Analyzing Transactions For each of the following items, (1) identify the accounts affected and give the amounts
Question:
Analyzing Transactions For each of the following items, (1) identify the accounts affected and give the amounts by which they would be increased or decreased, (2)
State the amount of any cash flow and whether cash is increased or decreased, and (3) identify how they would be reported in the statement of cash flows:
a. A depreciable asset is sold for $80,000. The asset originally cost $175,000, and the accumulated depreciation is
$120,000.
b. A depreciable asset is purchased for $383,000. A cash payment of $83,000 is made, and the remainder is paid with a long-term note of $300,000.
c. Interest of 8 percent is paid on bonds that were originally issued at a $150,000 discount from their par value of $1,000,000. A total of $13,000 of the discount was amortized this year.
d. Goodwill of $630,000 from the purchase of a business was recorded several years ago. The goodwill is amortized over a 20-year period at the rate of $31,500 per year.
e. Income tax expense for the year is $1,300,000. The tax payment during the year was $1,150,000 because a portion of the revenue received will not be recognized on the tax return until next year.
Step by Step Answer:
Financial Accounting A Decision Making Approach
ISBN: 9780471328230
2nd Edition
Authors: Thomas E. King, Valdean C. Lembke, John H. Smith