Cash Flows Assignment
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test.rtf12. In the space provided below, place one of the following seven letters to indicate the effect of the transaction on the statement of cash flows.
A. increase in cash from operating activities
B. decrease in cash from operating activities
C. increase in cash from investing activities
D. decrease in cash from investing activities
E. increase in cash from financial activities
F. decrease in cash from financial activities
G. no effect on cash flows
__ (1) Payment of Accounts Payable
__ (2) Sales of equipment originally costing $75,000 and having an accumulated depreciation total of $55,000 for cash
__ (3) Issue of preferred stock at par.
__ (4) Purchase of $2,000 of merchandise on credit (perpetual inventory)
__ (5) Cash payment for retirement of bonds at maturity
__ (6) Purchase of additional delivery equipment
__ (7) Sale of merchandise on credit
__ (8) Declared dividends on preferred stock to be paid next year
__ (9) Payment of dividends on common stock that had been declared the previous year
__ (10) Incurred delivery expenses amounting to $1,000, of which $200 was paid
__ (11) Made the adjusting entry for bad debts expense
__ (12) Gain on sale of marketable securities
__ (13) Amortization of bond discount
__ (14) Declared and paid a stock dividend
__ (15) the Allowance for Uncollectible account showed a decrease
__ (16) Purchase of equipment for preferred stock
__(17) Buildings were acquired for $187,500 with the company paying $50,000 cash and issuing a mortgage note payable in 5 years for the balance
__ (18) Uncollectible accounts were written off against the Allowance for Doubtful Accounts
__ (19) Cash was paid on the purchase of business assets consisting of: Merchandise, Furniture & Fixtures, Land & Buildings, and Goodwill
__ (20) Accounts Payable shows a decrease for the period
6. Below is comparative balance sheet information for Southern Company. An examination of the company’s 20X6 income statement and accounting records reveal the following additional information:
A. net income of $15,000 was earned in 20X6
B. Depreciation charged on office equipment was $600
C. Office equipment that originally cost $700 and had been depreciated $500 was sold to an employee for its book value
D. Store equipment that cost $4,500 was purchased during 20X6
E. Fully depreciated store equipment that cost $600 was discarded, and its cost and accumulated depreciated were removed from the accounts
F. cash dividends totaling $10,000 were declared and paid during the year
G. A 5% stock dividend was declared and distributed during the year at a time when the company’s stock was selling at $8 per share.
Required: Prepare a statement of Cash Flows.
20X5
DR
CR
20X6
Cash
11,800
12,700
Accounts Receivable
33,400
34,900
Merchandise Inventory
86,700
85,900
Prepaid Expenses
1,800
2,000
Office Equipment
6,100
5,400
Accumulated Depreciation
-2,400
-2,500
Store Equipment
27,800
31,700
Accumulated Depreciation
-6,500
-7,400
Notes Payable
-20,200
-19,500
Accounts Payable
-5,000
-4,500
Income Taxes Payable
-3,300
-3,500
Common Stock, $5 par value
-100,000
-105,000
Paid-in Capital Excess of Par
-5,500
-8,500
Retained Earnings
-24,700
-21,700
Total
Cash Flows from Operating Activities
Income
Cash Flows from Investing Activites
Cash flows from financing activities
Non Cash Investing and Financing Activities
7.
A. Pine Corporation’s 20X5 and 20X6 income statement information is provided below. Convert 20X6 to common-size (vertical analysis). Round percents to 1 decimal.
Common Size
20X6
20X5
20X6
Sales (net)
$14,000
$12,000
Costs of goods sold
10,150
8,580
Gross Profit
$3,850
3,420
Selling expenses
1,975
$1,680
Administrative expenses
1,165
1,080
Interest Expense
50
50
Total expenses
$3,190
$2,810
Income before taxes
$660
$610
Income tax
330
$305
Net Income
$330
$305
B. The balance sheets for Pine Corporation for 20X5 and 20X6 are presented below. Express the items for 20X6 showing percent of change (horizontal analysis) Round percents to 1 decimal.
Percent of Change
20X6
20X5
20X6
Current assets
$900
$700
Plant and equipment
4,600
4,400
Total Assets
$5,500
$5,100
Current liabilities
$360
$410
Long term liabilities
1,000
1,000
Common stock $25 par
2,800
2,500
Other contributed capital
260
200
retained earnings
1,080
990
Total equities
$5,500
$5,100
8. Following is the financial information for the PKK Company for the year ended December 31, 20X8:
Cash
$20,000
Net Sales
$100,000
Accounts Receivable
10,000
Cost of Goods sold
45,000
Inventory
15,000
Selling expenses
10,000
Equipment (net)
40,000
Interest Expenses
8,000
Land
3,000
Income taxes
5,000
Accounts Payable
8,000
Net Income
32,000
Bonds Payable due (20Z5)
10,000
Mortgage Payable
20,000
Common Stock (10,000 shares)
10,000
Retained Earnings
40,000
Calculate the following ratios. SHOW YOUR WORK!
- Current ratio= ___ to 1 (round to 2 decimal places)
- Earnings per share= $ ____ (round to nearest cent)
- Price- earnings ratio= ___ times (round to 2 decimal places)
- Quick Current ratio (acid test) = ___ times (round to 2 decimal places)
- Inventory turnover= ___ times (round to two decimal places)
BONUS: (MUST SHOW WORK)
- 8% bond with a par value of $150,000 sold on bond issue date; 10-year life; interest payable quarterly; 10% effective (market) interest rate.
- 9% bonds with a par value of $25,000 sold on bond issue date; 15-year life; interest payable semiannually; 8% (market) interest rate
