Prepare a worksheet for the statement of cash flows in indirect method and prepare journal entries for the investing and financing and noncash items
Given the following information for Test Company, prepare a worksheet for the Statement of Cash Flov and prepare journal entries for the investing, financing and non-cash items for the year ended Degreber 31, 2020. Assets 2020 2019 Cash and cash equivalents $ 42,400 $ 180,000 Investment securities Available for Sale 50,000 0 Allowance to adjust securities to market -3000 Accounts receivable 400,000 345,000 Allowance for bad debts (20,000) (31,000) Inventories 680,000 643,000 Property, plant, and equipment 810,500 743,400 Accumulated depreciation (229,000) (228,000) Total Assets $1,730,900 $1,652,400 0 Liabilities and Stockholders' Equity Accounts payable Short-term notes payable Accrued liabilities Bonds payable Discount on bonds payable (means debit balance) Deferred income tax liability Total Liabilities Common stock, $10 par Paid-in capital in excess of par Retained earnings Treasury Stock (debit balance) Total Stockholders' Equity Total Liabilities and Stockholders' Equity Additional information includes: $ 46,000 100,000 76,500 250,000 (19,600) 108,000 $ 560,900 $ 840,000 52,000 298,000 (20,000) $1,170,000 $1,730,900 $ 103,000 120,000 48,000 278,000 (20,800) 97,000 $ 625,200 S 790,000 20,000 217,200 0 $1,027,200 $1,652,400 Additional information includes: 1. 2. 3. 5. Net income for the year ended December 31, 2020, was $175,300. During 2020, machinery and land were purchased at a total cost of $115,100. Machinery with a cost of $48,000 and a book value of $4,200 was sold for $3,600. The bonds payable mature at the rate of $28,000 every year. 1 In January 2020, the company issued an additional 1,000 shares of its common stock at $14 per share. In May 2020, the company declared and issued a 5% stock dividend on its outstanding stock; there were 80,000 shares of stock outstanding at the time, and the market value per share after the stock dividend was issued was $17. During the year, cash dividends of $20,000 were paid on the common stock. In November 2020, 1,000 shares of treasury stock were purchased for $20 per share. ABC uses the cost method. 6. 7. 8. 9. 10. During 2020, a prior-period adjustment was made to correct an understatement of depreciation on equipment. The amount of the adjustment was $3,500. Ignore any tax effect/impact. During the year, investment securities were purchased for $50,000. As of December 31, 2020, the securities have a market value of $47,000. The securities are classified as available for sale securities, Depreciation expense for the year totaled $41,300. 11. Given the following information for Test Company, prepare a worksheet for the Statement of Cash Flov and prepare journal entries for the investing, financing and non-cash items for the year ended Degreber 31, 2020. Assets 2020 2019 Cash and cash equivalents $ 42,400 $ 180,000 Investment securities Available for Sale 50,000 0 Allowance to adjust securities to market -3000 Accounts receivable 400,000 345,000 Allowance for bad debts (20,000) (31,000) Inventories 680,000 643,000 Property, plant, and equipment 810,500 743,400 Accumulated depreciation (229,000) (228,000) Total Assets $1,730,900 $1,652,400 0 Liabilities and Stockholders' Equity Accounts payable Short-term notes payable Accrued liabilities Bonds payable Discount on bonds payable (means debit balance) Deferred income tax liability Total Liabilities Common stock, $10 par Paid-in capital in excess of par Retained earnings Treasury Stock (debit balance) Total Stockholders' Equity Total Liabilities and Stockholders' Equity Additional information includes: $ 46,000 100,000 76,500 250,000 (19,600) 108,000 $ 560,900 $ 840,000 52,000 298,000 (20,000) $1,170,000 $1,730,900 $ 103,000 120,000 48,000 278,000 (20,800) 97,000 $ 625,200 S 790,000 20,000 217,200 0 $1,027,200 $1,652,400 Additional information includes: 1. 2. 3. 5. Net income for the year ended December 31, 2020, was $175,300. During 2020, machinery and land were purchased at a total cost of $115,100. Machinery with a cost of $48,000 and a book value of $4,200 was sold for $3,600. The bonds payable mature at the rate of $28,000 every year. 1 In January 2020, the company issued an additional 1,000 shares of its common stock at $14 per share. In May 2020, the company declared and issued a 5% stock dividend on its outstanding stock; there were 80,000 shares of stock outstanding at the time, and the market value per share after the stock dividend was issued was $17. During the year, cash dividends of $20,000 were paid on the common stock. In November 2020, 1,000 shares of treasury stock were purchased for $20 per share. ABC uses the cost method. 6. 7. 8. 9. 10. During 2020, a prior-period adjustment was made to correct an understatement of depreciation on equipment. The amount of the adjustment was $3,500. Ignore any tax effect/impact. During the year, investment securities were purchased for $50,000. As of December 31, 2020, the securities have a market value of $47,000. The securities are classified as available for sale securities, Depreciation expense for the year totaled $41,300. 11
