Levels Tought:
Elementary,High School,College,University,PHD
Teaching Since: | May 2017 |
Last Sign in: | 262 Weeks Ago |
Questions Answered: | 20103 |
Tutorials Posted: | 20155 |
MBA, PHD
Phoniex
Jul-2007 - Jun-2012
Corportae Manager
ChevronTexaco Corporation
Feb-2009 - Nov-2016
Help me understand?
Question 1
Riverbed Beverage Company reported the following items in the most recent year.
Net income |
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$48,300 |
Dividends paid |
 |
6,320 |
Increase in accounts receivable |
 |
11,860 |
Increase in accounts payable |
 |
7,470 |
Purchase of equipment (capital expenditure) |
 |
8,710 |
Depreciation expense |
 |
4,470 |
Issue of notes payable |
 |
22,850 |
Compute net cash provided by operating activities, the net change in cash during the year. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
RIVERBED BEVERAGE COMPANY |
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$
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$
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$
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Compute free cash flow.
Â
Free Cash Flow |
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$
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Â
Question 2
The major classifications of activities reported in the statement of cash flows are operating, investing, and financing. Classify each of the transactions listed below as:
1. |
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Operating activity-add to net income. |
2. |
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Operating activity-deduct from net income. |
3. |
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Investing activity. |
4. |
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Financing activity. |
5. |
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Reported as significant noncash activity |
The transactions are as follows.
 |  |
Transactions |
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Classifications of Activities |
(a) |
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Issuance of common stock. |
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(b) |
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Purchase of land and building. |
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(c) |
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Redemption of bonds |
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(d) |
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Sale of equipment. |
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(e) |
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Depreciation of machinery. |
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(f) |
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Amortization of patent. |
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(g) |
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Issuance of bonds for plant assets. |
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(h) |
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Payment of cash dividends. |
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(i) |
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Exchange of furniture for office equipment. |
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(j) |
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Purchase of treasury stock. |
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(k) |
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Loss on sale of equipment. |
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(l) |
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Increase in accounts receivable during the year. |
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(m) |
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Decrease in accounts payable during the year. |
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|
Â
Question 3
The comparative balance sheets of Wildhorse Inc. at the beginning and the end of the year 2017 are as follows.
WILDHORSE INC. |
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Dec. 31, 2017 |
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Jan. 1, 2017 |
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Inc./Dec. |
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Assets |
 |  |  |  |  |  |  |
Cash |
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$Â 47,620 |
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$Â 15,620 |
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$32,000 |
 Inc. |
Accounts receivable |
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94,790 |
 |
89,170 |
 |
5,620 |
 Inc. |
Equipment |
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42,790 |
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23,170 |
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19,620 |
 Inc. |
Less: Accumulated Depreciation-Equipment |
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20,790 |
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11,000 |
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9,790 |
 Inc. |
    Total |
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$164,410 |
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$116,960 |
 |  |  |
Liabilities and Stockholders’ Equity |
 |  |  |  |  |  |  |
Accounts payable |
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$Â 23,790 |
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$Â 16,170 |
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7,620 |
 Inc. |
Common stock |
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102,620 |
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81,170 |
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21,450 |
 Inc. |
Retained earnings |
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38,000 |
 |
19,620 |
 |
18,380 |
 Inc. |
    Total |
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$164,410 |
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$116,960 |
 |  |  |
Net income of $47,790Â was reported, and dividends of $29,410Â were paid in 2017. New equipment was purchased and none was sold.
Prepare a statement of cash flows for the year 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
WILDHORSEÂ INC.
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$
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Adjustments to reconcile net income to |
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$
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$
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Â
Question 4
Novak Corporation is preparing its 2017 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2017 statement of cash flows.
