Ch13 - Exercises Set B 1 EXERCISES SET B E13-1B 1 2 3 4 5 6 Prepare journal entry and determine effect on cash flows Cumberland Corporation had the

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Exercises: Set B 1 Prepare the operating activities section—indirect method. (SO 3) Prepare the operating activities section—indirect method. (SO 3) Prepare journal entry and de- termine effect on cash flows. (SO 2) 2008 2007 Current assets Cash $105,000 $ 99,000 Accounts receivable 110,000 94,000 Inventory 158,000 177,000 Prepaid expenses 27,000 22,000 Total current assets $400,000 $392,000 Current liabilities Accrued expenses payable $ 15,000 $ 5,000 Accounts payable 80,000 92,000 Total current liabilities $ 95,000 $ 97,000 E13-1B Cumberland Corporation had the following transactions. 1. Sold land (cost $12,000) for $18,000. 2. Issued common stock for $25,000. 3. Recorded depreciation of $20,000. 4. Paid salaries of $12,000. 5. Issued 1,000 shares of $1 par value common stock for equipment worth $10,000. 6. Sold equipment (cost $10,000, accumulated depreciation $7,000) for $2,000. Instructions For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the statement of cash flows. E13-2B Wynne Company reported net income of $155,000 for 2008.Wynne also reported de- preciation expense of $25,000 and a loss of $5,000 on the sale of equipment.The comparative bal- ance sheet shows a decrease in accounts receivable of $10,000 for the year, a $12,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses. Instructions Prepare the operating activities section of the statement of cash flows for 2008. Use the indirect method. E13-3B The current sections of Carpenter Inc.’s balance sheets at December 31, 2007 and 2008, are presented here. Carpenter’s net income for 2008 was $123,000. Depreciation expense was $14,000. Instructions Prepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2008, using the indirect method. E13-4B The three accounts shown below appear in the general ledger of Tovar Corp.during 2008. Equipment Date Debit Credit Balance Jan. 1 Balance 160,000 July 31 Purchase of equipment 70,000 230,000 Sept. 2 Cost of equipment constructed 58,000 288,000 Nov. 10 Cost of equipment sold 44,000 244,000 Accumulated Depreciation—Equipment Date Debit Credit Balance Jan. 1 Balance 71,000 Nov. 10 Accumulated depreciation on equipment sold 30,000 41,000 Dec. 31 Depreciation for year 23,000 64,000 Prepare partial statement of cash flows—indirect method. (SO 3) EXERCISES: SET B
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2 Chapter 13 Statement of Cash Flows Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method.The loss on sale of equipment was $5,000. ( Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $58,000.) E13-5B Costas Corporation’s comparative balance sheets are presented below. COSTAS CORPORATION
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This note was uploaded on 02/07/2010 for the course ACC 604 taught by Professor Hoong during the Spring '10 term at National.

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Ch13 - Exercises Set B 1 EXERCISES SET B E13-1B 1 2 3 4 5 6 Prepare journal entry and determine effect on cash flows Cumberland Corporation had the

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