Accounts receivable 435000 Less Allowance for doubtful accounts 25000 410000

Accounts receivable 435000 less allowance for

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Accounts receivable ............................ $435,000 Less: Allowance for doubtful accounts .................................... (25,000) 410,000 Inventory ............................................... 597,000 Total current assets ...................... 1,357,000 Long-term investments Debt investments ................................. 299,000 Equity investments .............................. 277,000 Total long-term investments ....... 576,000 Property, plant, and equipment Land ....................................................... 260,000 Buildings ............................................... 1,040,000 Less: Accum. depreciation— building ....................................... (152,000 ) 888,000 Equipment ............................................ 600,000 Less: Accum. depreciation— equipment ................................... (60,000 ) 540,000 Total property, plant, and equipment ................................... 1,688,000 Intangible assets Franchises ............................................... 160,000 Patents .................................................. 195,000
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Total intangible assets .................. 355,000 Total assets ..................................... $3,976,000
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EXERCISE 5-12 (Continued) Liabilities and Stockholders’ Equity Current liabilities Accounts payable ............................ $ 455,000 Notes payable (short-term) ............ 90,000 Dividends payable ........................... 136,000 Accrued liabilities ............................ 96,000 Total current liabilities ............ $ 777,000 Long-term debt Notes payable (long-term) .............. 900,000 Bonds payable .................................. 1,000,000 Total long-term liabilities ........... 1,900,000 Total liabilities ............................. 2,677,000 Stockholder’s equity Paid-in capital Common stock ($5 par) ............ $1,000,000 Additional paid-in capital ......... 80,000 1,080,000 Retained earnings* ........................... 410,000 Total paid-in capital and retained earnings ................... 1,490,000 Less: Treasury stock ........................ 191,000 Total stockholders’ equity ....... 1,299,000 Total liabilities and stockholders’ equity .............. $3,976,000
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EXERCISE 5-12 (Continued) *Computation of Retained Earnings: Sales revenue $8,100,000 Investment revenue 63,000 Extraordinary gain 80,000 Cost of goods sold (4,800,000) Selling expenses (2,000,000) Administrative expenses (900,000) Interest expense (211,000 ) Net income $ 332,000 Beginning retained earnings $ 78,000 Net income 332,000 Ending retained earnings $410,000 Or ending retained earnings can be computed as follows: Total stockholders’ equity $1,299,000 Add: Treasury stock 191,000 Less: Paid-in capital in excess of par 1,080,000 Ending retained earnings $ 410,000 Note to instructor: There is no dividends account. Thus, the 12/31/14 retained earnings balance already reflects any dividends declared. EXERCISE 5-13 (15–20 minutes) (a) 4. (f) 1. (k) 1. (b) 3. (g) 5. (l) 2.
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(c) 4. (h) 4. (m) 2. (d) 3. (i) 5. (e) 1. (j) 4.
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EXERCISE 5-14 (25–35 minutes) Constantine Cavamanlis Inc. Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities Net income ........................................................... $44,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense ................................... $ 6,000 Increase in accounts receivable .................. (3,000) Increase in accounts payable ...................... 5,000 8,000 Net cash provided by operating activities ........ 52,000 Cash flows from investing activities Purchase of equipment ...................................... (17,000) Cash flows from financing activities Issuance of common stock ................................ 20,000 Payment of cash dividends ................................ (23,000 ) Net cash used by financing activities ............... (3,000 ) Net increase in cash ................................................. 32,000 Cash at beginning of year ........................................ 13,000 Cash at end of year ................................................... $45,000
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EXERCISE 5-15 (25–35 minutes) (a) Zubin Mehta Corporation Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities Net income ........................................................... $160,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense ................................... $17,000 Loss on sale of investments ........................ 10,000 Decrease in accounts receivable ................ 5,000 Decrease in current liabilities ...................... (17,000) 15,000 Net cash provided by operating activities ........ 175,000 Cash flows from investing activities Sale of investments ............................................ 12,000 [($74,000 – $52,000) – $10,000] Purchase of equipment .......................
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