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Concept explainers
1.
Complete the T-account worksheet that is used to prepare the statement of
1.
![Check Mark](/static/check-mark.png)
Explanation of Solution
T-account:
T-account is the form of the ledger account, where the
Following are the changes in cash accounts:
Cash (A) | |||
Operating activities: | |||
(1) Net income | 20,200 | (3) Inventory | 7,000 |
(2) | 3,000 | (4) Accounts payable | 3,000 |
(3) Income taxes payable | 1,500 | (5) Wages payable | 1,500 |
Net cash flow provided by operating activities | 13,700 | ||
Investing activities: | |||
(7) Sale of equipment | 6,000 | (8) Purchased investments | 15,000 |
Net cash flow provided by investing activities | 9,000 | ||
Financing activities: | |||
(9) Proceeds from stock issuance | 6,000 | (10) Payment of dividends | 12,000 |
Net cash flow used by financing activities | 6,000 | ||
Net decrease in cash and cash equivalents | 1,300 |
Following are the changes in non-cash accounts:
Beginning balance 22,000 | |||||
Ending balance 22,000 | |||||
Merchandise Inventory (A) | |||||
Beginning balance 68,000 | |||||
(3) Increase 7,000 | |||||
Ending balance 75,000 |
Accounts payable (L) | ||
Beginning balance | ||
(4) Decrease 7,000 | 17,000 | |
Ending balance | 14,000 |
Wages payable (L) | ||
Beginning balance | 2,500 | |
(5) Decrease 1,000 | ||
Ending balance | 1,500 |
Income taxes payable (L) | ||
Beginning balance | 3,000 | |
(6) Increase | 1,500 | |
Ending balance | 4,500 |
Equipment (A) | ||
Beginning balance 114,500 | ||
Purchases 0 | (7)Disposals | 21,000 |
Ending balance 93,500 |
Beginning balance | 32,000 | |
(7) Disposals | (2)Depreciation | 3,000 |
Ending balance | 20,000 |
Investments (A) | ||
Beginning balance 0 | ||
(8) Purchases 15,000 | Disposals | 0 |
Ending balance 15,000 |
Contributed Capital (SE) | ||
Beginning balance | 100,000 | |
Stock repurchased | (9)Stock issued | 6,000 |
Ending balance | 106,000 |
Beginning balance | 100,000 | |
Stock repurchased | (9) Stock issued | 6,000 |
Ending balance | 106,000 |
Note: L represents liabilities, XA represents contra-asset, A represents asset and SE represents
2.
Prepare the statement of cash flows for the current year.
2.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Statement of cash flows:
This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.
Indirect method:
Indirect method uses the accrual basis of accounting, where the Net Income is adjusted to determine the net cash provided from operating activities.
Prepare the statement of cash flows for the current year of Company G.
Company G | ||
Statement of Cash Flows (Indirect Method) | ||
For the year ended December 31 | ||
Particulars | Amount ($) | Amount ($) |
Cash flows from operating activities: | ||
Net income | 20,200 | |
Add: Depreciation expenses | 3,000 | |
Changes in current assets and current liabilities | ||
Less: Increase in inventory | (7,000) | |
Less: Decrease in accounts payable | (3,000) | |
Less: Decrease in wages payable | (1,000) | |
Add: Increase in income taxes payable | 1,500 | |
Net cash flows from operating activities | 13,700 | |
Cash flows from Investing activities: | ||
Less: Purchase of fixed assets | (15,000) | |
Add: Proceeds from sale of equipment | 6,000 | |
Net cash flows from investing activities | (9,000) | |
Cash flows from Financing activities: | ||
Add: Sale of capital stock | 6,000 | |
Less: Dividends paid | (12,000) | |
Net cash flows from financing activities | (6,000) | |
Net increase (decrease) in cash | (1,300) | |
Cash balance at the beginning | 20,500 | |
Cash balance at the end | 19,200 |
Table (1)
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Chapter 12 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
- A company purchases a machine for $150,000. It is estimated that the machine has a useful life of 10 years and will then be sold for $12,0000. Using the straight-line method, calculate the annual depreciation expense to be charged for each year of useful life. A. $13,800 B. $1,380 C. $12,500 D. $15,000 MCQarrow_forwardWalton Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 23,000 pounds of raw chicken that costs $15, 600, the company produces two parts: 4,000 pounds of drumsticks and 6,000 pounds of breast for a processing cost of $ 3,384. The chicken breast is further processed into 5,200 pounds of steak for a processing cost of $3,200. The market price of drumsticks per pound is $1.75 and the market price per pound of chicken steak is $5.20. If Walton decided to sell chicken breast instead of chicken steak, the price per pound would be $2.60. Product Allocation Rate x Weight of Base Allocated Cost Drumsticks $1.90 x 4,000 = $7,600 Chicken breast 1.90 x 6,000 = 11,400 Total allocated cost $19,000 Chicken Drumsticks Chicken Breast Revenue $7,000 $15,600 Cost of goods sold 7,600 11,400 Gross margin $(600) $4,200 Reallocate the joint…arrow_forwardPlease give me true answer this financial accounting questionarrow_forward
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