Chapter16
4 Pages

Chapter16

Course Number: ACCT 201, Spring 2011

College/University: Yale

Word Count: 838

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PROBLEM SET C PROBLEM 16-1C Jumpin Jim Company, a merchandiser, recently completed its calendar-year 2008 operations. For the year, (1) all sales are credit sales, (2) all credits to accounts receivable reflect cash receipts from customers, (3) purchases of inventory are on credit, (4) all debits to accounts payable reflect cash payments for inventory, and (5) other expenses are paid in advance and are initially...

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SET PROBLEM C PROBLEM 16-1C Jumpin Jim Company, a merchandiser, recently completed its calendar-year 2008 operations. For the year, (1) all sales are credit sales, (2) all credits to accounts receivable reflect cash receipts from customers, (3) purchases of inventory are on credit, (4) all debits to accounts payable reflect cash payments for inventory, and (5) other expenses are paid in advance and are initially debited to Prepaid Expenses. Jumpin Jims balance sheet and income statement follow: JUMPIN JIM COMPANY Income Statement For Year Ended December 31, 2008 $630,700 (278,000) 352,700 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 15,620 Other expenses 189,000 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes Net income (204,620) 10,200 $158,280 (27,570) $130,710 JUMPIN JIM COMPANY Comparative Balance Sheets December 31, 2008 2007 Assets Cash $ 54,400 $ 62,900 Accounts receivable 70,250 55,500 Merchandise inventory 210,800 204,800 Prepaid expenses 250 1,560 Equipment 102,580 88,000 Accum. depreciation Equip. (25,020) (24,200) Total assets $413,260 $388,560 Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $2 par value Contributed capital in excess of par, common stock Retained earnings Total liabilities and equity $ 41,090 5,000 26,000 122,000 $ 98,100 -040,000 120,000 70,500 148,670 $413,260 67,500 62,960 $388,560 Additional Information on Year 2008 Transactions a. The gain on cash sale of equipment is $10,200 (details in b). b. Sold equipment costing $21,420, with accumulated depreciation of $14,800, for $16,820 cash. c. Purchased equipment costing $36,000 by paying cash of $10,000 and signing a long-term note payable for the balance. d. Borrowed $5,000 cash by signing a short-term note payable. e. Paid $40,000 cash to reduce the long-term notes payable. f. Issued 1,000 shares of common stock for cash at $5 per share. g. Declared and paid cash dividends of $45,000. Required 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. Disclose any noncash investing and financing activities in a note. Analysis Component 2. Analyze and discuss the cash flow information in your answer to part (1), giving special attention to the wisdom of the cash dividend payment. PROBLEM 16-2C Refer to the information reported about Jumpin Jim Company in Problem 16-1C. Required Prepare a statement of cash flows using a spreadsheet as in Exhibit 16A.1 under the indirect method of reporting cash flows from operating activities. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events: a. Net income is $130,710. b. Accounts receivable increased. c. Merchandise inventory increased. d. Prepaid expenses decreased. e. Accounts payable decreased. f. Depreciation expense is $15,620. g. Sold equipment costing $21,420, with accumulated depreciation of $14,800, for $16,820 cash. This yielded a gain of $10,200. h. Purchased equipment costing $36,000 by paying $10,000 cash and (i.) by signing a long-term note payable for the balance. j. Borrowed cash $5,000 by signing a short-term note payable. k. Paid $40,000 cash to reduce the long-term notes payable. l. Issued 1,000 shares of common stock for cash at $5 per share. m. Declared and paid cash dividends of $45,000. PROBLEM 16-3C Refer to Jumpin Jim Companys financial statements and related information in Problem 16-1C. Required Prepare a complete statement of cash flows; report its operating activities according to the direct method. Disclose any noncash investing and financing activities in a note. PROBLEM 16-4C Steve Corporation, a merchandiser, recently completed its 2008 operations. For the year, (1) all sales are credit sales, (2) all credits to accounts receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to accounts payable reflect cash payments for inventory, (5) other operating expenses are cash expenses, and (6) any change in income taxes payable reflects the accrual and cash payment of taxes. Steves balance sheet and income statement follow: STEVE CORPORATION Income Statement For Year Ended December 31, 2008 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Income before taxes Income taxes Net income $1,494,000 (895,500) 508,500 $ 40,500 375,750 (416,250) 182,250 (31,500) $150,750 STEVE CORPORATION Comparative Balance Sheets December 31, 2008 2007 Assets Cash Accounts receivable Merchandise inventory Equipment Accum. depreciation Equip. Total assets Liabilities and Equity $130,500 69,750 456,750 249,750 (117,000) $789,750 $87,750 60,750 400,500 222,750 (76,500) $695,250 Accounts payable Income taxes payable Common stock, $1 par value Contributed capital in excess of par value, common stock Retained earnings Total liabilities and equity $51,750 20,250 436,500 $ 72,000 18,000 418,500 148,500 132,750 $789,750 121,500 65,250 $695,250 Additional Information on Year 2008 Transactions a. Purchased equipment for $27,000 cash. b. Issued 18,000 shares of common stock for cash at $2.50 per share. c. Declared and paid $83,250 of cash dividends. Required Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. PROBLEM 16-5C Refer to the information reported about Steve Corporation in Problem 16-4C. Required Prepare a statement of cash flows using a spreadsheet as in Exhibit 16A.1 under the indirect method of reporting cash flows from operating activities. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events: a. Net income is $150,750. f. Depreciation expense is $40,500. b. Accounts receivable increased. g. Purchased equipment for $27,000 cash. c. Merchandise inventory increased. h.Issued 18,000 shares at $2.50 per share. d. Accounts payable decreased. i. Declared and paid $83,250 of cash dividends. e. Income taxes payable increased. PROBLEM 16-6C Refer to Steve Corporations financial statements and related information in Problem 16-4C. Required Prepare a complete statement of cash flows; report its cash flows from operating activities according to the direct method.

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UT Dallas - ACCT - 6325
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UT Dallas - ACCT - 6325
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UT Dallas - ACCT - 6325
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UT Dallas - ACCT - 6325
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UT Dallas - ACCT - 6325
Chapter 16 - Accounting for Income TaxesChapter 16TaxesAccounting for IncomeQUESTIONS FOR REVIEW OF KEYTOPICSQuestion 16-1Income tax expense is comprised of both the current and the deferred tax consequences ofevents and transactions already recog
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Chapter 17 - Pensions and Other Postretirement Benefit PlansChapter 17Pensions and Other Postretirement BenefitPlansPension plans aredesignedto provide income toQuestion 17-1individuals during theirretirement years. Funds are set aside during an
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Chapter 19 - Share-Based Compensation and Earnings Per ShareChapter 19Share-Based Compensation and Earnings PerShareQUESTIONS FOR REVIEW OF KEY TOPICSQuestion 19-1Restricted stock refers to shares actually awarded in the name of an employee, althoug