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ASHFORD ACC 206 Week 1 Chapter One
                   Problems

PLEASE DOWNLOAD HERE


Chapter One Problems. Please complete the following 5 exercises below in
either Excel or a word document (but must be single document). You must show
your work where appropriate (leaving the calculations within Excel cells is
acceptable). Save the document, and submit it in the appropriate week using the
Assignment Submission button.

Ch 1 Critical Thinking Question 5:

Answer the following questions: Why are noncash transactions, such as the
exchange of common stock for a building, included on a statement of cash flows?
How are these noncash transactions disclosed?

Chapter 1 Exercise 1:

1. Classification of activities Classify each of the following transactions as
arising from an operating (O), investing (I), financing (F), or noncash
investing/financing (N) activity.

a. ________ Received $80,000 from the sale of land.

b. ________ Received $3,200 from cash sales.

c. ________ Paid a $5,000 dividend.

d. ________ Purchased $8,800 of merchandise for cash.

e. ________ Received $100,000 from the issuance of common stock.

f. ________ Paid $1,200 of interest on a note payable.

g. ________ Acquired a new laser printer by paying $650.

h. ________ Acquired a $400,000 building by signing a $400,000 mortgage note.

Chapter 1 Exercise 4:

4. Overview of direct and indirect methods

Evaluate the comments that follow as being True or False. If the comment is
false, briefly explain why.
a. Both the direct and indirect methods will produce the same cash flow from
operating activities.

b. Depreciation expense is added back to net income when the indirect method is
used.

c. One of the advantages of using the direct method rather than the indirect
method is that larger cash flows from financing activities will be reported.

d. The cash paid to suppliers is normally disclosed on the statement of cash flows
when the indirect method of statement preparation is employed.

e. The dollar change in the Merchandise Inventory account appears on the
statement of cash flows only when the direct method of statement preparation is
used.

Chapter 1 Exercise 6:

Dec. 31, 19X4

Dec. 31, 19X3

Land

$94,000

$94,000

Equipment

652,000

527,000

Less: Accumulated depreciation

-316,000

-341,000

a. Determine the cost and accumulated depreciation of the equipment sold during
19X4.

b. Determine the selling price of the equipment sold.

c. Show how the sale of equipment would appear on a statement of cash flows
prepared by using the indirect method.
Chapter 1 Problem 3:

3. Cash flow information: Direct and indirect methods The comparative year-
end balance sheets of Sign Graphics, Inc., revealed the following activity in the
company's current accounts:

19X5

19X4

Increase / Decrease)

Current assets

Cash

$55,400

$35,200

$20,200

Accounts receivable (net)

83,800

88,000

-4,200

Inventory

243,400

233,800

9,600

Prepaid expenses

25,400

24,200

1,200

Current liabilities

Accounts payable
$123,600

$140,600

($17,000)

Taxes payable

43,600

49,200

-5,600

Interest payable

9,000

6,400

2,600

Accrued liabilities

38,800

60,400

-21,600

Note payable

44,000

—

44,000

Other data:

1. Long-term investments were purchased for cash at a cost of $74,600.

2. Cash proceeds from the sale of land totaled $76,200.

3. Store equipment of $44,000 was purchased by signing a short-term note
payable. Also, a $150,000 telecommunications system was acquired by issuing
3,000 shares of preferred stock.

4. A long-term note of $49,400 was repaid.
5. Twenty thousand shares of common stock were issued at $5.19 per share.

6. The company paid cash dividends amounting to $128,600.

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Ashford acc 206 week 1 chapter one problems

  • 1. ASHFORD ACC 206 Week 1 Chapter One Problems PLEASE DOWNLOAD HERE Chapter One Problems. Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button. Ch 1 Critical Thinking Question 5: Answer the following questions: Why are noncash transactions, such as the exchange of common stock for a building, included on a statement of cash flows? How are these noncash transactions disclosed? Chapter 1 Exercise 1: 1. Classification of activities Classify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity. a. ________ Received $80,000 from the sale of land. b. ________ Received $3,200 from cash sales. c. ________ Paid a $5,000 dividend. d. ________ Purchased $8,800 of merchandise for cash. e. ________ Received $100,000 from the issuance of common stock. f. ________ Paid $1,200 of interest on a note payable. g. ________ Acquired a new laser printer by paying $650. h. ________ Acquired a $400,000 building by signing a $400,000 mortgage note. Chapter 1 Exercise 4: 4. Overview of direct and indirect methods Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why.
  • 2. a. Both the direct and indirect methods will produce the same cash flow from operating activities. b. Depreciation expense is added back to net income when the indirect method is used. c. One of the advantages of using the direct method rather than the indirect method is that larger cash flows from financing activities will be reported. d. The cash paid to suppliers is normally disclosed on the statement of cash flows when the indirect method of statement preparation is employed. e. The dollar change in the Merchandise Inventory account appears on the statement of cash flows only when the direct method of statement preparation is used. Chapter 1 Exercise 6: Dec. 31, 19X4 Dec. 31, 19X3 Land $94,000 $94,000 Equipment 652,000 527,000 Less: Accumulated depreciation -316,000 -341,000 a. Determine the cost and accumulated depreciation of the equipment sold during 19X4. b. Determine the selling price of the equipment sold. c. Show how the sale of equipment would appear on a statement of cash flows prepared by using the indirect method.
  • 3. Chapter 1 Problem 3: 3. Cash flow information: Direct and indirect methods The comparative year- end balance sheets of Sign Graphics, Inc., revealed the following activity in the company's current accounts: 19X5 19X4 Increase / Decrease) Current assets Cash $55,400 $35,200 $20,200 Accounts receivable (net) 83,800 88,000 -4,200 Inventory 243,400 233,800 9,600 Prepaid expenses 25,400 24,200 1,200 Current liabilities Accounts payable
  • 4. $123,600 $140,600 ($17,000) Taxes payable 43,600 49,200 -5,600 Interest payable 9,000 6,400 2,600 Accrued liabilities 38,800 60,400 -21,600 Note payable 44,000 — 44,000 Other data: 1. Long-term investments were purchased for cash at a cost of $74,600. 2. Cash proceeds from the sale of land totaled $76,200. 3. Store equipment of $44,000 was purchased by signing a short-term note payable. Also, a $150,000 telecommunications system was acquired by issuing 3,000 shares of preferred stock. 4. A long-term note of $49,400 was repaid.
  • 5. 5. Twenty thousand shares of common stock were issued at $5.19 per share. 6. The company paid cash dividends amounting to $128,600.