Explanation 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. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. Worksheet: A worksheet is a spreadsheet used while preparing a financial statement. It is a type of form having multiple columns and it is used in the adjustment process. The use of a worksheet is optional for any organization. A worksheet can neither be considered as a journal nor a part of the general ledger. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. Prepare journal entry to record the stock dividend. a. Small stock dividend is not considered to be a financing activity and is not reported on the statement of cash flows because it only affects shareholders equity accounts. This entry is made in the portion of the spreadsheet for the stock dividend. Date Accounts and Explanation Debit ($) Credit ($) Retained Earnings 8,000 Common Stock, $10 par 4,000 Additional Paid-in Capital on Common Stock 4,000 (To record the stock divided) Table (1) Retained earnings are a stockholder’s equity and it is decreased. Therefore, debit the retained earnings. Common stock is stockholders equity and it is increased. Therefore, credit the common stock. Additional Paid-in Capital on common stock is stockholders equity and it is increased. Therefore, credit the additional paid-in Capital on common stock. Prepare journal entry for exchange of equipment. b. This exchange represents cash flows for investing activities because cash was paid in theacquisition of the land. Additionally, the use of equipment in the exchange represents asimultaneous investing and financing activity. Date Accounts and Explanation Debit ($) Credit ($) Land 12,000 Accumulated Depreciation : Equipment 6,200 Loss on exchange of equipment for land 300 Exchanged equipment for land 3,500 Equipment 10,000 Acquisition of land by exchange of equipment 3,500 Payment for purchase of land 8,500 (To record the exchange of equipment) Table (2) Note: In this entry the cash payment of $8,500 will be reported as investing activity and the remaining $3,500 will be reported in the schedule of investing and financing activities not affecting cash. Land is a fixed asset and it is increased. Therefore, debit the Land. Equipment is a accumulated depreciation and it is increased. Therefore, debit the equipment. Loss on exchange of equipment for land is a net cash flow from operating activities and it is increased. Therefore, debit the loss on exchange of equipment for land. Exchanged equipment for land is not affecting cash from investing and financing activities and it is increased. Therefore, debit the exchanged equipment for land. Equipment is a fixed asset and it is decreased. Therefore, credit the equipment. Acquisition of land by exchange of equipment is not affecting cash from investing and financing activities and it is decreased. Therefore, credit the acquisition of land by exchange of equipment. Payment for purchase of land is a cash flow from investing activities and it is decreased. Therefore, credit the payment for purchase of land. Prepare journal entry for conversion of preferred stock to common stock. c. The conversion of preferred stock to common stock is a investing and financing transaction which involves exchange of equity securities, it will be reported in a schedule accompanying the statement of cash flows. It is recorded on worksheet. Date Accounts and Explanation Debit ($) Credit ($) Issuance of Common Stock to Convert Preferred Stock 22,800 Common Stock, $10 par 15,000 Additional Paid-in Capital on Common Stock 7,800 Preferred stock, $100 par 20,000 Additional paid-in capital on preferred stock 2,800 Conversion of Preferred Stock to Common Stock 22,800 (To record the conversion of preferred to common stock) Table (3) Issuance of Common Stock to Convert Preferred Stock is not affecting cash from investing and financing activities and it is increased...

Intermediate Accounting: Reporting and Analysis

2nd Edition

ISBN: 9781285453828

Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher: Cengage Learning

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Chapter 21, Problem 10P

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Journalize the transaction recorded on the spreadsheet to support the statement of cash flows.

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Chapter 21, Problem 9P

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Intermediate Accounting: Reporting and Analysis

Ch. 21 - What information does the statement of cash flows...Ch. 21 - Briefly describe the three types of activities a...Ch. 21 - Thompson Company sold a piece of equipment that...Ch. 21 - Give two examples of a companys (a) cash inflows...Ch. 21 - Prob. 5GI Ch. 21 - Prob. 6GI Ch. 21 - Prob. 7GI Ch. 21 - Prob. 8GI Ch. 21 - Prob. 9GI Ch. 21 - List the three operating cash inflows that a...

