Wildhorse Corporation had the following transactions. 1. Sold land (cost $12,800) for $16,600. 2. Issued common stock at par for $20,000. 3. Recorded depreciation on buildings for $17,800. 4. Paid salaries of $9,800. 5. Issued 900 shares of $1 par value common stock for equipment worth $7,200. 6. Sold equipment (cost $12,200, accumulated depreciation $8,540) for $1,464. Instructions: For each transaction above, indicate how it would affect the statement of cash flows using the indirect method. (Select "Not Reported" if it is not reported on the statement of cash flows. Select "Not Applicable" if it does not belong to any sections.)
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Wildhorse Corporation had the following transactions.
1. Sold land (cost $12,800) for $16,600.
2. Issued common stock at par for $20,000.
3. Recorded
4. Paid salaries of $9,800.
5. Issued 900 shares of $1 par value common stock for equipment worth $7,200.
6. Sold equipment (cost $12,200,
Instructions: For each transaction above, indicate how it would affect the statement of
![For each transaction above, indicate how it would affect the statement of cash flows using the indirect method. (Select "Not Reported" if it is not reported on the statement of cash flows. Select "Not Applicable" if it does not belong to any section.)
1. Cash receipt
2
4.
3. Depreciation expense
5.
Gain on disposal of plant assets
6.
Cash receipt
Salaries and wages expense
Common stock for equipment
Cash receipt
Loss on disposal of plant assets
$
$
$
$
$
S
$
Reported
Not reported v
Reported
Reported ✓
Operating Section
Operating Section](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d9c9f6a-3a92-4650-aee4-d1b63ade92c4%2F33c01369-863a-4af1-9d8a-5fa3dc601767%2Ffg74aud_processed.png&w=3840&q=75)
![For each transaction above, prepare the journal entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Transaction Account Titles and Explanation
1
2
3
5.
Land
Gain on Disposal of Plant A
Ceah
Common Stock
Depreciation Expense
Accumulated Depreciation-Buildings
Salaries and Wages Expense
Equipment
Common Stock
Pald-In Capital In Excess of Par Value-Common Stock
Accumulated Depreciation-Equipment
Loss on Disposal of Plant A
Equipment
Debit
16,400
20,000
17,800
9,800
7,200
1,464
8,540
2,196
Credit
12,800
3,800
20,000
17,800
9,800
900
6,300
12,200](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d9c9f6a-3a92-4650-aee4-d1b63ade92c4%2F33c01369-863a-4af1-9d8a-5fa3dc601767%2Fxunr9zm_processed.png&w=3840&q=75)
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