unit_08_key - Solutions to Suggested Exercises Problems in...

Solutions to Suggested Exercises & Problems in Unit 8
E13–1.
O
1. Depreciation and amortization
NA 2. Cash collections from customers
F
3. Dividends paid
O
4. [Change in] Inventory
I
5. Payments to acquire property and equipment
F
6. Repayments of long-term debt
O
7. Net income
F
8. Proceeds from issuance of common stock to employees
F
9. Net repayments of notes payable to banks
O 10. [Change in] Accounts payable and accrued expenses
E13–3.
1. – NCFI Plant and equipment
Cash
2. NE Inventory
Accounts payable
3. + NCFO Cash
Accounts receivable
4. NE Salaries expense
Accrued salaries payable
5. – NCFO Interest expense
Cash
6. – NCFF Short-term debt
Cash
7. – NCFO Prepaid expenses (rent)
Cash
8. + NCFI Cash
Accumulated depreciation
Plant and equipment
9. – NCFO Accounts payable
Cash
10. – NCFF Retained earnings
Cash

E13–4.
1. – NCFO Income tax expense
Cash
2. + NCFI Cash
Plant and equipment (net)
3. + NCFF Cash
Long-term Debt
4. + NCFO Cash
Accounts receivable
5. NE Inventory
Accounts payable
6. – NCFI Investment securities
Cash
7. NE Plant and equipment
Note payable
8. + NCFF Cash
Common stock
Additional paid-in capital
9. – NCFO Prepaid expenses (rent)
Cash
10. NE Expense
Prepaid expense
E13–7.
Req. 1
Cash flows from operating activities—indirect method
Net loss ...................................................................................................... ($6,000)
Depreciation expense ................................................................................ 7,000
Amortization of copyrights ......................................................................... 300
Accounts receivable decrease (8,000 – 20,000) ...................................... 12,000
Salaries payable increase (12,000 – 3,000) ............................................. 9,000
Other accrued liabilities decrease (1,000 – 5,000) .................................... (4,000)
Net cash provided by operating activities ............................................ $18,300

Req. 2
The first reason for the net loss was the depreciation expense. This is a non-
cash expense. Depreciation expense, along with decreased working capital