Spreadsheet from
A review of the accounting records reveals the following additional information:
- a. Bomb payable with a face value, book value, and market value of $14,000 were retired on June 30, 2019.
- b. Bonds payable with a face value of $8,000 were issued at 90.25 on August 1, 2019. They mature on August 1, 2024. The company uses the straight-line method to amortize the bond discount.
- c. The company sold a building that had an original cost of $8,000 and a book value of $4,800. The company received $2,200 in cash for the building and recorded a loss of $2,600.
- d. Equipment with a cost of $4,000 and a book value of $1,400 was exchanged for an acre of land valued at $2,700. No cash was exchanged.
- e. Long-term investments in bonds being held to maturity with a cost of $ 1,000 were sold for $800.
- f. Sixty-five shares of common stock were exchanged for a patent. The common stock was selling for $20 per share at the time of the exchange.
Required:
Prepare a spreadsheet to support a statement of
Prepare a spreadsheet to support a cash flow statement of H Company for the year 2019.
Explanation of Solution
Statement of cash flows: Cash flow statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.
Worksheet: A worksheet is a spreadsheet used while preparing a financial statement. It is a type of form having multiple columns and it is used in the adjustment process. The use of a worksheet is optional for any organization. A worksheet can neither be considered as a journal nor a part of the general ledger.
Prepare a spreadsheet to support the statement of cash flows.
Table (1)
A statement of cash flows of H Company for the year 2019:
Table (2)
Working notes:
(a) Calculate the net loss.
Particulars | Amount($) | Amount($) |
Revenues : | ||
Sales | 49,550 | |
Interest revenue | 790 | |
Gain on exchange of assets | 1,300 | |
Total revenue | 51,640 | |
Expenses: | ||
Cost of goods sold | 23,800 | |
Wages expense | 16,510 | |
Other operating expenses | 1,100 | |
Depreciation expense: buildings | 2,700 | |
Depreciation expense: equipment | 3,100 | |
Patent amortization | 815 | |
Interest expense | 1,715 | |
Loss on sale of investments | 200 | |
Loss on sale of building | (2,600) | |
Income tax expense | 500 | |
Total expenses | (53,040) | |
Net Loss | (1,400) |
Table (2)
Note: The $31,850 ending retained earnings balance is derived by subtracting the $1,400 net loss and the $2,100 dividends from the $35,350 beginning retained earnings balance.
(e) Calculate the increase in accounts receivable.
(f) Calculate the increase in inventories.
(g) Calculate the decrease in prepaid items.
(h) Calculate the increase in accounts payable.
(i) Calculate the decrease in interest payable.
(j) Calculate the increase in wages payable.
(l) Proceeds from issuance of bonds payable.
(m) Students may have difficulty with the extraordinary loss transaction. This may be shown in journal entry form as follows:
Date | Accounts and Explanation | Debit ($) | Credit ($) |
Proceeds from sale of building | 2,200 | ||
Accumulated Depreciation | 3,200 | ||
Ordinary Loss(net) | 2,600 | ||
Buildings | 8000 | ||
(To record the sale of building) |
Table (3)
(n-1) Calculate the exchange of equipment for land.
(o)Calculate the proceeds from sale of long-term investment.
(p-1) Calculate the issuance of common stock for patent.
(p-2) Acquisition of patent by issuing common stock is $1,300,
(r) Calculate the bond discount amortization.
(s) Calculate net increase in cash.
Therefore, the net increase in cash is $820.
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Chapter 21 Solutions
Intermediate Accounting: Reporting And Analysis
- Inferring Accounts Receivable Amounts At the end of 2019, Karras Inc. had a debit balance of 141,120 in its accounts receivable. Additionally, Karras had a credit balance in its allowance for doubtful accounts of 4,350 and 9,420 at the beginning and end of the year, respectively. During the year, Karras made credit sales of 1,530,000, collected receivables in the amount of 1,445,700, and recorded bad debt expense of 83, 750. Required: Next Level Compute the amount of accounts receivable that Karras wrote off during the year and the amount of accounts receivable at the beginning of the year.arrow_forwardNon-Interest-Bearing Notes Payable On November 16, 2019, Clear Glass Company borrowed 20,000 from First American Bank by issuing a 90-day, non-interest-bearing note. The bank discounted this note at 12% and remitted the difference to Clear Glass. Required: 1. Prepare the journal entries of Clear Glass to record the preceding information, the related calendar year-end adjusting entry, and payment of the note at maturity. 2. Show how the preceding items Would be reported on the December 31, 2019, balance sheet. 3. Next Level What is Clear Glass Companys effective interest rate?arrow_forwardEstimating Bad Debts from Receivables Balances The following information is extracted from Shelton Corporations accounting records at the beginning of 2019: During 2019, sales on credit amounted to 575,000, 557,400 was collected on outstanding receivables and 2,600 of receivables were written off as uncollectible. On December 31, 2019, Shell on estimastes its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Sheltons estimate of bad debt expense for 2019. 2. Prepare the Accounts Receivable section of Shelton's December 31, 2019, balance sheet. 3. Compute Shelton's receivables turnover. (Round to one decimal place.) 4. It Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?arrow_forward
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- Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed the following information relating to its receivables: The company has a recourse liability of 700 related to a note receivable sold to a bank. During 2019, credit sales (terms, n/EOM) totaled 2,200,000, and collections on accounts receivable (unassigned) amounted to 1,900,000. Uncollectible accounts totaling 18,000 from several customers were written off, and a 1,350 accounts receivable previously written off was collected. Additionally, the following transactions relating to Blackmons receivables occurred during the year: On December 31, 2019, an aging of the accounts receivable balance indicated the following: Required: 1. Prepare the journal entries to record the preceding receivable transactions during 2019 and the necessary adjusting entry on December 31, 2019. Assume a 360-day year for interest calculations and round calculations to the nearest dollar. 2. Prepare the receivables portion of Blackmons December 31, 2019, balance sheet. 3. Next Level Compute Blackmons accounts receivable turnover in days, assuming a 360-day business year. What is your evaluation of its collection policies? 4. If Blackmon uses IFRS, what might be the heading of the section for the receivables reported in Requirement 2?arrow_forwardOn January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.arrow_forwardBalance Sheet Baggett Companys balance sheet accounts and amounts as of December 31, 2019, are shown in random order as follows: Required: 1. Prepare a December 31, 2019, balance sheet for Baggett. 2. Compute the debt to-assets ratio.arrow_forward
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