Reference no: EM132578737
Question 1 - The three accounts shown below and on page 626 appear in the general ledger of Cesar Corp. during 2019.
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Equipment
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Date
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Debit
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Credit
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Balance
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Jan.1
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Balance
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|
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160,000
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July 31
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Purchase of equipment
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70,000
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230,000
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Sept. 2
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Cost of equipment constructed
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53,000
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283,000
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Nov. 10
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Cost of equipment sold
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49,000
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234,000
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|
|
|
|
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Accumulated Depreciation- Equipment
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Date
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Debit
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Credit
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Balance
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Jan. 1
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Balance
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|
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71,000
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Nov. 10
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Accumulated depreciation on equipment sold
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30,000
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41,000
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Dec. 31
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Depreciation for year
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28,000
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69,000
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|
|
|
|
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Retained Earnings
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Date
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Debit
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Credit
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Balance
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Jan. 1
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Balance
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|
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105,000
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Aug. 23
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Dividends (cash)
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14,000
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91,000
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Dec. 31
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Net income
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67,000
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158,000
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Instructions - From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on sale of equipment was $5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)
Question 2 - Grania Company's income statement contained the condensed information below.
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GRANIA COMPANY Income Statement For the Year Ended December 31, 2019
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Revenues
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$970,000
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Operating expenses, excluding depreciation
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$624,000
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|
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Depreciation expense
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60,000
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|
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Loss on sale of equipment
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16,000
|
700,000
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Income before income taxes
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270,000
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Income tax expense
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40,000
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Net income
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$230,000
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Grania's balance sheet contained the comparative data at December 31, shown on page 630.
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2007
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2006
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Accounts receivable
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$75,000
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$60,000
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Accounts payable
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41,000
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28,000
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Income taxes payable
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11,000
|
7,000
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Accounts payable pertain to operating expenses.
Instructions - Prepare the operating activities section of the statement of cash flows using the indirect method.
Question 3 - Data for Grania Company are presented in question 2.
Instructions - Prepare the operating activities section of the statement of cash flows using the direct method.