Assets Depreciation

Document Sample
Assets Depreciation Powered By Docstoc
					Exercise 23-1A

a.             + I                                      g.           – F

b.             + O                                      h.          + O

c.             – O                                      i.           – O

d.             – F                                      j.           – I

e.              – I                                     k.           – F

f.             + O                                      l.           + F


Problem 23-12A

                      T Accounts for Indirect Method Statement of Cash Flows
                                        McDowell Company

      Accrued Interest                      Notes Payable                  Common Stock
        Receivable
BB       610                                         102,000 BB                     800,000 BB
(2)      110                                          16,000 (17)                   100,000 (15)
EB       720                                         118,000 EB                     900,000 EB


                                                                     Paid-In Capital in Excess
  Accounts Receivable                     Accounts Payable            of Par—Common Stock
BB 325,800                                          195,000 BB                      390,000 BB
              15,100 (3)           (6)     85,000                                     40,000 (15)
EB 310,700                                          110,000 EB                      430,000 EB


   Merchandise Inventory               Income Tax Payable               Retained Earnings
BB 540,200                                         25,000 BB                      360,000 BB
(4) 145,200                        (7)    5,000                     (16) 60,000   232,710 (1)
EB 685,400                                         20,000 EB                      532,710 EB


                                         Accrued and Withheld
Supplies and Prepayments                     Payroll Taxes
BB 39,000                                              14,900 BB
               12,000 (5)                               1,500 (8)
EB   27,000                                            16,400 EB


     Store Equipment                 Accrued Interest Payable
BB 460,000                                            1,035 BB
(12) 64,000     70,000 (10)        (9)      160
(17) 16,000                                             875 EB
EB 470,000
Accumulated Depreciation—
     Store Equipment          Major entries of interest:
              150,000 BB      Cash                                  (10)     25,000
(10) 30,000    60,000 (11)    Accum. Depr.—Store Equipment          (10)     30,000
              180,000 EB      Loss on Sale of Store Equipment       (10)     15,000
                                 Store Equipment                    (10)              70,000

     Delivery Equipment       Depreciation Expense                  (11)    112,000
BB 390,000                       Accum. Depr.—Store Equip.          (11)              60,000
(13) 140,000                     Accum. Depr.—Delivery Equip.       (11)              40,000
EB 530,000                       Accum. Depr.—Office Equip.         (11)              12,000

Problem 23-12A (Continued)


Accumulated Depreciation—
    Delivery Equipment
               100,000 BB
                40,000 (11)
               140,000 EB


     Office Equipment         Cash and cash equivalents                    20-2      20-1
BB 400,000                    Cash                                         $75,365 $40,325
(14) 30,000                   Government notes                               6,800 18,000
EB 430,000                    Cash and cash equivalents                    $82,165 $58,325
                              Net increase in cash and cash equivalents    $23,840 (18)

Accumulated Depreciation—
    Office Equipment
               76,000 BB
               12,000 (11)
               88,000 EB

BB: Beginning Balance
EB: Ending Balance
Problem 23-12A (Concluded)
                                          McDowell Company
                                       Statement of Cash Flows
                                  For Year Ended December 31, 20-2
Cash flows from operating activities:
   Net income                                                  $ 232,710      1
      Adjustments for changes in current assets and
      liabilities related to operating activities:
         Increase in accrued interest receivable                     (110)    2
         Decrease in accounts receivable (net)                     15,100     3
         Increase in merchandise inventory                       (145,200)    4
         Decrease in supplies and prepayments                      12,000     5
         Decrease in accounts payable                             (85,000)    6
         Decrease in income tax payable                            (5,000)    7
         Increase in accrued and withheld payroll taxes             1,500     8
         Decrease in accrued interest payable                        (160)    9
      Noncash expenses and other adjustments:
         Loss on sale of store equipment                           15,000     10
         Depreciation expense                                     112,000     11
            Net cash provided by operating activities                              $ 152,840
Cash flows from investing activities:
   Sold store equipment                                        $ 25,000       10
   Purchased store equipment                                      (64,000)    12
   Purchased delivery equipment                                  (140,000)    13
   Purchased office equipment                                     (30,000)    14
      Net cash used by investing activities                                            (209,000)
Cash flows from financing activities:
   Issued common stock                                         $ 140,000      15
   Paid cash dividends                                            (60,000)    16
      Net cash provided by financing activities                                         80,000
Net increase (decrease) in cash and cash equivalents                          18   $    23,840
Cash and cash equivalents, January 1, 20-2                                              58,325
Cash and cash equivalents, December 31, 20-2                                       $    82,165

Schedule of Noncash Investing and Financing Activities:
   Acquired store equipment by issuing a note payable                         17       $16,000

Supplemental Disclosures of Cash Flow Information:
   Cash paid for interest                                                     19       $ 1,050
   Cash paid for income taxes                                                 19       138,000

To compute cash paid for interest and taxes, prepare the following entries:
   Interest Expense (see income statement)                           890
   Accrued Interest Payable (decrease in Acc. Int. Pay.)             160
      Cash (plug)                                                             19          1,050

   Income Tax Expense (see income statement)                      133,000
   Income Tax Payable (decrease in income tax payable)              5,000
      Cash (plug)                                                             19        138,000

				
DOCUMENT INFO