Accounting 4

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1. Listed below are six events involving a corporation’s stockholders’ equity. Insert the words “increase,” “decrease,” or “no effect” under the appropriate column heading to indicate the event’s effect on total paid-in capital, retained earnings, and total stockholders’ equity.

		Total Paid-In Capital	Retained Earnings	Total Stockholders’ Equity
(1)	Issued 5,000 shares of common stock for cash at a price higher than par value.
(2)	Split common stock 2 for 1.
(3)	Purchased 1,000 shares of own common stock for treasury.
(4)	Issued 500 shares of preferred stock in exchange for new equipment.
(5)	Sold 400 shares of treasury common stock at a price higher than the shares’ reacquisition cost.
(6)	Issued 800 shares of common stock for land whose fair value equaled the par value of the shares issued.

2. Harmon Helmets purchased equipment for $62,000 cash, sold equipment costing $36,000 with a book value of $22,000 at a loss, and declared dividends during 2013. No new notes payable were issued during the year. Financial data follows:

	Dec. 31, 2013	Dec. 31, 2012	Change		2013
Cash	$44,600	$43,000	$1,600	Sales revenue	$850,000
Accounts receivable	31,200	13,800	17,400	Cost of sales	425,000
Inventory	28,000	21,000	7,000	Salaries expense	135,000
Equipment	180,000	154,000	21,000	Depreciation expense	18,000
Accum. depreciation	(46,000)	(42,000)	1,000	Interest expense	3,500
Accounts payable	25,400	36,400	(11,000)	Loss on sale of equipment	3,000
Unearned revenue	16,200	21,200	(5,000)	Income taxes expense	44,000
Accrued salaries	7,000	8,800	(1,800)	Net income	$221,500
Taxes payable	11,600	8,000	3,600
Long-term notes pay.	37,000	55,000	(18,000)
Common stock	90,000	28,000	62,000
Retained earnings	50,600	32,400	18,200

Calculate cash flows from operations using the indirect method for 2013.

3. The following schedule of information relates to Page Products for the year, 2013:

Income statement data:

Sales $580,000

Depreciation expense 21,000

Net income 77,000

Cash receipts:

From issuance of common stock $44,000

From sale (at book value) of stock investment 28,000

Cash payments:

For purchase of land $124,000

To stockholders as dividends 22,000

To payoff notes payable 14,000

Change in working capital accounts:

Cash increase $5,000

Accounts receivable increase 6,000

Inventory decrease 3,000

Accounts payable decrease 4,000

Accrued liabilities increase 2,000

The cash balance was $22,000 at the beginning of 2013. In good form, prepare a 2013 statement of cash flows for Page Products using the indirect method.