CHAPTER 18 BE18-1 b) Investing activity - $150 000 outflow c) Investing activity - $30 000 inflow d) Financing activity - $50 000 outflow BE18-2 a) Investing b) Investing d) Financing e) Financing BE18-4 Dressmart.com Inc. Net Income $2 500 000 : Amortization expense $ 280 000 Decrease in accounts receivable 350 000 Decrease in accounts payable (310 000) 320 000 Net $2 820 000 BE18-5 Sterling Engineering Co. Net Income $250 000 Amortization expense $60 000 Loss on sale of capital assets 9 000 69 000 Net $319 000 BE18-6 Harden Company Net Income $220 000 : Decrease in accounts receivable $ 75 000 Increase in prepaid expenses (12 000) Increase in inventories (30 000) 33 000 Net $253 000
E18-3 Pesci Company for the year ended July 31, 2003 Net Income $195 000 Amortization expense $ 45 000 Loss on sale of equipment 5 000 Increase in accounts receivable (15 000) Increase in accounts payable 8 000 Decrease in prepaid expenses 4 000 47 000 Net $242 000 E18-4 Invest.com Inc. for the year ended December 31, 2002 Net Income $163 000 Amortization expense $ 30 000 Increase in accounts receivable (21 000) Decrease in inventory 15 000 Decrease in prepaid expenses 5 000 Increase in accrued expenses payable 10 000 Decrease in accounts payable (7 000) 32 000 Net $195 000
E18-10a Véfour Company Net Income $125 000 Gain on sale of land $(5 000) Increase in accounts receivable (9 000) Decrease in inventory 9 000 Amortization expense 24 000 Decrease in accounts payable (13 000) 6 000 Net 131 000 Sale of land $ 30 000 Purchase of equipment (60 000) Net cash used by investing activities (30 000) Payment of bonds $(50 000) Issue of common shares 50 000 Payment of dividends (60 000) Net cash used by financing activities (60 000) Net Increase in Cash 41 000 Cash, January 1, 2003 22 000 Cash, December 31, 2003 $ 63 000 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
P18-2A Snair Limited Net Income $ 200 000 Increase in accounts receivable $(150 000) Increase in inventory (170 000) Decrease in prepaid advertising 7 000 Increase in accounts payable 26 000 Decrease in salaries payable (10 000) Increase in interest payable 6 000 Amortization expense 70 000 (221 000) Net cash used by operating activities $(21 000) P18-3A Cousin Tommy s Toy Company Net Income $38 000 Decrease in accounts receivable $ 2 500 Increase in inventory (9 450) Decrease in prepaid expenses 4 220 Decrease in accounts payable (1 270) Amortization expense 42 000 Loss on sale of equipment 1 900 39 900 Net 77 900 Sale of land $ 30 000 Purchase of equipment (95 000) Sale of equipment 8 100 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, 2003 45 000 Cash, December 31, 2003 $ 39 000 Note: Noncash Investing & Financing Activities Redemption of bonds with common shares $50 000 Ending Retained Earnings = Beginning Retained Earnings + Net Income Dividends $191 000 = 180 000 + Net Income 27 000 Net Income = $38 000
P18-4A a) Investing activity inflows/outflows Land - $30 000 outflow Equipment - $80 000 outflow Proceeds from sale of equipment - $2 000 inflow Sold equipment costing: Beginning equipment $240 000 Plus purchase 80 000 Less sold equipment? Ending Equipment $300 000 Sold equipment = $240 000 + 80 000-300 000 = $20 000 Amortization of sold equipment: Building amortization $37 500 ($337 500-300 000) Equipment amortization 48 000 (144 000-96 000) Total amortixation 85 500 Actual amortization 101 500 Amortization written off 16 000 NBV = Cost of equipment sold - accumulated amortization written off = $20 000-16 000 = $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 $1 050 000 Decrease in accounts receivable $280 000 Increase in prepaid expenses (150 000) Decrease in accounts payable (200 000) Decrease in accrued expenses payable (100 000) Amortization Expense 70 000 Decrease in inventory 400 000 300 000 Net $1 350 000
P18-7A E-Perform.com Ltd. Net Income $132 210 Increase in accounts receivable $(33 800) Increase in inventory (19 250) Increase in accounts payable 9 420 Decrease in accrued expenses payable (6 730) Gain on sale of capital assets (8 750) Amortization expense 49 700 (9 410) Net 122 800 Sale of investment $ 2 500 Purchase of capital assets (92 000) Sale of capital assets 15 550 Net cash used by investing activities (73 950) Issue of bonds $30 000 Issue of common shares 50 000 Payment of dividends (83 400) Net cash used by financing activities (3 400) Net Increase in Cash 45 450 Cash, January 1, 2003 47 250 Cash, December 31, 2003 $92 700
P18-8A St. Alban's Company Ltd. Net Income $17 000 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 11 000 (10 000) Net 7 000 Sale of equipment $10 000 Purchase of equipment (7 000) Net cash provided by investing activities 3 000 Issue of bonds $10 000 Payment of dividends (9 000) Net cash provided by financing activities 1 000 Net Increase in Cash 11 000 Cash, January 1, 2003 (including investments) 13 000 Cash, December 31, 2003 (including investments) $24 000