Exhibit 5.15 shows a simplified statement of changes in financial position for a period. Ten of the

Question:

Exhibit 5.15 shows a simplified statement of changes in financial position for a period. Ten of the lines in the statement are numbered. Other lines are various subtotals and grand totals; these are to be ignored in the remainder of the problem. Assume that the accounting cycle is complete for the period and that all of the financial statements have been prepared. Then it is discovered that a transaction has been overlooked. That transaction is recorded in the accounts and all of the financial statements are corrected. For each of the following transactions, indicate which of the numbered lines of the funds statement is affected.

image text in transcribed

Define funds as working capital. If net income, line (1), is affected, be sure to indicate whether it decreases or increases. Ignore income tax effects.
a Depreciation expense on cash register.
b Purchase of machinery for cash.
c Declaration of a cash dividend on common stock; the dividend has not been paid at the close of the fiscal year.
d Issue of preferred stock for cash.
e Issue of common stock for cash.
f Proceeds of sale of common stock investment, a noncurrent asset, for cash. The investment was sold for book value.
g Merchandise Inventory is sold for a price in excess of cost, but payment is received in the form of a long-term note receivable.