Chapter4_HW_Key[1]

Chapter4_HW_Key[1] - Chapter 4 The Statement of Cash Flows...

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1 Chapter 4 The Statement of Cash Flows Homework 1. Indicate which of the following current assets and current liabilities are operating accounts (O) and thus included in the adjustment of net income to cash flow from operating activities and which are cash (C)k investing (I), or financing (F) activities (1 point) (a) Accounts payable (b) Accounts receivable (c) Notes payable to banks (d) U.S. treasury bills (e) Accrued expenses (f) Inventory (g) Note receivable (h) Current portion of long-term debt (i) Dividends payable (j) Income taxes payable (k) Interest payable (l) Certificates of deposit (a) O (g) I (b) O (h) F (c) F (i) F (d) C (j) O (e) O (k) O (f) O (l) C
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2 2. The following comparative balance sheets and income statements are available for Evangel Inn, Prepare a statement of cash flow for 2007 using the indirect method. (1 point) Evangel Inn Balance Sheets Ended Dec 31, 2006 and 2007 2006 2007 Assets Current assets Cash $20,000 $60,000 Marketable securities 20,000 25,000 Accounts receivables 90,000 115,000 Inventory 15,000 20,000 Prepaid expenses 15,000 5,000 Totasl current assets 160,000 225,000 Investments 150,000 450,000 Property and equipment Land 450,000 450,000 Buildings 2,000,000 2,000,000 Equipment 500,000 610,000 Less: Accumulated depreciation (1,000,000) (1,300,000) Net property and equipment 1,950,000 1,760,000 Other assets - franchise fees 100,000 90,000 Total assets $2,360,000 $2,525,000 Liabilities and Owners' Equity Current liabilities Accounts payable $25,000 $35,000 Current maturities of long-term debt 50,000 50,000 Wages payable 15,000 15,000 Dividends payable 20,000 15,000 Total current liabilities 110,000 115,000 Long-term debt 1,000,000 1,050,000 Owners' equity Common stock 1,160,000 1,285,000 Retained earnings 100,000 225,000 Less: Treasury stock (10,000) (150,000) Total owners' equity 1,250,000 1,360,000 Total liabilities and owners' equity $2,360,000 $2,525,000
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3 Evangel Inn Condensed Income Statement For the Year Ended 2007 Revenues: Sales $2,700,000 Interest income 80,000 Total revenues 2,780,000 Expenses: Salaries and wages 750,000 Depreciation 340,000 Amortization 10,000 Interest expense 100,000 Other expenses 1,140,000 Income before gain and losses and income taxes 440,000 Gain on sale of equipment 20,000 Loss on sale of investments (50,000) Income taxes 80,000 Net income $330,000 Other information: 1. Equipment costing $100,000 was sold for $80,000 during 2007 2. Investments costing $100,000 were sold during 2007 for a loss of $50,000
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This note was uploaded on 10/08/2011 for the course HTM 458 taught by Professor Bu during the Spring '09 term at S.F. State.

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Chapter4_HW_Key[1] - Chapter 4 The Statement of Cash Flows...

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