Code Letter |
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Effect |
A |
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Added to net income in the operating section |
D |
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Deducted from net income in the operating section |
R-I |
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Cash receipt in investing section |
P-I |
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Cash payment in investing section |
R-F |
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Cash receipt in financing section |
P-F |
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Cash payment in financing section |
N |
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Noncash investing and financing activity |
Â
(a) |
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Purchase of land and building. |
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(b) |
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Decrease in accounts receivable. |
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(c) |
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Issuance of stock. |
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(d) |
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Depreciation expense. |
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(e) |
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Sale of land at book value. |
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(f) |
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Sale of land at a gain. |
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(g) |
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Payment of dividends. |
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(h) |
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Increase in accounts receivable. |
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(i) |
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Purchase of available-for-sale debt investment. |
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(j) |
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Increase in accounts payable. |
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(k) |
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Decrease in accounts payable. |
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(l) |
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Loan from bank by signing note. |
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(m) |
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Purchase of equipment using a note. |
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(n) |
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Increase in inventory. |
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(o) |
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Issuance of bonds. |
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(p) |
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Redemption of bonds payable. |
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(q) |
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Sale of equipment at a loss. |
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(r) |
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Purchase of treasury stock. |
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Â
Question 5
Waterway Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
WATERWAY INC. |
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12/31/17 |
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12/31/16 |
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Cash |
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$6,000 |
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$7,000 |
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Accounts receivable |
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62,600 |
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50,600 |
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Short-term debt investments (available-for-sale) |
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35,200 |
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18,100 |
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Inventory |
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39,600 |
 |  |
59,700 |
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Prepaid rent |
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5,000 |
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4,000 |
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Equipment |
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152,800 |
 |  |
128,900 |
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Accumulated depreciation—equipment |
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(34,900 |
) |
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(24,800 |
) |
Copyrights |
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45,900 |
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49,800 |
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Total assets |
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$312,200 |
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$293,300 |
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Accounts payable |
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$45,900 |
 |  |
$39,900 |
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Income taxes payable |
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4,000 |
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6,000 |
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Salaries and wages payable |
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8,100 |
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3,900 |
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Short-term loans payable |
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8,000 |
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10,000 |
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Long-term loans payable |
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60,500 |
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68,500 |
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Common stock, $10 par |
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100,000 |
 |  |
100,000 |
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Contributed capital, common stock |
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30,000 |
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30,000 |
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Retained earnings |
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55,700 |
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35,000 |
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Total liabilities & stockholders’ equity |
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$312,200 |
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$293,300 |
 |
Â
WATERWAY INC. |
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Sales revenue |
 |  |  |
$337,675 |
Cost of goods sold |
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175,500 |
Gross profit |
 |  |  |
162,175 |
Operating expenses |
 |  |  |
119,500 |
Operating income |
 |  |  |
42,675 |
Interest expense |
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$11,300 |
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Gain on sale of equipment |
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2,000 |
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9,300 |
Income before tax |
 |  |  |
33,375 |
Income tax expense |
 |  |  |
6,675 |
Net income |
 |  |  |
$26,700 |
Additional information:
1. |
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Dividends in the amount of $6,000Â were declared and paid during 2017. |
2. |
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Depreciation expense and amortization expense are included in operating expenses. |
3. |
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No unrealized gains or losses have occurred on the investments during the year. |
4. |
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Equipment that had a cost of $20,000Â and was 70% depreciated was sold during 2017. |
Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
WATERWAYÂ INC.
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$
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$
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$
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Â
Question 6
Pharoah Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
PHAROAH INC. |
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12/31/17 |
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12/31/16 |
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Cash |
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$6,100 |
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$6,900 |
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Accounts receivable |
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61,900 |
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50,500 |
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Short-term debt investments (available-for-sale) |
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34,800 |
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18,200 |
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Inventory |
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39,900 |
 |  |
59,800 |
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Prepaid rent |
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4,900 |
 |  |
4,000 |
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Equipment |
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155,500 |
 |  |
131,200 |
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Accumulated depreciation—equipment |
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(34,800 |
) |
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(25,300 |
) |
Copyrights |
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45,700 |
 |
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50,200 |
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Total assets |
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$314,000 |
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$295,500 |
 |
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 |  |  |  |  |  |
Accounts payable |
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$46,200 |
 |  |
$39,700 |
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Income taxes payable |
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4,000 |
 |  |
6,100 |
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Salaries and wages payable |
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7,900 |
 |  |
4,000 |
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Short-term loans payable |
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7,900 |
 |  |
10,000 |
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Long-term loans payable |
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59,800 |
 |  |
68,600 |
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Common stock, $10 par |
 |
100,000 |
 |  |
100,000 |
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Contributed capital, common stock |
 |
30,000 |
 |  |
30,000 |
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Retained earnings |
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58,200 |
 |
 |
37,100 |
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Total liabilities & stockholders’ equity |
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$314,000 |
 |
 |
$295,500 |
 |
Â
PHAROAH INC. |
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Sales revenue |
 |  |  |
$335,575 |
Cost of goods sold |
 |  |  |
173,200 |
Gross profit |
 |  |  |
162,375 |
Operating expenses |
 |  |  |
119,100 |
Operating income |
 |  |  |
43,275 |
Interest expense |
 |
$11,400 |
 |  |
Gain on sale of equipment |
 |
2,000 |
 |
9,400 |
Income before tax |
 |  |  |
33,875 |
Income tax expense |
 |  |  |
6,775 |
Net income |
 |  |  |
$27,100 |
Additional information:
1. |
 |
Dividends in the amount of $6,000Â were declared and paid during 2017. |
2. |
 |
Depreciation expense and amortization expense are included in operating expenses. |
3. |
 |
No unrealized gains or losses have occurred on the investments during the year. |
4. |
 |
Equipment that had a cost of $20,100Â and was 70% depreciated was sold during 2017. |
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
PHAROAHÂ INC.
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$
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Adjustments to reconcile net income to |
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$
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$
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Â
Â
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