ALT-CF-POSTING-AR-AP There is one exercise in this set. Choose 1 Score: 2 /31 CLOSING SERVICE REVENUE 30,000 EXPENSES DEPRECIATION EXF RETAINED EARNINGS RETAINED EARNIN 0 20,000 1,000 9,000 COMMON STOCK CASH 1 100,000 0 ACCOUNTS PAYABLE 0 0 0 10 0 0 tement reconciles NOTES PAYABLE EXPENSES SERVICE REVENUE 100,000 0 0 0 0 ACCOUNTS RECEIVABLE 0 GAIN ON DISPOSAL DEPRECIATION EXPENSE 0 0 LAND EQUIPMENT 0 POST to T-Accounts: 1. Johnson Corporation issued 100,000 shares of $1 par common stock and received cash of $100,000 2. Johnson Corporation purchased equipment for $28,000, paying cash. 3. Johnson earned revenue of $30,000, one half in cash, the other half on account. ACCUM. DEPR EQUIP 4. Johnson incurred expenses of $20,000, paying one-half in cash, the rest was on account. 0 5. Depreciation is $1,000 on the equipment. 6. CLOSING: see entries to the right to close revenues and expenses to Retained Earnings. 7. Johnson declared and paid a dividend of $3000 in cash to stockholders. Debit Retained Earnings, credit Cash Suggested formulas and hints CASH FLOW STATEMENT--INDIRECT METHOD--use minus sign for negative cash flows. NET INCOME 0 Calculate Revenues - Expenses - Depreciation Expense + DEPRECIATION EXPENSE 0 Add back this non-cash expense DEBIT CREDIT 100.000 UNTS RECEIVABLE D E F G G H M N O B LAND EQUIPMENT POST ro T-Accounts: 1. Johnson Corporation issued 100,000 shares of $1 par common stock and received cash of $100,000 2. Johnson Corporation purchased equipment for $28,000, paying cash. 3. Johnson earned revenue of $30,000, one half in cash, the other half on account. ACCUM. DEPR EQUIP 4. Johnson incurred expenses of $20,000, paying one-half in cash, the rest was on account. 0 0 5. Depreciation is $1,000 on the equipment 6. CLOSING: see entries to the right, to close revenues and expenses to Retained Earnings. 7. Johnson declared and paid a dividend of $3000 in cash to stockholders. Debit Retained Earnings, credit Cash Suggested formula and its CASH FLOW STATEMENT -- INDIRECT METHOD--use minus sign for negative cash flows. NET INCOME 0 0 Calculate Revenues - Expenses - Depreciation Expense + DEPRECIATION EXPENSE 0 Add back this non-cash expense - INCREASE IN ACCOUNTS RECEIVABLE 0 This should be negative because AVR increased +INCREASE IN ACCOUNTS PAYABLE 0 This should be positive because A/P increased = CASH FLOW FROM OPERATIONS 010 *SUM(128.131) 17 18 19 20 21 22 23 D 24 25 26 27 20 CASH 29 ACCOUNTS RECEIVABLE 30 LAND 31 EQUIPMENT 32 ACCUM, DEPR EQUIP 33 ACCOUNTS PAYABLE 34 NOTES PAYABLE 35 COMMON STOCK 36 RETAINED EARNINGS 37 SERVICE REVENUE 38 EXPENSES 29 DEPRECIATION EXPENSE 40 GAIN ON DISPOSAL 41 TOTALS 42 43 44 45 DEBIT CREDIT 100.000 -PURCHASE OF EQUIPMENT = CASH FLOW FROM INVESTING 0 010 This should be negative cash is going out =134 - ISSUANCE OF COMMON STOCK -PAYMENT OF DIVIDEND CASH FLOW FROM FINANCING 0 0 0 010 Cash received from stock issuance This should be negative is going out for the dividend = 137 138 100 000 O NET CASH FLOW +BEGINNING BALANCE OF CASH ENDING BALANCE OF CASH olo 0.1 OO 32+K35+39 Entero =K41K42 K40 MUST EQUAL the amount in B10 K40 does not equal 310
