Homework - Ch 21

Homework Ch 21 - Exercise 21-1(use N for none Example F 1 2 I 3 F O 4 5 F 6 O 7 F 8 O 9 I from sale 10 F 11 I 12 O 13 F 14 I 15 I amount 16 I 17 N

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Exercise 21-1 (use N for none) Example F 1. Sale of common stock I 2. Sale of land F 3. Purchase of treasury stock O 4. Merchandise sales (assumes cash sales) F 5. Issuance of a long-term note payable O 6. Purchase of merchandise (assumes cash purchases) F 7. Repayment of note payable O 8. Employee salaries (assumes the payments) I 9. Sale of equipment at a gain (refers to the proceeds from sale) F 10. Issuance of bonds I 11. Acquisition of bonds of another corporation O 12. Payment of semiannual interest on bonds payable F 13. Payment of a cash dividend I 14. Purchase of building I 15. Collection of nontrade note receivable (principal amount) I 16. Loan to another firm N 17. Retirement of common stock O 18. Income taxes (assumes the payments) F 19. Issuance of a short-term note payable I 20. Sale of a copyright
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Exercise 21-11 Most would report the cash inflow of $566,589,440 from the sale of the bonds as a cash inflow from financing activities in its statement of cash flows. The $64,000,000 cash interest paid * , ** is a cash outflow from operating activities because interest is an income statement (operating) item. The discount amortization is a reconciling adjustment (addition) for the sum of the two credits in the JEs below. June 30, 2006* Interest expense (6% x $566,589,440) . .................. 33,995,366 Discount on bonds payable (difference). ......... 1,995,366 Cash (5% x $640,000,000) . ............................... 32,000,000 December 31, 2006** Interest expense (6% x [$566,589,440 + 1,995,366])34,115,088 Discount on bonds payable (difference). ......... 2,115,088 Cash (5% x $640,000,000) . ............................... 32,000,000 O: interest payments (64,000,000) R: amortization of bond discount 4,110,454 = 1,995,366 + 2,115,088
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Exercise 21-12 National would report the cash inflow of $4 million from the borrowing as a cash inflow from financing activities in its statement of cash flows. Each installment payment includes both an amount that represents interest and an amount that represents a reduction of principal. In its statement of cash flows, then, National reports the interest portion ($400,000*) as a cash outflow from operating activities and the principal portion ($861,881*) as a cash outflow from financing activities.
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This note was uploaded on 09/27/2008 for the course BUS 1000 taught by Professor Professor during the Spring '08 term at Cal Poly.

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Homework Ch 21 - Exercise 21-1(use N for none Example F 1 2 I 3 F O 4 5 F 6 O 7 F 8 O 9 I from sale 10 F 11 I 12 O 13 F 14 I 15 I amount 16 I 17 N

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