Operating activity
Question No. 1 (6 Marks)
The major classifications of activities reported inthe statement of cash flows are Operating (O), Investing (I), and Financing (F). Classify each of the transactions listedbelow as:
1. Operating activity—add to net income.
2. Operating activity—deduct from net income.
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4. Financing activity.
5. Reported as significant non-cash activity in the notes to the financial statements.
The transactions are as follows.
Transactions | Activity (O, I, F) | ADD or LESS + or – |
Issuance of ordinary shares. | ||
Purchase of land and building, | ||
Redemption of bonds, | ||
Sale of equipment | ||
Depreciation of machinery. | ||
Issuance of bonds for plant assets, | ||
Payment of cash dividends, | ||
Exchange of furniture for office equipment. | ||
Purchase of treasury shares. | ||
Loss on sale of equipment. | ||
Increase in accounts receivables during the year, | ||
Decrease in accounts payable during the year. |
Question No. 2: (9 Marks)
Abbey INC. | |||
Balance Sheet | |||
Assets | Dec. 31, 2010 | Jan. 1, 2010 | Inc./Dec. |
Equipment | $39,000 | $22,000 | $17,000 Inc. |
Less: Accumulated depreciation | -17,000 | $ (11,000) | 6,000 Inc. |
Accounts receivable | 91000 | 88,000 | 3,000 Inc. |
Cash | 45,000 | 13,000 | 32,000 Inc. |
Total | $158,000 | $112,000 | |
Equity and Liabilities | |||
Share capital—ordinary | 100000 | $80,000 | 20,000 Inc. |
Retained earnings | 38,000 | 17,000 | 21 ,OOO Inc. |
Accounts payable | 20,000 | 15,000 | 5,000 Inc. |
Total | $158,000 | $112,000 |
Net Income of $34000 was reported and Dividend of $13000 were paid in 2010. New Equipment was purchased and none was sold.
Requirement:
Prepare Statement of Cash Flow for the year 2010.
Question No. 3: (10 Marks)
A Comparative Statement of Financial Position for Vivaldi Corporation is given below;
Dec-31 | ||
Assets | 2010 | 2009 |
Land | $71,000 | $110,000 |
Equipment | 270,000 | 200,000 |
Accumulated depreciation—equipment | -69,000 | -42,000 |
Inventories | 180,000 | 189,000 |
Accounts receivable | 82000 | 66,000 |
Cash | 63,000 | 22,000 |
Total | $597,000 | $545,000 |
Equity and Liabilities | ||
Share capital—ordinary ($1 par) | $214,000 | $164,000 |
Retained earnings | 199,000 | 134,000 |
Bonds payable | 150,000 | 200,000 |
Accounts payable | 34,000 | 47000 |
Total | $597,000 | $545,000 |
Additional Information
1. Net Income for 2010 was $105000
2. Cash Dividend of $40000 were declared and paid
3. Bonds payable amounting to $50000 were retired.
Requirement:
Prepare Statement of Cash Flow for the year 2010.
Question No. 4: (5 Marks)
Smart Co Sales made on credit. On July 1, 2018 it made sales of $60 000 with the term 3/10, n/30. On July 9, 2018 Smart Co received $30000 payment for July 1 sales. Remaining Payment received by smart Co on 15th July, 2018.
Requirement:
Record the Journal Transaction with discount amount with Gross Method and Net Method