Accounts

FAC 2122 Assignment Due Date: April 24, 2019 Instructions : Answer all questions Question 1 Arcade Corporation's balance sheet and income statement appear below: Income Statement
Sales	$723
Cost of goods sold	453
Gross margin	270
Selling and administrative expenses	163
Income before income taxes	107
Income tax expense	32
Net income	$75

Balance Sheet
Ending Balance	Beginning Balance
Cash	$42	$36
Debtors	77	80
Inventories	54	58
Plant and equipment	581	480
less: accumulated depreciation	(318)	(294)
Total Assets	$436	$360
creditors	$23	$28
Bonds payable	293	270
Common stock	61	60
Retained earnings	59	2
Total liabilities and equity	$436	$360

The company did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $18.

Required: Prepare a statement of cash flow . (10 marks)

Question 2

Comparative Balance Sheet
Shiner Corporation
Assets	Dec 31, 1996	Dec 31, 1995
Cash	$37,000	$49,000
Accounts Receivable	$26,000	$36,000
Prepaid Expenses	$6,000	$0
Land	$70,000	$0
Building	$200,000		$0
Accumulated Depreciation	$11,000	$189,000	$0
Equipment	$68,000		$0
Accumulated Depreciation	$10,000	$58,000	$0
Total Assets	$386,000	$85,000
Liabilities and Stockholder Equity
Accounts Payable	$40,000	$5,000
Bonds Payable	$150,000	$0
Common Stock	$60,000	$0
Retained Earnings	$136,000	$20,000
Total Liabilities and Stockholder Equity	$386,000	$85,000

Income Statement
Shiner Corporation
Revenue	$492,000
Operating Expenses	$269,000
Depreciation	$21,000	$290,000
Income before Income Taxes	$202,000
Income Tax Expense	$68,000
Net Income	$134,000

Additional information: 1. During the year Shiner Corporation paid dividends of $18,000. 2. Shiner also issued $150,000 in bonds. Copy and complete the statement below: (15 marks) Statement of Cash Flows Cash Flow from Operating Activities Net Income Adjustments to reconcile net income to net cash Depreciation Accts Receivable decrease Prepaid Expense increase Accts Payable Increase Net cash provided from Operating Activities Investing Activities Land Purchase Building Purchase Equipment Purchase Financing Activities Dividend payment to shareholders Issuance of Bonds Payable Net Decrease in Cash Cash Jan 1, 1996 Cash Dec 31, 1996

Question 3

Caribbean Distributors

Balance Sheet for

Assets 2010 2009

Cash 191 000 159 000

Debtors/Accounts Receivables 12 000 15 000

Stock/Inventory 170 000 160 000

Prepaid expenses 6 000 8 000

Land 140 000 80 000

Equipment 160 000 0

Accumulated depreciation – equipment (16 000) 0

Total 663 000 422 000

Liabilities and Shareholders Equity

Trade creditors/Accounts Payable 52 000 60 000

Accrued expenses payable/owing 15 000 20 000

Income tax payable/owing 12 000 0

Bond payable/long term loan 130 000 0

Ordinary share/common stock 360 000 300 000

Retained earnings 94 000 42 000

Total 663 000 422 000

Caribbean Distributors

Income statement

For the year ended December 31 2010

$ $

Revenues 975 000

Cost of goods sold 660 000

Operating expenses (excluding depreciation) 176 000

Depreciation expense 18 000

Loss on sale of store equipment 1 000 855,000

Income before income taxes 120 000

Income taxes 36 000

Net income/profit 84 000

Additional information:

1. In 2005, the company declared and paid a $32 000 cash dividend

2. Bonds/long term loans were issued at face value for $130 000 in cash

3. Equipment costing $20 000 was sold for $17 000 cash when the book value of the equipment was $18 000

4. Common stock/ordinary shares of $60 000 was issued to acquire land

Required: Prepare a cash flow statement for Caribbean Distributers for the year ending December 31, 2010. (25 Marks)

Question 4

Part A

The following information is given for Tripp Company, which uses the indirect method.

Net income $20,000

Depreciation expense 3,000

Increase in accounts receivable 2,000

Payment of dividends 2,000

Proceeds from sale of equipment 6,000

Increase in accounts payable 4,000

Decrease in inventory 3,000

From the information provided, answer the following questions:

a) The cash flow from operating activities is ________. (3 marks)

b) The cash flow from investing activities is ________. (1 mark)

c) The cash flow from financing activities is ________. ( 1 mark)

Part B

Avatar Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2014.

Additional information provided:

• Equipment costing $52,000 was purchased for cash.

• Equipment with a net asset value of $10,000 was sold for $14,000

• Depreciation expense of $12,000 was recorded during the year.

• During 2014, the company repaid $40,000 of long-term notes payable.

• During 2014, the company borrowed $34,000 on a new note payable

• There were no stock retirements during the year.

• There were no sales of treasury stock during the year.

Prepare a complete statement of cash flows using the outline given below : (20 marks)

Avatar Company

Statement of Cash Flows

Year Ended December 31, 2014

Operating activities:
Net income
Adjustments
Depreciation expense
Gain or loss on sale
Increase/decrease in current assets
Increase/decrease in current liabilities
Net cash from operating activities
Investing activities:
Proceeds from sale of assets
Acquisition of assets
Net cash from investing activities
Financing activities:
Issuance of stock
Purchase of treasury stock
Borrowing on notes payable
Repayments of notes payable
Payment of dividends
Net cash from financing activities
Net change in cash
Cash balance, December 31, 2013
Cash balance, December 31, 2014