chapter 13 - 13-1Odd-numbered SolutionsCHAPTER 13STATEMENT...

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Unformatted text preview: 13-1Odd-numbered SolutionsCHAPTER 13STATEMENT OF CASH FLOWS: ANOTHER LOOKProblems and Cases: Answers and Solutions13.1(Effects of transactions on statement of cash flows.)a.The journal entry to record this transaction is:Retained Earnings........................................................15,000Dividends Payable...................................................3,000Cash...........................................................................12,000!Cash=!L +!SE !N$AFinancing$12,000=$3,000 +$15,000 $0The credit to the Cash account reduces Line (11) by $12,000. Payingdividends is a financing activity, so Line (10) increases by $12,000.b.The journal entry to record this transaction is:Cash................................................................................75,000Bank Loan Payable.................................................75,000!Cash=!L +!SE !N$AFinancing+$75,000= $75,000 +$0 $0The debit to the Cash account increases Line (11) by $75,000.Borrowing is a financing activity so Line (8) increases by $75,000.Odd-numbered Solutions13-213.1 continued.c.The journal entry to record this transaction is:Cash................................................................................20,000Accumulated Depreciation.........................................35,000Machinery.................................................................40,000Gain on Sale of Machinery.....................................15,000!Cash=!L +!SE !N$AInvesting$20,000=$0 +$15,000 $5,000The debit to the Cash account results in an increase in Line (11) of$20,000. Selling machinery is an investing activity so Line (6) increasesby $20,000. The gain on the sale increases net income on Line (3) by$15,000. Because the full cash proceeds is an investing activity, Line(5) increases by $15,000 to subtract from net income a revenue that didnot provide an operating source of cash.d.The journal entry for this transaction is:Rent Expense................................................................28,000Cash...........................................................................28,000!Cash=!L +!SE !N$AOperations$28,000=$0 +$28,000 $0The credit to the Cash account reduces Line (11) by $28,000. Therecognition of rent expense reduces net income on Line (3) by $28,000.Expenditure matched the expense, so Line (2) shows an increase in theamount subtracted of $28,000.e.The journal entry to record this transaction is:Marketable Securities.................................................39,000Cash...........................................................................39,000!Cash=!L +!SE !N$AInvesting$39,000=$0 +$0 $39,000The credit to the Cash account reduces Line (11) by $39,000....
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chapter 13 - 13-1Odd-numbered SolutionsCHAPTER 13STATEMENT...

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