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unit_08_key - Solutions to Suggested Exercises Problems in...

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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
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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
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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
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