Question No. 1 (6 Marks)

The major classifications of activities reported inthe statement of cash flows are Operating (O), Investing (I), and Financing (F). Classify each of the transactions listedbelow as:

1. Operating activity—add to net income.

2. Operating activity—deduct from net income.

3. Investing activity.

4. Financing activity.

5. Reported as significant non-cash activity in the notes to the financial statements.

The transactions are as follows.

Transactions Activity (O, I, F) ADD or LESS + or –
Issuance of ordinary shares.    
Purchase of land and building,    
Redemption of bonds,    
Sale of equipment    
Depreciation of machinery.    
Issuance of bonds for plant assets,    
Payment of cash dividends,    
Exchange of furniture for office equipment.    
Purchase of treasury shares.    
Loss on sale of equipment.    
Increase in accounts receivables during the year,    
Decrease in accounts payable during the year.    

Question No. 2: (9 Marks)

Abbey INC.
Balance Sheet
Assets Dec. 31, 2010 Jan. 1, 2010 Inc./Dec.
Equipment $39,000 $22,000 $17,000 Inc.
Less: Accumulated depreciation -17,000 $ (11,000) 6,000 Inc.
Accounts receivable 91000 88,000 3,000 Inc.
Cash 45,000 13,000 32,000 Inc.
Total $158,000 $112,000  
Equity and Liabilities      
Share capital—ordinary 100000 $80,000 20,000 Inc.
Retained earnings 38,000 17,000 21 ,OOO Inc.
Accounts payable 20,000 15,000 5,000 Inc.
Total $158,000 $112,000  

Net Income of $34000 was reported and Dividend of $13000 were paid in 2010. New Equipment was purchased and none was sold.

Requirement:

Prepare Statement of Cash Flow for the year 2010.

Question No. 3: (10 Marks)

A Comparative Statement of Financial Position for Vivaldi Corporation is given below;

  Dec-31
Assets 2010 2009
Land $71,000 $110,000
Equipment 270,000 200,000
Accumulated depreciation—equipment -69,000 -42,000
Inventories 180,000 189,000
Accounts receivable 82000 66,000
Cash 63,000 22,000
Total $597,000 $545,000
Equity and Liabilities    
Share capital—ordinary ($1 par) $214,000 $164,000
Retained earnings 199,000 134,000
Bonds payable 150,000 200,000
Accounts payable 34,000 47000
Total $597,000 $545,000

Additional Information

1. Net Income for 2010 was $105000

2. Cash Dividend of $40000 were declared and paid

3. Bonds payable amounting to $50000 were retired.

Requirement:

Prepare Statement of Cash Flow for the year 2010.

Question No. 4: (5 Marks)

Smart Co Sales made on credit. On July 1, 2018 it made sales of $60 000 with the term 3/10, n/30. On July 9, 2018 Smart Co received $30000 payment for July 1 sales. Remaining Payment received by smart Co on 15th July, 2018.

Requirement:

Record the Journal Transaction with discount amount with Gross Method and Net Method

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