c. purchased equipment costing 96,375 by paying 25,000 cash and signing a long t
ID: 2369952 • Letter: C
Question
c. purchased equipment costing 96,375 by paying 25,000 cash and signing a long term note payable for the balance.
d. borrowed 3,750 cash by signing a short term note payable.
e. paid 31,375 cash to reduce the long term notes payable.
f. issued 2,500 shares of common stock for $18 cash per share.
g. declared and paid cash dividends of 62,125.
prepair a complete statement of cash flows using above pictures. report its operating activities using the indirent method. identify the debits and credits in the analysis of changes columns that correspond to following events:
a. net income was 73,750
b. accounts receivable increased
c. merchandize inventory increased.
d. prepaid expenses decreased.
e. accounts payable decreased.
f. depreciation expense was 18,750.
g. sold equipment costing 46,875, with accumulated depreciation of 28,125 for 13,625 cash. this yeilded a loss of 5,125
h. purchased equipment costing 96,375 by paying 25,000 cash and (i) by signing a long term note payable for the balance.
j. borrowed 3,750 cash by signing a short term note payable
k. paid 31,375 cash to reduce the long term notes payable.
l. issued 2,500 shares of common stock for $18 cash per share.
m. declared and paid cash dividends of 62,125
Explanation / Answer
a. Net income is $73,750 (Debit)
b. Accounts receivable increased (Credit)
c. Merchandise inventory increased (Credit)
d. Prepaid expenses decreased (Debit)
e. Accounts payable decreased (Credit)
f. Depreciation expense is $18,750 (Debit)
g. Sold equipment costing $46,875, with accumulated depreciation of $28,125, for $13,625 cash (Debit)
This yielded a loss of $5,125 (Debit)
h. Purchased equipment costing $96,375 by paying $25,000 cash (Credit) and
(i.) by signing a long-term note payable for the balance (shown in a note)
j. Borrowed $3,750 cash by signing a short-term note payable (Debit)
k. Paid $31,375 cash to reduce the long-term notes payable
(Credit)
l. Issued 2,500 shares of common stock for $18 cash per share (Debit)
m. Declared and paid cash dividends of $62,125 (Credit)
Cash flows from operating activities
Net income $73,750
Adjustments for:
Depreciation $18,750
Loss on sale of equipment $5,125
Sub-total $97,625
Increase in accounts receivable ($15,375)
Increase in inventories ($21,250)
Decrease in prepayments $875
Decrease in accounts payable ($28,500)
Increase in short-term notes payable $3,750
Net cash from operating activities $37,125
Cash flows from investing activities
Proceeds from sale of equipment $13,625
Purchase of equipment ($25,000)
Net cash used in investing activities ($11,375)
Cash flows from financing activities
Proceeds from issue of share capital $45,000
Repayment of long-term notes payable ($31,375)
Dividends paid ($62,125)
Net cash used in financing activities ($48,500)
Net decrease in cash and cash equivalents ($22,750)
CCE at beginning of period $76,625
CCE at end of period $53,875
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