Learning Materials
Features
Discover
Chapter 23: Q7BE (page 1373)
Moxley Corporation had January 1 and December 31 balances as follows.
1/1/17 12/31/17
Inventory \(95,000 \)113,000
Accounts payable 61,000 69,000
For 2017, cost of goods sold was $500,000. Compute Moxley鈥檚 2017 cash payments to suppliers.
The cash payment to suppliers is computed as$510,000
Over 30 million students worldwide already upgrade their learning with 91影视!
All the tools & learning materials you need for study success - in one app.
Get started for free
Question:(SCF鈥擨ndirect Method) The following are Sullivan Corp.鈥檚 comparative balance sheet accounts at December 31, 2017 and 2016, with a column showing the increase (decrease) from 2016 to 2017.
| Comparative Balance Sheet | |||
2017 | 2016 | Increase (Decrease) | |
Cash | \(815,000 | \)700,000 | \(115,000 |
Accounts receivable | 1,128,000 | 1,168,000 | (40,000) |
Inventory | 1,850,000 | 1,715,000 | 135,000 |
Property, plant and equipment | 3,307,000 | 2,967,000 | 340,000 |
Accumulated depreciation | (1,165,000) | (1,040,000) | (125,000) |
Investment in Myers Co | 310,000 | 275,000 | 35,000 |
Loan receivable | 250,000 | - | 250,000 |
Total assets | \)6,495,000 | \(5,785,000 | \)710,000 |
Account payable | \(1,015,000 | \)955,000 | \(60,000 |
Income taxes payable | 30,000 | 50,000 | (20,000) |
Dividend payable | 800,000 | 100,000 | (20,000) |
Lease liability | 400,000 | - | 400,000 |
Common stock, \) 1 par value | 500,000 | 500,000 | 0 |
Paid-in-capital in excess of par 鈥� common stock | 1,500,000 | 1,500,000 | 0 |
Retained earnings | 2,970,000 | 2,680,000 | 290,000 |
Total liabilities and stockholders equity | \(6,495,000 | \)5,785,000 | \(710,000 |
Additional information:
1. On December 31, 2016, Sullivan acquired 25% of Myers Co.鈥檚 common stock for \)275,000. On that date, the carrying value of Myers鈥檚 assets and liabilities, which approximated their fair values, was \(1,100,000. Myers reported income of \)140,000 for the year ended December 31, 2017. No dividend was paid on Myers鈥檚 common stock during the year.
2. During 2017, Sullivan loaned \(300,000 to TLC Co., an unrelated company. TLC made the first semi-annual principal repayment of \)50,000, plus interest at 10%, on December 31, 2017.
3. On January 2, 2017, Sullivan sold equipment costing \(60,000, with a carrying amount of \)38,000, for \(40,000 cash.
4. On December 31, 2017, Sullivan entered into a capital lease for an office building. The present value of the annual rental payments is \)400,000, which equals the fair value of the building. Sullivan made the first rental payment of \(60,000 when due on January 2, 2018.
5. Net income for 2017 was \)370,000.
6. Sullivan declared and paid the following cash dividends for 2017 and 2016.
2017 | 2016 | |
Declared | December 15, 2017 | December 15, 2016 |
Paid | February 28, 2018 | February 28, 2018 |
Amount | \(80,000 | \)100,000 |
Instructions
Prepare a statement of cash flows for Sullivan Corp. for the year ended December 31, 2017, using the indirect method.
Data for Krauss Company are presented in E23-5.
Instructions
Prepare the operating activities section of the statement of cash flows using the indirect method.
Question: Each of the following items must be considered in preparing a statement of cash flows for Blackwell Inc. for the year ended December 31, 2017. State where each item is to be shown in the statement, if at all.
Question: You have completed the field work in connection with your audit of Alexander Corporation for the year ended December 31, 2017. The balance sheet accounts at the beginning and end of the year are shown below.
