CHAPTER 18. BE18-1 b) Investing activity - $ outflow c) Investing activity - $ inflow d) Financing activity - $ outflow

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1 CHAPTER 18 BE18-1 b) Investing activity - $ outflow c) Investing activity - $ inflow d) Financing activity - $ outflow BE18-2 a) Investing b) Investing d) Financing e) Financing BE18-4 Dressmart.com Inc. Net Income $ : Amortization expense $ Decrease in accounts receivable Decrease in accounts payable ( ) Net $ BE18-5 Sterling Engineering Co. Net Income $ Amortization expense $ Loss on sale of capital assets Net $ BE18-6 Harden Company Net Income $ : Decrease in accounts receivable $ Increase in prepaid expenses (12 000) Increase in inventories (30 000) Net $

2 E18-3 Pesci Company for the year ended July 31, 2003 Net Income $ Amortization expense $ Loss on sale of equipment Increase in accounts receivable (15 000) Increase in accounts payable Decrease in prepaid expenses Net $ E18-4 Invest.com Inc. for the year ended December 31, 2002 Net Income $ Amortization expense $ Increase in accounts receivable (21 000) Decrease in inventory Decrease in prepaid expenses Increase in accrued expenses payable Decrease in accounts payable (7 000) Net $

3 E18-10a Véfour Company Net Income $ Gain on sale of land $(5 000) Increase in accounts receivable (9 000) Decrease in inventory Amortization expense Decrease in accounts payable (13 000) Net Sale of land $ Purchase of equipment (60 000) Net cash used by investing activities (30 000) Payment of bonds $(50 000) Issue of common shares Payment of dividends (60 000) Net cash used by financing activities (60 000) Net Increase in Cash Cash, January 1, Cash, December 31, 2003 $ P18-1A a) Operating no effect (noncash) b) Investing cash received is inflow; Operating gain has no effect c) Investing cash received is inflow; Operating loss has not effect d) Investing outflow for 10% paid; Financing note as noncash activity e) Financing outflow f) Financing inflow g) Investing outflow h) Financing outflow i) Financing no effect; note as noncash activity j) Operating no effect (noncash) k) Operating no effect (noncash) l) Operating outflow

4 P18-2A Snair Limited Net Income $ Increase in accounts receivable $( ) Increase in inventory ( ) Decrease in prepaid advertising Increase in accounts payable Decrease in salaries payable (10 000) Increase in interest payable Amortization expense ( ) Net cash used by operating activities $(21 000) P18-3A Cousin Tommy s Toy Company Net Income $ Decrease in accounts receivable $ Increase in inventory (9 450) Decrease in prepaid expenses Decrease in accounts payable (1 270) Amortization expense Loss on sale of equipment Net Sale of land $ Purchase of equipment (95 000) Sale of equipment Net cash used by investing activities (56 900) Payment of dividends $(27 000) Net cash used by financing activities (27 000) Net Decrease in Cash (6 000) Cash, January 1, Cash, December 31, 2003 $ Note: Noncash Investing & Financing Activities Redemption of bonds with common shares $ Ending Retained Earnings = Beginning Retained Earnings + Net Income Dividends $ = Net Income Net Income = $38 000

5 P18-4A a) Investing activity inflows/outflows Land - $ outflow Equipment - $ outflow Proceeds from sale of equipment - $2 000 inflow Sold equipment costing: Beginning equipment $ Plus purchase Less sold equipment? Ending Equipment $ Sold equipment = $ = $ Amortization of sold equipment: Building amortization $ ($ ) Equipment amortization ( ) Total amortixation Actual amortization Amortization written off NBV = Cost of equipment sold - accumulated amortization written off = $ = $4 000 Loss on sale was $2 000 Therefore, cash received from sale is $2 000 (NBV - loss) b) all are Cash Flows from Investing activities P18-5A a) Oak Island Company for the year ended November 30, 2003 Net Income $ Decrease in accounts receivable $ Increase in prepaid expenses ( ) Decrease in accounts payable ( ) Decrease in accrued expenses payable ( ) Amortization Expense Decrease in inventory Net $

6 P18-7A E-Perform.com Ltd. Net Income $ Increase in accounts receivable $(33 800) Increase in inventory (19 250) Increase in accounts payable Decrease in accrued expenses payable (6 730) Gain on sale of capital assets (8 750) Amortization expense (9 410) Net Sale of investment $ Purchase of capital assets (92 000) Sale of capital assets Net cash used by investing activities (73 950) Issue of bonds $ Issue of common shares Payment of dividends (83 400) Net cash used by financing activities (3 400) Net Increase in Cash Cash, January 1, Cash, December 31, 2003 $92 700

7 P18-8A St. Alban's Company Ltd. Net Income $ Increase in accounts receivable $(6 000) Increase in inventory (3 000) Decrease in accounts payable (7 000) Decrease in income tax payable (5 000) Amortization expense (10 000) Net Sale of equipment $ Purchase of equipment (7 000) Net cash provided by investing activities Issue of bonds $ Payment of dividends (9 000) Net cash provided by financing activities Net Increase in Cash Cash, January 1, 2003 (including investments) Cash, December 31, 2003 (including investments) $24 000

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