ACC 206 Week 1 Assignment.doc
ACC 206 Week 1 Assignment.doc PRG211
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Date Created: 11/11/15
ACC 206 Week 1 Assignment Chapter One Problems Please complete the following 5 exercises below in either Excel or a word document but must be single document You must show your work where appropriate leaving the calculations within Excel cells is acceptable Save the document and submit it in the appropriate week using the Assignment Submission button Ch 1 Critical Thinking Question 5 Answer the following questions Why are noncash transactions such as the exchange of common stock for a building for example included on a statement of cash ows How are these noncash transactions disclosed Chapter 1 Exercise 1 1 Classi cation of activities Classify each of the following transactions as arising from an operating 0 investing 1 financing F or noncash investingfinancing N activity a Received 80000 from the sale of land b Received 3200 from cash sales c Paid a 5000 dividend d Purchased 8800 of merchandise for cash e Received 100000 from the issuance of common stock f Paid 1200 of interest on a note payable g Acquired a new laser printer by paying 650 h Acquired a 400000 building by signing a 400000 mortgage note Chapter 1 Exercise 4 4 Overview of direct and indirect methods Evaluate the comments that follow as being True or False If the comment is false brie y explain why a b C Both the direct and indirect methods will produce the same cash ow from operating activities Depreciation expense is added back to net income when the indirect method is used One of the advantages of using the direct method rather than the indirect method is that larger cash ows from financing activities will be reported The cash paid to suppliers is normally disclosed on the statement of cash ows when the indirect method of statement preparation is employed The dollar change in the Merchandise Inventory account appears on the statement of cash ows only when the direct method of statement preparation is used Chapter 1 Exercise 6 6 Equipment transaction and cash ow reporting Property Plant amp Equipment Land Equipment Less Accumulated depreciation Dec 31 20X4 94000 652000 316000 Dec 31 20X3 94000 527000 341000 New equipment purchased during 20x4 totaled 280000 The 20x4 income statement disclosed equipment depreciation expense of 41000 and a 9000 loss on the sale of equipment a Determine the cost and accumulated depreciation of the equipment sold during 20X4 b Determine the selling price of the equipment sold 0 Show how the sale of equipment would appear on a statement of cash ows prepared by using the indirect method Chapter 1 Problem 3 3 Cash ow information Direct and indirect methods The comparative yearend balance sheets of Sign Graphics Inc revealed the following activity in the company39s current accounts Current assets Cash Accounts receivable net Inventory Prepaid expenses Current liabilities Accounts payable Taxes payable Interest payable Accrued liabilities Note payable 20X5 55400 83800 243400 25400 123600 43600 9000 38800 44000 20X4 35200 88000 233800 24200 140600 49200 6400 60400 Increase Decrease 20200 4200 9600 1200 17000 5600 2600 21600 44000 The accounts payable were for the purchase of merchandise Prepaid expenses and accrued liabilities relate to the firm39s selling and administrative expenses The company39s condensed income statement follows SIGN GRAPHICS INC Income Statement for the Year Ended December 31 20x5 Sales 713800 Less Cost of goods sold 323000 Gross pro t 390800 Less Selling amp administrative expenses 186000 Depreciation expense 17000 Interest expense 27000 230000 Add gain on sale of land 160800 21800 Income before taxes 182600 Income taxes 36800 Net income 145800 Other data 1 Longterm investments were purchased for cash at a cost of 74600 2 Cash proceeds from the sale of land totaled 76200 3 Store equipment of 44000 was purchased by signing a shortterm note payable Also a 150000 telecommunications system was acquired by issuing 3000 shares of preferred stock 4 A longterm note of 49400 was repaid 5 Twenty thousand shares of common stock were issued at 519 per share 6 The company paid cash dividends amounting to 128600 Instructions a Prepare the operating activities section of the company39s statement of cash ows assuming use of 1 The direct method 2 The indirect method b Prepare the investing and financing activities sections of the statement of cash ows
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