# 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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