Question Week Two Assignment Intermediate Accounting

29 Jun Question Week Two Assignment Intermediate Accounting

Question
Week Two Assignment Intermediate Accounting

E 4-16 Statement of cash flows preparation

The flowing summary transactions occurred during 2011 for Bluebonnet Bakers

Cash received from:

Customers 380,000

Interest on note receivable 6,000

Sale of investments 30,000

Proceeds from note payable 100,000

Cash paid for:

Purchase of inventory 160,000

Interest on note payable 5,000

Purchase of equipment 85,000

Salaries to employees 90,000

Principal on note payable 25,000

Payment of dividends to shareholders 20,000

The balance of cash and cash equivalents at the beginning of 2011 was 17,000.

Required:

Prepare a statement of cash flows for 2011 for Bluebonnet Bakers. Use the direct method for reporting operating activities.

E 4-19 Statement of cash flows directly from transactions

The following transactions occurred during March 2011 for Wainwright Corporation. The company owns and operates a wholesale warehouse.

1. Issued 30,000 shares of capital stock in exchange for 3000,000 in cash.

2. Purchased equipment at a cost of 40,000. 10,000 cash was paid and a note payable was signed for balance owed.

3. Purchased inventory on account at a cost of 90,000. The company uses the perpetual inventory system.

4. Credit sales for the month totaled 120,000. The cost of the goods sold was 70,000.

5. Paid 5,000 in rent on the warehouse building for the month of March

6. Paid 6,000 to an insurance company for fire and liability insurance fo a one-year period beginning April 1, 2011.

7. Paid 70,000 on account for the merchandise purchased in 3.

8. Collected 55,000 from customers on account.

9. Recorded depreciation expense of 1,000 for the month on the equipment.

Required:

1. Analyze each transaction and classify each as a financing, investing and/or operating activity ( a transaction can represent more than one type of activity). In doing so, also indicate the cash effect of each, if any. If there is no cash effect, simply place a check mark in the appropriate column(s). Example:

Financing Investing Operating

1. 300,000

2. Prepare a statement of cash flows, using the direct method to present cash flows from operating activities. Assume the cash balance at the beginning of the month was 40,000.

E 4-22 Statement of cash flows; indirect method

Presented below is the 2011 income statement and comparative balance sheet information for Tiger Enterprises

Tiger Enterprises

Income Statement

For the Year Ended December 31, 2011

($ in thousands)

Sales Revenue 7,000

Operating Expense:

Cost of goods sold 3,360

Depreciation 240

Insurance 100

Administrative and other 1,800

Total operating expenses 5,000