ACC 560 Week 9 Homework Chapter 13 (E13-4, E13-6, E13-7 and P13-1A) Chapter 13: Statement of Cash Flows ACC 560 Week 9 Chapter 13 Exercises 4, 6, and 7; Problem 1 E13-4 Gutierrez Company reported net income of $225,000 for 2017. Gutierrez also reported depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses. Instructions Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method. E13-6 the three accounts shown below appear in the general ledger of Herrick Corp. during 2017. Equipment Date”�”�”�”�”� � � � � � � � � � � � � Debit � � Credit � � Balance Jan. 1 � Balance � � � � � � � � � � � � � � � � � � 160,000 July 31 � Purchase of equipment � � � � � � 70,000 � � � � � � � � � 230,000 Sept. 2 � Cost of equipment constructed � � � � 53,000 � � � � � � � � � 283,000 Nov. 10 � Cost of equipment sold � � � � � � � � � � � 49,000 � � � � 234,000 Accumulated Depreciation”�Equipment Date”�”�”�”�”� � � � � � � � � � � � � � � � Debit Credit � � Balance Jan. 1 � Balance � � � � � � � � � � � � � � � � � � 71,000 Nov. 10 � Accumulated depreciation on equipment sold � � 30,000 � � � � � � � 41,000 Dec. 31 � Depreciation for year � � � � � � � � � 28,000 � � � � 69,000 Retained Earnings Date”�”�”�”�”� � � � � � � � � � � � � � � � Debit Credit � � Balance Jan. 1 � Balance � � � � � � � � � � � � � � � � � � 105,000 Aug. 23 � Dividends (cash) � � � � � � � � 14,000 � � � � � � � 91,000 Dec. 31 � Net income � � � � � � � � � � � � 77,000 � � � � 168,000 Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of equipment was $7,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000. E13-7 Rojas Corporation’s comparative balance sheets are presented below. ROJAS CORPORATION Comparative Balance Sheets December 31 � � � � � � � � � � � � � � � � � � � � � 2017 � � 2016 Cash � � � � � � � � � � � � � � � � � � � $14,300″� � $10,700″� Accounts receivable � � � � � � � � � � � � � � 21,200″� � 23,400″� Land � � � � � � � � � � � � � � � � � � � 20,000″� � 26,000″� Buildings � � � � � � � � � � � � � � � � � � 70,000″� � 70,000″� Accumulated depreciation”�buildings � � “� � � � � � � � � � (15,000) � (10,000) � � � � � � � � � � � � � � � � � � � � � ________ � _________ Total � � � � � � � � � � � � � � � � � � � $110,500″� � $120,100″� Accounts payable � � � � � � � � � � � � � � � $12,370″� � $31,100″� Common stock � � � � � � � � � � � � � � � � � � 75,000″� � 69,000″� Retained earnings � � � � � � � � � � � � � � � 23,130″� � 20,000″� � � � � � � � � � � � � � � � � � � � � � _________ � _________ Total � � � � � � � � � � � � � � � � � � � $110,500″� � $120,100″� Instructions a. Prepare a statement of cash flows for 2017 using the indirect method. b. Compute free cash flow. P13-1A You are provided with the following transactions that took place during a recent fiscal year. � � � � � � (a) � Recorded depreciation expense on the plant assets. � � � (b) � Recorded and paid interest expense. � � � � � (c) � Recorded cash proceeds from a disposal of plant assets. � (d) � Acquired land by issuing common stock. � � � � � � (e) � Paid a cash dividend to preferred stockholders. � � � � (f) � Paid a cash dividend to common stockholders. � � � � (g) � Recorded cash sales. � � � � � � � � � � (h) � Recorded sales on account. � � � � � � � (i) � Purchased inventory for cash. � � � � � � � � � (j) � Purchased inventory on account. � � � � � � Instructions Complete the table indicating whether each item (1) affects operating (O) activities, investing (I) activities, financing (F) activities, or is a noncash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.
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