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Mgmt 200 Assignment Soln 4-23-10

# Mgmt 200 Assignment Soln 4-23-10 - Management 200...

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Management 200 – Introductory Financial Accounting – Spring 2010 Krannert School of Management - Purdue University Solutions to class assignment for April 23, 2010 Exercise 12-3 Retirement Of Bonds Payable On The Statement Of Cash Flows— Indirect Method 1. Journal entry: 2008 Dec. 31 Bonds Payable 500,000 Loss on Retirement of Bonds 50,000 Discount on Bonds Payable 40,000 Cash 510,000 To record retirement of bonds: \$510,000 – \$460,000. 2. The \$510,000 in cash paid to retire the bonds would be reported as a cash outflow in the financing activities section. Assuming the company uses the indirect method, the loss of \$50,000 would be added back in the operating activities section. Exercise 12-14 Long-Term Assets On The Statement Of Cash Flows—Indirect Method First, determine the accumulated depreciation on the assets sold so that the book value of those sold can be found: Accumulated Depreciation 200,000 Beginning balance x = Accumulated 50,000 Depreciation depreciation on assets sold expense 160,000 Ending balance \$200,000 + \$50,000 – x = \$160,000 x = \$90,000 . Thus, the entry to record the sale would be

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