ACC 211 CHALLENGE #9 CASH FLOWS Instructions: 1. Prepare journal entries for the
ID: 2588919 • Letter: A
Question
ACC 211 CHALLENGE #9 CASH FLOWSInstructions: 1. Prepare journal entries for the selected transactions listed below. 2. Based on the account information in the ledger, the selected transactions below, and the other financial statements, prepare the Statement of Cash Flows for ABC Company for the ended June 30, 2017. ACC 211 Challenge #9 Name:, CASH FLowS Instructions: 1. Prepare journal entries for the selected transactions listed below. 2. Based on the account information in the ledger, the selected transactions below, and the other financial statements, prepare theStatement of Cash Flows for ABC Company for the year ended June 30, 2017 1. PREPARE THE JOURNAL ENTRIES (include explanations). Below is a partial list of transactions from ABC Company for fiscal year ended June 30, 2017 (NOTE: transactions have been posted to the ledger). a. Issued 5,000 shares of $1 par common stock for cash, $50,000 b. Sold investment in XYZ Co. for $35,000 of cash. c. Redeemed $55,000 bonds at face value d. Declared $4,000 in dividends. e. Recorded depreciation on equipment, $18,500 f. Paid $3,500 in cash for dividends g. Purchased equipment for cash, $13,450 PARTIAL JOURNAL Debit Credit C. 167
Explanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. a. Cash Dr. 50,000.00 To Common Stock 5,000.00 5,000 Shares X $1 To Paid in Capital in Excess of Par 45,000.00 5,000 Shares X $9 (Record the issue of common shares) b. Cash Dr. 35,000.00 To Investments 20,000.00 To Gain on Sale of Investment 15,000.00 $35,000 - $20,000 (Record the sale of investments) c. Bonds Payable Dr. 55,000.00 (Record the redemption of Bonds) 55,000.00 d. Retained Earnings Dr. 4,000.00 To Dividends Payable 4,000.00 (Record the dividends declared) e. Depreciation Expenses Dr. 18,500.00 To Accumulated Depreciation 18,500.00 (Record the deprciation on equipment) f. Dividends Payable Dr. 3,500.00 To Cash 3,500.00 (record the par payment of dividends) g. Cash Dr. 13,450.00 To Equipment 13,450.00 (Record the Purchase of equipment) Answer 2. ABC COMPANY Statement of Cash Flows (Indirect Method) For the Year ended June 30, 2017 Cash Flow from opearating activities: Net Income 40,840 Add/(Less) non cash effects on operating activities Depreciation expense 18,500 Gain on Sale of Investments (15,000) Changes in Current Operating Assets & Liabilities Increase in Accounts Receivables (4,650) Decrease in Supplies 1,110 Decrease in Accounts Payables (1,300) Net Cash provided by operating activities 39,500 Cash flow from Investing Activities Purchase of Equipment (13,450) Sale of Investments 35,000 Cash Flow / (used) from Investing activities 21,550 Cash Flow from Financing Activities Redemption of Bond Payable (55,000) Issue of Common Stock 5,000 Paid in Capital in Excess of Par 45,000 50,000 Cash dividend paid (3,500) Cash Flow from Financing Activities (8,500) Net Increase / (Decrease) in Cash 52,550 Cash balance at the beginning 42,480 Cash balance at the end 95,030 Answer 3-A. Income Will Decrease by ($40,840 - $37,300) 3,540 Income Statement on Cash Basis Service Revnue 101,850 Less: Expenses Deprecitaion Expenses 18,500 Rent Expeses 24,000 Supplies Expenses 3,050 Salaries Expenses 34,000 Total Expenses 79,550 Income from Operations 22,300 Other Revenue Gain on Sale of Investments 15,000 Net Income 37,300 Answer 3-b. Issue of Common Stock 50,000 Answer 3-c. Redemption of Bonds Payable 55,000 Answer 3-d. Cash Balance at Balance Sheet.
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