Posted: October 8th, 2022
ACC 206
Assessment Brief
ACC
206 Week Assignment
Please complete the following 5 exercises
below in either Excel or a word document (but must be single document). You
must show your work where appropriate (leaving the calculations within Excel
cells is acceptable). Save the document, and submit it in the appropriate week
using the Assignment Submission button.
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1.
Critical Thinking Question:
Answer the following questions:
Why are noncash transactions, such as the exchange of common stock for a
building for example, included on a statement of cash flows? How are these
noncash transactions disclosed?
2.
Classification of activitiesClassify each of the
following transactions as arising from an operating (O), investing (I),
financing (F), or noncash investing/financing (N) activity.
a.
________
Received $80,000 from the sale of land.
b.
________
Received $3,200 from cash sales.
c.
________
Paid a $5,000 dividend.
d.
________
Purchased $8,800 of merchandise for cash.
e.
________
Received $100,000 from the issuance of common stock.
f.
________
Paid $1,200 of interest on a note payable.
g.
________
Acquired a new laser printer by paying $650.
h.
________
Acquired a $400,000 building by signing a $400,000 mortgage note.
3.
Overview of direct and indirect methods
Evaluate the comments that follow as being True or False. If the
comment is false, briefly explain why.
a.
Both the
direct and indirect methods will produce the same cash flow from operating
activities.
b.
Depreciation
expense is added back to net income when the indirect method is used.
c.
One of the
advantages of using the direct method rather than the indirect method is that
larger cash flows from financing activities will be reported.
d.
The cash
paid to suppliers is normally disclosed on the statement of cash flows when the
indirect method of statement preparation is employed.
e.
The dollar
change in the Merchandise Inventory account appears on the statement of cash
flows only when the direct method of statement preparation is used.
4.
Equipment transaction and cash flow reporting
Dec. 31, 20X4
Dec. 31, 20X3
Property, Plant & Equipment:
Land
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$94,000
$94,000
Equipment
652,000
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527,000
Less: Accumulated depreciation
-316,000
-341,000
New equipment purchased during 20x4 totaled $280,000. The 20x4
income statement disclosed equipment depreciation expense of $41,000 and a
$9,000 loss on the sale of equipment.
a.
Determine
the cost and accumulated depreciation of the equipment sold during 20X4.
b.
Determine
the selling price of the equipment sold.
c.
Show how
the sale of equipment would appear on a statement of cash flows prepared by
using the indirect method.
5.
Cash flow information: Direct and indirect methodsThe comparative year-end
balance sheets of Sign Graphics, Inc., revealed the following activity in the
company's current accounts:
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20X5
20X4
Increase / Decrease)
Current assets
Cash
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$55,400
$35,200
$20,200
Accounts receivable (net)
83,800
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88,000
-4,200
Inventory
243,400
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233,800
9,600
Prepaid expenses
25,400
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24,200
1,200
Current liabilities
Accounts payable
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$123,600
$140,600
($17,000)
Taxes payable
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43,600
49,200
-5,600
Interest payable
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9,000
6,400
2,600
Accrued liabilities
38,800
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60,400
-21,600
Note payable
44,000
—
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44,000
The accounts payable were for the purchase of merchandise. Prepaid
expenses and accrued liabilities relate to the firm's selling and
administrative expenses. The company's condensed income statement follows.
SIGN
GRAPHICS INC.
Income
Statement
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for the
Year Ended December 31, 20x5
Sales
$713,800
Less: Cost of goods sold
323,000
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Gross profit
$390,800
Less: Selling & administrative expenses
$186,000
Depreciation expense
17,000
Interest expense
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Yes, free revisions are available within 7 days to ensure your paper meets all your expectations. We are here to make it perfect. Our revision policy covers both minor adjustments and substantial changes as needed. Submit your feedback through your account. Ace tutors remain committed to revision support until complete satisfaction.
27,000
230,000
Add: gain on sale of land
$160,800
21,800
Income before taxes
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$182,600
Income taxes
36,800
Net income
$145,800
Other data:
1.
Long-term
investments were purchased for cash at a cost of $74,600.
2.
Cash
proceeds from the sale of land totaled $76,200.
3.
Store
equipment of $44,000 was purchased by signing a short-term note payable. Also,
a $150,000 telecommunications system was acquired by issuing 3,000 shares of
preferred stock.
4.
A long-term
note of $49,400 was repaid.
5.
Twenty
thousand shares of common stock were issued at $5.19 per share.
6.
The company
paid cash dividends amounting to $128,600.
Instructions:
a.
Prepare the
operating activities section of the company's statement of cash flows, assuming
use of:
1.
The direct
method.
2.
The
indirect method.
b.
Prepare the
investing and financing activities sections of the statement of cash flows.
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