4-26-11 Solution

4-26-11 Solution - EXERCISE 23-10 1 The solution can be...

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EXERCISE 23-10 1. The solution can be determined through use of a T-account for property, plant, and equipment. 12/31/09 247,000 45,000 Equipment sold Equipment from exchange of B/P 25,000 ? 12/31/10 277,000 Payments = $277,000 + $45,000 – $247,000 – $25,000 = $50,000 GAAP states that investing activities include the acquisition and disposition of long-term productive assets. Accordingly, the purchase of property, plant, and equipment is an investing activity. Note that the acquisition of property, plant, and equipment in exchange for bonds payable would be disclosed as a noncash investing and financing activity.
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EXERCISE 23-10 (continued) 2. The solution can be determined through use of a T-account for accumulated depreciation. Accumulated Depreciation 167,000 12/31/09 38,000 Depreciation expense Equipment sold ? 178,000 12/31/10 Accumulated depreciation on equipment sold = $167,000 + $38,000 – $178,000 = $27,000 The entry to reflect the sale of equipment is: Cash (proceeds from sale of equipment) ($45,000 + $14,500 – $27,000) 32,500 Accumulated Depreciation 27,000 Property, Plant, and Equipment 45,000 (given) Gain on Sale of Equipment 14,500 (given)
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EXERCISE 23-18 POPOVICH COMPANY Statement of Cash Flows (partial) For the Year Ended December 31, 2010 Cash flows from operating activities Net income. .......................................................................................... $ 50,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense. .................................................................. $16,800 Loss on sale of equipment. .......................................................... 5,800 22,600 Net cash provided by operating activities. ........................................... 72,600 Cash flows from investing activities Purchase of machinery. ........................................................................ (62,000) Sale of machinery [($66,000 – $25,200) – $5,800]. ...................................................... 35,000 Extraordinary repairs on machinery. ................................................... (21,000) Cost of machinery constructed. ........................................................... (48,000 ) Net cash used by investing activities. .................................................. (96,000)
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EXERCISE 23-18 (Continued) Cash flows from financing activities Payment of cash dividends. ................................................................. (15,000 ) Decrease in cash. ........................................................................................... (38,400) Cash, January 1, 2010. ................................................................................... xxx Cash, December 31, 2010. ............................................................................. $ xxx
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PROBLEM 23-5 ALEXANDER CORPORATION Statement of Cash Flows For the Year Ended December 31, 2010
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This note was uploaded on 01/31/2011 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue.

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4-26-11 Solution - EXERCISE 23-10 1 The solution can be...

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