The following transactions occurred during December.

Dec. 2 Paulson purchased equipment for $16,000, plus sales taxes of $800 (all paid in cash).

2 Paulson sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2012, was $1,800;

2012 depreciation prior to the sale of equipment was $450.

15 Paulson sold for $5,000 on account inventory that cost $3,500.

23 Salaries and wages of $6,600 were paid.

Adjustment data:

1. Paulson estimates that uncollectible accounts receivable at year-end are $4,000.

2. The note receivable is a one-year, 8% note dated April 1, 2012. No interest has been recorded.

3. The balance in prepaid insurance represents payment of a $3,600, 6-month premium on September 1, 2012.

4. The building is being depreciated using the straight-line method over 30 years. The salvage value is $30,000.

5. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.

6. The equipment purchased on December 2, 2012, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,800.

7. The patent was acquired on January 1, 2012, and has a useful life of 9 years from that date.

8. Unpaid salaries at December 31, 2012, total $2,200.

9. Both the short-term and long-term notes payable are dated January 1, 2012, and carry a 10% interest rate. All interest is payable in the next 12 months.

10. Income tax expense was $15,000. It was unpaid at December 31.

Required:

a) Prepare Cash flow statement (12 points)

b) Journalize the transactions using (8 points)

Please explain all steps detally. I want to learn solving this type of exercises. How did you find the answer and with the help of which rule did you solve this exercise?

Paulson Corporation's unadjusted trial balance at December 1, 2012, is presented 1. Credit Debit $ 22,000 36,800 10,000 -0- 36,200 3,600 20,000 150,000 60,000 9,000 $ Cash Accounts Receivable Notes Receivable Interest Receivable Inventory Prepaid Insurance Land Buildings Equipment Patent Allowance for Doubtful Accounts Accumulated Depreciation-Buildings Accumulated Depreciation Equipment Accounts Payable Salaries and Wages Payable Notes Payable (due April 30, 2013) Interest Payable Notes Payable (due in 2018) Common Stock Retained Earnings Dividends Sales Revenue Interest Revenue Gain on Disposal of Plant Assets Bad Debts Expense Cost of Goods Sold Depreciation Expense Insurance Expense Interest Expense Other Operating Expenses Amortization Expense Salaries and Wages Expense Total 500 50,000 24,000 27,300 -0- 11,000 -0 35,000 50,000 63,600 12,000 900,000 -0- -0 630,000 -0 -0- -0- 61,800 -0- 110,000 $1,161,400 $1,161,400