Dec 31, 2017 | Dec 31, 2016 | Increase or (decrease) | |
Cash | \(277,900 | \)298,000 | (\(20,100) |
Accounts receivable | 469,424 | 353,000 | 116,424 |
Inventory | 741,700 | 610,000 | 131,700 |
Prepaid expenses | 12,000 | 8,000 | 4,000 |
Investment in subsidiary | 110,500 | 0 | 110,500 |
Cash surrender value of life insurance | 2,304 | 1,800 | 504 |
Machinery | 207,000 | 190,000 | 17,000 |
Buildings | 535,200 | 407,900 | 127,300 |
Land | 52,500 | 52,500 | 0 |
Patents | 69,000 | 64,000 | 5,000 |
Copyrights | 40,000 | 50,000 | (10,000) |
Bond discount and issue costs | 4,502 | 0 | 4,502 |
Total | \)2,522,030 | \(2,035,200 | \)486,830 |
Income tax payable | \(90,250 | \)79,600 | \(10,650 |
Account payable | 299,280 | 280,000 | 19,280 |
Dividend payable | 70,000 | 0 | 70,000 |
Bond payable 鈥� 8% | 125,000 | 0 | 125,000 |
Bond payable 鈥� 12% | 0 | 100,000 | (100,000) |
Allowance for doubtful accounts | 35,300 | 40,000 | (4,700) |
Accumulated depreciation 鈥� building | 424,000 | 400,000 | 24,000 |
Accumulated depreciation 鈥� machinery | 173,000 | 130,000 | 43,000 |
Premium on bond payable | 0 | 2,400 | (2,400) |
Common stock 鈥� no par | 1,176,200 | 1,453,200 | (277,000) |
Paid-in-capital in excess of par 鈥� common stock | 109,000 | 0 | 109,000 |
Retained earnings 鈥� unappropriated | 20,000 | (450,000) | 470,000 |
Total | \)2,522,030 | \(2,035,200 | \)486,830 |
STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2017 | ||
January 1, 2017 | Balance (deficit) | (\(450,000) |
March 31, 2017 | Net income for first quarter of 2017 | 25,000 |
April 1, 2017 | Transfer from paid-in capital | 425,000 |
Balance | 0 | |
December 31, 2017 | Net income for last three quarters of 2017 | 90,000 |
Dividend declared鈥攑ayable January 21, 2018 | (70,000) | |
Balance | \)20,000 | |
Your working papers from the audit contain the following information:
1. On April 1, 2017, the existing deficit was written off against paid-in capital created by reducing the stated value of the nopar stock.
2. On November 1, 2017, 29,600 shares of no-par stock were sold for \(257,000. The board of directors voted to regard \)5 per share as stated capital.
3. A patent was purchased for \(15,000.
4. During the year, machinery that had a cost basis of \)16,400 and on which there was accumulated depreciation of \(5,200 was sold for \)9,000. No other plant assets were sold during the year.
5. The 12%, 20-year bonds were dated and issued on January 2, 2005. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2017.
6. The 8%, 40-year bonds were dated January 1, 2017, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was \(839.
7. Alexander Corporation acquired 70% control in Crimson Company on January 2, 2017, for \)100,000. The income statement of Crimson Company for 2017 shows a net income of \(15,000.
8. Major repairs to buildings of \)7,200 were charged to Accumulated Depreciation鈥擝uildings. 9. Interest paid in 2017 was \(10,500 and income taxes paid were \)34,000.
Instructions
From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest.
Bloom Corporation had the following 2017 income statement.
Sales revenue | \(200,000 |
Cost of goods sold | 120,000 |
Gross profit | 80,000 |
Operating expenses (including depreciation of \)21,000) | 50,000 |
Net income | \(30,000 |
The following accounts increased during 2017: Accounts Receivable \)12,000, Inventory \(11,000, and Accounts Payable \)13,000. Prepare the cash flows from the operating activities section of Bloom鈥檚 2017 statement of cash flows using the direct method.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Flashcards 
91影视 AI 
Notes 
Study Plans 
Study Sets 
Find a degree 
Magazine