
Common stock—no par	1,411,440	1,743,840			(332,400	)
Paid-in capital in excess of par—common stock	130,800	0			130,800
Retained earnings—unappropriated	24,000	(540,000	)		564,000
	$3,026,436	$2,442,240			$584,196

STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020
January	1, 2020	Balance (deficit)	$(540,000	)
March	31, 2020	Net income for first quarter of 2020	30,000
April	1, 2020	Transfer from paid-in capital	510,000
		Balance	0
December	31, 2020	Net income for last three quarters of 2020	108,000
		Dividend declared—payable January 21, 2021	(84,000	)
		Balance	$24,000

Your working papers from the audit contain the following information:

1.		On April 1, 2020, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock.
2.		On November 1, 2020, 35,520 shares of no-par stock were sold for $308,400. The board of directors voted to regard $5 per share as stated capital.
3.		A patent was purchased for $18,000.
4.		During the year, machinery that had a cost basis of $19,680 and on which there was accumulated depreciation of $6,240 was sold for $10,800. No other plant assets were sold during the year.
5.		The 12%, 20-year bonds were dated and issued on January 2, 2008. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2020.
6.		The 8%, 40-year bonds were dated January 1, 2020, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $1,007.
7.		Bridgeport Corporation acquired 70% control in Crimson Company on January 2, 2020, for $120,000. The income statement of Crimson Company for 2020 shows a net income of $18,000.
8.		Major repairs to buildings of $8,640 were charged to Accumulated Depreciation—Buildings.
9.		Interest paid in 2020 was $12,600 and income taxes paid were $40,800.

From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to 0 decimal places, e.g. 2,500. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

BRIDGEPORT CORPORATION Statement of Cash Flows (Indirect Method)

		$
Adjustments to reconcile net income to

	$

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