Preparing a statement of cash flows. (Adapted from a problem prepared by Stephen A. Zeff.) Selected information
Question:
(1) Net income for 2009 is $90.000.
(2) Beginning and ending balances in three accounts relating to the firm€™s customers were as follows:
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On November 1, 2009, a customer gave the firm a six-month, 80%, $15,000 note in satisfaction of an account receivable of $15,000. Interest is payable at maturity. This was the only note receivable held by the company during 2009.
(3) The balances in Merchandise Inventory and Accounts Payable were as follows:
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(4) During 2009 the firm sold, for $25,000 cash, equipment with a carrying value of $38,000. The firm also purchased equipment for cash Depreciation expense for 2009 was $42,000. The balance in the Equipment account at acquisition cost decreased $26,000 between the beginning and end of 2009. The balance in the Accumulated Depreciation account increased $11,000 between the beginning and end of 2009.
(5) The balance in the Leasehold Asset and Lease Liability accounts were as follows on various dates:
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On December 31, 2008, the firm signed a long-term lease, which, by its terms, qualified as a capital tease. The firm made a payment under the lease of $10,000 on December 31, 2009.
(6) The firm declared cash dividends during 2009 of $26,000, of which $10,000 remains unpaid on December 31, 2009. During 2009 the firm paid $8,000 cash for dividends declared during 2008.
(7) The firm classifies all marketable securities as available for sale. It purchased no marketable securities during 2009 but sold marketable equity securities that had originally cost $4,500 for $9,100 cash in November 2009. The fair values of marketable equity securities were $4,000 on December 31, 2008, and $10,500 on December 31, 2009. These amounts were also the carrying values of the securities on these two dates
(8) Investors in $100,000 face value of convertible bonds of Breda Enterprises Inc. converted them into 8,000 shares of the firm€™s $12 par value common stock during 2009. The common stock had a market value of $15 per share on the conversion date. Breda Enterprises Inc. had originally issued the bonds at a premium. Their carrying value on the date of the conversion was $105,000. The firm chose the generally accepted (alternative) accounting principle of recording the issuance of the common stock at market value and recognizing a loss of $15,000. The loss is not an extraordinary item. The firm amortized $1,500 of the bond premium between January 1, 2009, and the date of theconversion.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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Breda Enterprises Inc preparing a statement of cash flows BREDA ENTERPRISES INC Statement of Cash Fl...View the full answer
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
