Chapter 21 Homework: ACCT3202 Spring 2016

(1). For each of the three independent situations below, prepare journal entries that summarize the selling and collection activities for the reporting period in order to determine the amount of cash received from customers and to explain the change in each account shown. All dollars are in millions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

In preparation for developing its statement of cash flows for the year ended December 31, 2016, Rapid Pac, Inc., collected the following information:

   


($ in millions)  Fair value of shares issued in a stock dividend$48.0
  Payment for the early extinguishment of


      long-term bonds (book value: $76.0 million)
81.0
  Proceeds from the sale of treasury stock (cost: $12.0 million)
17.0
  Gain on sale of land
2.1
  Proceeds from sale of land
6.3
  Purchase of Microsoft common stock
132.0
  Declaration of cash dividends
46.0
  Distribution of cash dividends declared in 2015
42.0
 

Required:1.

In Rapid Pac’s statement of cash flows, what were net cash inflows (or outflows) from investing activities for 2016? (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

2. In Rapid Pac’s statement of cash flows, what were net cash inflows (or outflows) from financing activities for 2016? (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

(3)

Comparative balance sheets for 2016 and 2015 and a statement of income for 2016 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

  
 

METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2016 and 2015
($ in 000s)

2016
2015  Assets



  Cash$460  $190    Accounts receivable
470  
250    Inventory
620  
380    Land
625  
575    Building
800  
800       Less: Accumulated depreciation
(200) 
(170)   Equipment
2,800  
2,510       Less: Accumulated depreciation
(451) 
(420)   Patent
1,600  
1,800  





$6,724  $5,915  




  Liabilities



  Accounts payable$720  $470    Accrued expenses payable
210  
165    Lease liability—land
150  
0    Shareholders' Equity



  Common stock
2,650  
2,500    Paid-in capital—excess of par
500  
470    Retained earnings
2,494  
2,310  





$6,724  $5,915  




 


 

METAGROBOLIZE INDUSTRIES
Income Statement
For the Year Ended December 31, 2016
($ in 000s)  Revenues



     Sales revenue$2,807  

     Gain on sale of land
60  $2,867  




  Expenses



     Cost of goods sold$920  

     Depreciation expense—building
30  

     Depreciation expense—equipment
328  

     Loss on sale of equipment
10  

     Amortization of patent
200  

     Operating expenses
600  
2,088  




  Net income

$779  




 


 

Additional information from the accounting records:a.During 2016, equipment with a cost of $330,000 (90% depreciated) was sold.b.

The statement of shareholders' equity reveals reductions of $180,000 and $415,000 for stock dividends and cash dividends, respectively.

Required:

Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2016. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

Portions of the financial statements for Parnell Company are provided below.

 

PARNELL COMPANY
Income Statement
For the Year Ended December 31, 2016
($ in 000s)  Revenues and gains:




       Sales$720



       Gain on sale of buildings11
$731
  Expenses and loss:




       Cost of goods sold$260



       Salaries112



       Insurance32



       Depreciation115



       Interest expense42



       Loss on sale of machinery10

571






  Income before tax


160
       Income tax expense


80






  Net income

$80






 

 

        PARNELL COMPANY
       Selected Accounts from Comparative Balance Sheets
       December 31, 2016 and 2015
       ($ in 000s)
  Year






  2016  2015  Change  Cash$126   $108   $18
  Accounts receivable316   224   92
  Inventory329   417   (88)    Prepaid insurance69   80   (11)    Accounts payable202   125   77
  Salaries payable118   101   17
  Deferred income tax liability76   60   16
  Bond discount180   208   (28)  

Required:1.

Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

Comparative balance sheets for 2016 and 2015 and a statement of income for 2016 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

 

METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2016 and 2015
($ in 000s)

2016
2015  Assets



  Cash$530  $265    Accounts receivable
610  
320    Inventory
760  
415    Land
600  
525    Building
700  
700       Less: Accumulated depreciation
(250) 
(220)   Equipment
3,150  
2,930       Less: Accumulated depreciation
(418) 
(380)   Patent
1,300  
1,600  





$6,982  $6,155  




  Liabilities



  Accounts payable$860  $710    Accrued expenses payable
280  
235    Lease liability—land
150  
0    Shareholders' Equity



  Common stock
3,650  
3,500    Paid-in capital—excess of par
550  
485    Retained earnings
1,492  
1,225  





$6,982  $6,155  




 


 

METAGROBOLIZE INDUSTRIES
Income Statement
For the Year Ended December 31, 2016
($ in 000s)  Revenues



     Sales revenue$3,101  

     Gain on sale of land
95  $3,196  




  Expenses



     Cost of goods sold$1,060  

     Depreciation expense—building
30  

     Depreciation expense—equipment
524  

     Loss on sale of equipment
20  

     Amortization of patent
300  

     Operating expenses$400  
2,334  




  Net income

$862  




 


 

Additional information from the accounting records:a.During 2016, equipment with a cost of $540,000 (90% depreciated) was sold.b.

The statement of shareholders’ equity reveals reductions of $215,000 and $380,000 for stock dividends and cash dividends, respectively.


 

Required:

Prepare the statement of cash flows for Metagrobolize Industries using the indirect method. (Enter your answers in thousands. (i.e., 10,000 should be entered as 10).) Amounts to be deducted should be indicated with a minus sign.)

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