{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Homework - Ch 21

Homework - Ch 21 - Exercise 21-1(use N for none Example F 1...

This preview shows pages 1–4. Sign up to view the full content.

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

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
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