Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have completed the field work in connection with your audit of Alexander Corporation for the year ended December 31, 2017. The balance sheet accounts

You have completed the field work in connection with your audit of Alexander Corporation for the year ended December 31, 2017. The balance sheet accounts at the beginning and end of the year are shown below.

Dec. 31, 2017

Dec. 31, 2016

Increase or (Decrease)

Cash

$277,900

$298,000

($20,100

)

Accounts receivable

469,424

353,000

116,424

Inventory

741,700

610,000

131,700

Prepaid expenses

12,000

8,000

4,000

Investment in subsidiary

110,500

0

110,500

Cash surrender value of life insurance

2,304

1,800

504

Machinery

207,000

190,000

17,000

Buildings

535,200

407,900

127,300

Land

52,500

52,500

0

Patents

69,000

64,000

5,000

Copyrights

40,000

50,000

(10,000

)

Bond discount and issue cost

4,502

0

4,502

$2,522,030

$2,035,200

$486,830

Income taxes payable

$90,250

$79,600

$10,650

Accounts payable

299,280

280,000

19,280

Dividends payable

70,000

0

70,000

Bonds payable8%

125,000

0

125,000

Bonds payable12%

0

100,000

(100,000

)

Allowance for doubtful accounts

35,300

40,000

(4,700

)

Accumulated depreciationbuildings

424,000

400,000

24,000

Accumulated depreciationmachinery

173,000

130,000

43,000

Premium on bonds payable

0

2,400

(2,400

)

Common stockno par

1,176,200

1,453,200

(277,000

)

Paid-in capital in excess of parcommon stock

109,000

0

109,000

Retained earningsunappropriated

20,000

(450,000

)

470,000

$2,522,030

$2,035,200

$486,830

STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2017

January 1, 2017 Balance (deficit)

$(450,000

)

March 31, 2017 Net income for first quarter of 2017

25,000

April 1, 2017 Transfer from paid-in capital

425,000

Balance

0

December 31, 2017 Net income for last three quarters of 2017

90,000

Dividend declaredpayable January 21, 2018

(70,000

)

Balance

$20,000

Your working papers from the audit contain the following information:

1. On April 1, 2017, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock.
2. On November 1, 2017, 29,600 shares of no-par stock were sold for $257,000. The board of directors voted to regard $5 per share as stated capital.
3. A patent was purchased for $15,000.
4. During the year, machinery that had a cost basis of $16,400 and on which there was accumulated depreciation of $5,200 was sold for $9,000. No other plant assets were sold during the year.
5. The 12%, 20-year bonds were dated and issued on January 2, 2005. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2017.
6. The 8%, 40-year bonds were dated January 1, 2017, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $839.
7. Alexander Corporation acquired 70% control in Crimson Company on January 2, 2017, for $100,000. The income statement of Crimson Company for 2017 shows a net income of $15,000.
8. Major repairs to buildings of $7,200 were charged to Accumulated DepreciationBuildings.
9. Interest paid in 2017 was $10,500 and income taxes paid were $34,000.

From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest.

I need help with computing the "Supplemental disclosures of cash flow information" part I have to do.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting Text Problems And Cases

Authors: M Y Khan, P K Jain

6th Edition

125902668X, 978-1259026683

More Books

Students also viewed these Accounting questions

Question

=+1. How will you measure awareness objectives?

Answered: 1 week ago

Question

=+2. How will you measure acceptance objectives?

Answered: 1 week ago

Question

What distinguishes craft and industrial unions from each other?

Answered: 1 week ago