PXE Company presented the following comparative balance sheets

P1. PXE Company presented the following comparative balance sheets at December 31, 2005 and 2006, and the income statement for the year ended December 31, 2006:
PXE Company
Balance Sheets
December 31, 2006 and 2005

December 31, 2006  December 31, 2005
Assets 
Cash  $ 12,200  $ 28,200
Accounts receivable  16,000  18,000
Inventory  19,500  22,000
Prepaid rent  200  300
Total current assets  $ 47,900  $ 68,500
Land  58,000  30,000
Equipment  65,000  60,000
Accumulated depreciation  (11,000)  (4,000)
Total assets  $159,900  $154,500

Liabilities and stockholders’ equity 
Accounts payable $ 13,000  $ 25,000
Salaries payable  2,000  2,500
Interest payable  2,500  4,000
Income tax payable  6,500  3,000
Dividends payable  4,000  0
Total current liabilities $ 28,000  $ 34,500
Long-term notes payable  10,000  40,000
Common stock, $1 par  30,000  28,000
Preferred stock, $4 par  24,000  10,000
Additional paid-in capital  45,000  30,000
Retained earnings  22,900  12,000
Total liabilities and stockholders’ equity $159,900  $154,500

PXE Company
Income Statement
For the Year Ended December 31, 2006

Sales  $ 400,000
Cost of goods sold  (250,000)
Gross profit  $ 150,000
General and administrative expenses $80,000 
Salaries expense  31,000 
Rent expense  3,600 
Depreciation expense  7,000 
Total operating expenses  (121,600)
Other revenue and expenses: 
Gain on sale of land $ 3,000 
Interest revenue  300 
Interest expense  (2,800)  500
Income before income taxes  $ 28,900
Income tax expense  (8,000)
Net income  $ 20,900

Additional information:
a. The company declared dividends in the amount of $10,000 during the year.
b. Additional land and equipment were purchased for cash.
c. Land that had originally cost $9,000 was sold for $12,000 cash.
d. All accounts payable are related to merchandise purchases.
e. The company uses a perpetual LIFO inventory system and uses straight-line depreciation for all depreciable assets.

Required:
1. Prepare the operating activities section of the statement of cash flows using the indirect method.

P2. Salary expense on the books was $43000. Salary payable at the beginning of the year was $11000 and at the end of the year was $12500. How much cash was paid out for salaries?

P3. Rent expense on the books was $15000. Prepaid rent at the beginning of the year was $3000 and at the end of the year was $1250. How much cash was paid out for rent?

P4. Sales revenue on the books was $118000. Accounts receivable at the end of the year was $14000 and accounts receivable at the beginning of the year was $16000. How much cash was received for sales?

P5. Sales revenue on the books was $175000. Unearned revenue at the end of the year was $12000 and unearned revenue at the beginning of the year was $4500. How much cash was received from revenue?

P6. Harp’s Business Machines Inc. reported the following items from its comparative balance sheet for the calendar year 2008:

2008  2007
Inventory $125,000  $100,000
Land 100,000  200,000
Building 570,000  500,000
Equipment 45,000  30,000
Accumulated depreciation (105,000)  (50,000)
Notes payable 100,000  150,000
Common stock 300,000  200,000

Additional information for 2008:
1. A piece of land was sold for $65,000, resulting in a $5,000 gain.
2. A smaller section of land was sold for $26,000, resulting in a $14,000 loss.
3. A building was started and completed costing $70,000. All costs were paid in cash.
4. Depreciation expense totaled $55,000 for the year.

Required:
Determine the cash flows from investing activities for Harp’s Business Machines Inc. for 2008.

P7. Checker’s Games Co. reported the following items on its comparative balance sheet for 2008:

2008  2007
Accounts payable $200,000  $175,000
Dividends payable 10,000  0
Notes payable 280,000  240,000
Common stock 315,000  290,000
Additional paid-in capital 120,000  100,000
Land 175,000  150,000
Goodwill 45,000  75,000

Additional information for 2008:
1. A $70,000 note payable was issued for cash.
2. Interest expense totaled $15,000 for the year of which $13,500 was paid in cash.
3. Stock was issued for cash (the transaction involved common stock).
4. A note payable for $30,000 was repaid.
5. Dividends of $50,000 were declared of which $40,000 have been paid.

Required: Prepare the financing section of the cash flow statement in good form for Checker’s Games Co.

P8. On January 1, 2006, ABC Company bought equipment for $12,000 with an estimated useful life of 5 years and no salvage value. ABC uses straight-line depreciation. On January 1, 2008, it was decided that the sum-of-the-years-digits was more appropriate.

What journal entry do you make on January 1, 2008?