Financial Accounting class

Question No. 1 (6 Marks)

The major classifications of activities reported inthe statement of cash flows are Operating (O), Investing (I), and Financing (F). Classify each of the transactions listedbelow as:

1. Operating activity—add to net income.

2. Operating activity—deduct from net income.

3. Investing activity.

4. Financing activity.

5. Reported as significant non-cash activity in the notes to the financial statements.

The transactions are as follows.

Transactions	Activity (O, I, F)	ADD or LESS + or -
Issuance of ordinary shares.
Purchase of land and building,
Redemption of bonds,
Sale of equipment
Depreciation of machinery.
Issuance of bonds for plant assets,
Payment of cash dividends,
Exchange of furniture for office equipment.
Purchase of treasury shares.
Loss on sale of equipment.
Increase in accounts receivables during the year,
Decrease in accounts payable during the year.

Question No. 2: (9 Marks)

Abbey INC.
Balance Sheet
Assets	Dec. 31, 2010	Jan. 1, 2010	Inc./Dec.
Equipment	$39,000	$22,000	$17,000 Inc.
Less: Accumulated depreciation	-17,000	$ (11,000)	6,000 Inc.
Accounts receivable	91000	88,000	3,000 Inc.
Cash	45,000	13,000	32,000 Inc.
Total	$158,000	$112,000
Equity and Liabilities
Share capital—ordinary	100000	$80,000	20,000 Inc.
Retained earnings	38,000	17,000	21 ,OOO Inc.
Accounts payable	20,000	15,000	5,000 Inc.
Total	$158,000	$112,000

Net Income of $34000 was reported and Dividend of $13000 were paid in 2010. New Equipment was purchased and none was sold.

Requirement:

Prepare Statement of Cash Flow for the year 2010.

Question No. 3: (10 Marks)

A Comparative Statement of Financial Position for Vivaldi Corporation is given below;

	Dec-31
Assets	2010	2009
Land	$71,000	$110,000
Equipment	270,000	200,000
Accumulated depreciation—equipment	-69,000	-42,000
Inventories	180,000	189,000
Accounts receivable	82000	66,000
Cash	63,000	22,000
Total	$597,000	$545,000
Equity and Liabilities
Share capital—ordinary ($1 par)	$214,000	$164,000
Retained earnings	199,000	134,000
Bonds payable	150,000	200,000
Accounts payable	34,000	47000
Total	$597,000	$545,000

Additional Information

1. Net Income for 2010 was $105000

2. Cash Dividend of $40000 were declared and paid

3. Bonds payable amounting to $50000 were retired.

Requirement:

Prepare Statement of Cash Flow for the year 2010.

Question No. 4: (5 Marks)

Smart Co Sales made on credit. On July 1, 2018 it made sales of $60 000 with the term 3/10, n/30. On July 9, 2018 Smart Co received $30000 payment for July 1 sales. Remaining Payment received by smart Co on 15th July, 2018.

Requirement:

Record the Journal Transaction with discount amount with Gross Method and Net Method

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