Endingprepaidinsurance

Unformatted text preview: ilding Purchase of building $ 110,000 (60,000) Case 2: Proceeds from sale = Book value of equipment sold + Gain on sale = ($50,000 – $25,000) + $5,000 = $30,000 In the statement of cash flows for 2012, Webb Industries would report the following items under cash flows from investing activities. Proceeds from sale of equipment Purchase of equipment $ 30,000 (170,000) Case 3: In the statement of cash flows for 2012, Webb Industries would report the following items under cash flows from investing activities. Proceeds from the sale of land $300,000 Purchase of land (225,000) P14–8 Concluded Case 4: Since Webb Industries exchanged land for a building, this transaction did not affect cash and would not be disclosed in the body of the statement of cash flows. However, Webb Industries did collect $650,000 from the building it sold ($670,000 cost of building sold – $20,000 accumulated depreciation on the building), which Webb Industries would report under cash flows from investing activities. P14–9 Total number of shares issued during 2012 Number of shares issued for cash Cash received = = = = = Change in balance of common stock account ÷ Par value per share of common stock = ($128,000 – $100,000) ÷ $1 per share = 28,000 shares = Total number of shares issued – (Shares issued as stock dividend + Shares issued in exchange for land) = 28,000 shares – [(100,000 shares outstanding on 1/1/12 20%) + 6,000 shares exchanged for land] = 28,000 shares – (20,000 shares + 6,000 shares) = 2,000 shares Change in common stock account due to issue of common stock for cash + Change in additional paid­in capital, common stock account due to issue of common stock for cash (2,000 shares $1 par value per share) + [($95,000 – $12,000) – $40,000a + $12,000b] $2,000 + $31,000 $33,000 a $40,000 represents the additional paid­in capital from the 20% stock dividend. The company distributed 20,000 shares, and the fair market value at the time was $3 per share. One dollar was allocated to the Common Stock account, and the remaining $2 was allocated to the Additional Paid­in Capital, Common Stock account. b $12,000 represents the ad...
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