By comparing parts b and c with part a it is obvious

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Unformatted text preview: ditional paid­in capital from exchanging stock for land. P14–10 a. Ending accounts receivable = Beginning accounts receivable + (Gross sales – Sales returns) – Cash collections 2011 $95,000 Gross sales = $0 + (Gross sales – $20,000) – $350,000 = $465,000 2012 $150,000 Gross sales = $95,000 + (Gross sales – $25,000) – $500,000 = $580,000 P14–10 b. Concluded 2012 Ending inventory $110,000 Net purchases = 2012 Beginning inventory + Net purchases of inventory during 2012 – 2012 Cost of goods sold = $130,000 + Net purchases – $375,000 = $355,000 2012 Ending accounts payable $115,000 Cash payments c. Ending prepaid insurance = 2012 Beginning accounts payable + Net purchases of inventory during 2012 – Cash payments for inventory during 2012 = $105,000 + $355,000 – Cash payments = $345,000 = Beginning prepaid insurance + Insurance purchased during the year – Insurance expense 2011 Ending prepaid insurance = $0 + $65,000 – $35,000 = $30,000 2012 Ending prepaid insurance = $30,000 + $90,000 – $50,000 = $70,000 P14–11 Accrual sales Accrual COGS = = = Collections from customers + Increase in accounts receivable $26,000 + $3,000 $29,000 = Payments to suppliers – Increase in inventory + Increase in accounts payable = $13,000 – $3,000 + $1,000 = $11,000 Accrual operating expenses = Payments for expenses – Decrease in accrued payables = $10,000 – $2,000 = $8,000 Battery Builders, Inc. Income Statement Sales 29,000 Cost of goods sold (11,000) Depreciation expense (3,000) Other operating expenses (8,000) Gain on sale of equipment Net income $ 2,000 9,000 $ P14–12 a. Pendleton Enterprises Statement of Cash Flows from Operating Activities For the Years Ended December 31, 2010, 2011, and 2012 Cash collections from customers and sales* 13,000 Cash payments for expenses and to suppliers** (8,000) Net cash increase (decrease) due to operating activities $ *Revenues minus increase in Accounts Receivable **Expenses minus increase in Accounts Payable $ 2012 $ 4,000 2011 9,000 2010 $ (12,000) (4,000) $ (3,000) $ 5,000 0 b. Pendleton Enterprises Statement of Cash Flows...
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