Exercise 23-20 The transactions below took place during the year 2017. 1. Conver

Question

Exercise 23-20 The transactions below took place during the year 2017. 1. Convertible bonds payable with a par value of $301,500 were exchanged for unissued common stock with a par value of $301,500. The market price of both types of securities was par 2. The net income for the year was $416,600. 3. Depreciation expense for the building was $89,600. 4. Some old office equipment was traded in on the purchase of some dissimilar office equipment, and the following entry was made. Equipment Accum. Depreciation-Equipment 50,300 30,500 Equipment Cash Gain on Disposal of Plant Assets 40,400 34,400 6,000 The Gain on Disposal of Plant Assets was included in income before income taxes. 5. Dividends in the amount of $120,500 were declared. They are payable in January of next year. Show by journal entries the adjustments that would be made on a worksheet for a statement of cash flows. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit

Explanation / Answer

No. Account Titles and Explanation Debit Credit 1 Bonds Payable 301,500 Common Stock 301,500 (Noncash financing activity) 2 Operating—Net income 416,600 Retained Earnings 416,600 3 Operating—Depreciation Expense 89,600 Accumulated Depreciation—Building 89,600 4 Accumulated Depreciation—Office Equipment 30,500 Office Equipment 9,900 Operating—Gain on Exchange of Office Equipment    6,000 Investing—Purchase of Office Equipment 34,400 5 Retained Earnings 120,500 Cash Dividend Payable 120,500 (Noncash financing activity)

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