Accounting Paper 3
Ex. 118
A comparative balance sheet for Joseph Corporation is presented below:
JOSEPH CORPORATION
Comparative Balance Sheet 2002 2001
Assets
Cash $ 51,000 $ 31,000
Accounts receivable (net) 75,000 60,000
Prepaid insurance 22,000 17,000
Land 22,000 40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000) Total Assets $220,000 $195,000
Liabilities and Stockholders ' Equity
Accounts payable $ 13,000 $ 6,000
Bonds payable 30,000 19,000
Common stock 140,000 115,000
Retained earnings 37,000 55,000 Total liabilities and stockholders ' equity $220,000 $195,000
Additional information:
1. Net loss for 2002 is $14,000.
2. Cash dividends of $4,000 were declared and paid in 2002.
3. Land was sold for cash at a loss of $5,000. This was the only land transaction during the year.
4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.
5. $14,000 of bonds were retired during the year at carrying (book) value.
6. Equipment was acquired for common stock. The fair market value of the stock at the time of the exchange was $25,000.
Instructions
Prepare a statement of cash flows for the year ended 2002, using the indirect method.
Solution 118 (22-27 min.)
JOSEPH CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2002
———————————————————————————————————————————
Cash flows from operating activities Net loss $(14,000) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation (a) $17,000 Loss on sale of land (b) 5,000 Increase in accounts receivable (15,000) Increase in prepaid insurance (5,000) Increase in accounts payable 7,000 9,000 Net cash used by operating activities (5,000)
Cash flows from investing activities Proceeds from the sale of land (b) 13,000 Proceeds from the sale of equipment 5,000 Net cash provided by investing
A comparative balance sheet for Joseph Corporation is presented below:
JOSEPH CORPORATION
Comparative Balance Sheet 2002 2001
Assets
Cash $ 51,000 $ 31,000
Accounts receivable (net) 75,000 60,000
Prepaid insurance 22,000 17,000
Land 22,000 40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000) Total Assets $220,000 $195,000
Liabilities and Stockholders ' Equity
Accounts payable $ 13,000 $ 6,000
Bonds payable 30,000 19,000
Common stock 140,000 115,000
Retained earnings 37,000 55,000 Total liabilities and stockholders ' equity $220,000 $195,000
Additional information:
1. Net loss for 2002 is $14,000.
2. Cash dividends of $4,000 were declared and paid in 2002.
3. Land was sold for cash at a loss of $5,000. This was the only land transaction during the year.
4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.
5. $14,000 of bonds were retired during the year at carrying (book) value.
6. Equipment was acquired for common stock. The fair market value of the stock at the time of the exchange was $25,000.
Instructions
Prepare a statement of cash flows for the year ended 2002, using the indirect method.
Solution 118 (22-27 min.)
JOSEPH CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2002
———————————————————————————————————————————
Cash flows from operating activities Net loss $(14,000) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation (a) $17,000 Loss on sale of land (b) 5,000 Increase in accounts receivable (15,000) Increase in prepaid insurance (5,000) Increase in accounts payable 7,000 9,000 Net cash used by operating activities (5,000)
Cash flows from investing activities Proceeds from the sale of land (b) 13,000 Proceeds from the sale of equipment 5,000 Net cash provided by investing