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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- Fall '08
- staff
- Accounting, Depreciation, CASH FLOW
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