Ch. 21 - Prob. 11GI Ch. 21 - Prob. 12GI Ch. 21 - Prob. 13GI Ch. 21 - Prob. 14GI Ch. 21 - Prob. 15GI Ch. 21 - Indicate how a company computes the amount of...Ch. 21 - Prob. 17GI Ch. 21 - Prob. 18GI Ch. 21 - Prob. 19GI Ch. 21 - Which of the following would be considered a cash...Ch. 21 - In a statement of cash flows (indirect method),...Ch. 21 - Prob. 3MC Ch. 21 - The retirement of long-term debt by the issuance...Ch. 21 - Prob. 5MC Ch. 21 - Prob. 6MC Ch. 21 - Prob. 7MC Ch. 21 - Prob. 8MC Ch. 21 - Which of the following need not be disclosed in a...Ch. 21 - Prob. 10MC Ch. 21 - Prob. 1RE Ch. 21 - Prob. 2RE Ch. 21 - Given the following information, convert Cardinal...Ch. 21 - Given the following information, convert Robin...Ch. 21 - In the current year, Harrisburg Corporation had...Ch. 21 - Tifton Co. had the following cash transactions...Ch. 21 - Tifton Co. had the following cash transactions...Ch. 21 - Trenton Corporation has the following items....Ch. 21 - Prob. 9RE Ch. 21 - In the current year, Harrisburg Corporation...Ch. 21 - Providence Company sold equipment for 25,000 cash....Ch. 21 - Annapolis Corporation paid 270,000 to retire bonds...Ch. 21 - Given the following information, compute Lemon...Ch. 21 - Prob. 14RE Ch. 21 - 38619-15.1-1BYL AID: 1825 | 13/07/2019 The ways by...Ch. 21 - Visual Inspection Gordon Companys accounting...Ch. 21 - Prob. 3E Ch. 21 - Prob. 4E Ch. 21 - Prob. 5E Ch. 21 - Prob. 6E Ch. 21 - Prob. 7E Ch. 21 - Prob. 8E Ch. 21 - Prob. 9E Ch. 21 - Prob. 10E Ch. 21 - Prob. 11E Ch. 21 - Fixed Asset Transactions The following is an...Ch. 21 - Prob. 13E Ch. 21 - Prob. 14E Ch. 21 - Prob. 15E Ch. 21 - Prob. 16E Ch. 21 - Prob. 17E Ch. 21 - Prob. 18E Ch. 21 - Prob. 19E Ch. 21 - Prob. 20E Ch. 21 - Prob. 21E Ch. 21 - Prob. 22E Ch. 21 - Classification of Cash Flows A company's statement...Ch. 21 - Prob. 2P Ch. 21 - Prob. 3P Ch. 21 - Prob. 4P Ch. 21 - Prob. 5P Ch. 21 - Spreadsheet and Statement of Cash Flows The...Ch. 21 - Prob. 7P Ch. 21 - Prob. 8P Ch. 21 - Prob. 9P Ch. 21 - Prob. 10P Ch. 21 - Prob. 11P Ch. 21 - Prob. 12P Ch. 21 - Prob. 13P Ch. 21 - Prob. 14P Ch. 21 - Prob. 15P Ch. 21 - Prob. 16P Ch. 21 - Prob. 17P Ch. 21 - Prob. 18P Ch. 21 - Financial Statement Interrelationships Prepare an...Ch. 21 - Statement of Cash Flows A friend of yours is...Ch. 21 - Prob. 3C Ch. 21 - Operating, Investing, and Financing Activities The...Ch. 21 - Prob. 5C Ch. 21 - Spreadsheet Method The spreadsheet method is...Ch. 21 - Prob. 7C Ch. 21 - Inflows and Outflows Alfred Engineering Company is...Ch. 21 - Ethics and Cash Flows You are the accountant for...

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Journalize the transaction recorded on the spreadsheet to support the statement of cash flows .

Solution Summary: The author explains the rules of debiting and crediting different accounts while they occur in business transactions.

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Journalize the transaction recorded on the spreadsheet to support the statement of cash flows.

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Chapter 21 Solutions