Company ABC is preparing its 2021 financial statements. At the end of 2021, the company purchased a building for $500,000 making a down payment of $200,000 cash and signing a $300,000 mortgage note. The president of Company ABC, Jackie Brown understand that debt transactions are considered a financing activity from a business perspective and also, that purchases of long-term assets are investing activities. Consequently, Jackie is pondering how to report this transaction on the statement of cash flows and has asked you as her accountant to look into the issue. Using the related GAAP, prepare a memo to the president that summarizes how to report this transaction on the State of Cash Flows

Company ABC is preparing its 2021 financial statements. At the end of 2021, the company purchased a building for $500,000 making a down payment of $200,000 cash and signing a $300,000 mortgage note. The president of Company ABC, Jackie Brown understand that debt transactions are considered a financing activity from a business perspective and also, that purchases of long-term assets are investing activities. Consequently, Jackie is pondering how to report this transaction on the statement of cash flows and has asked you as her accountant to look into the issue. Using the related GAAP, prepare a memo to the president that summarizes how to report this transaction on the State of Cash Flows

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 11C

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Company ABC is preparing its 2021 financial statements. At the end of 2021, the company purchased a building for $500,000 making a down payment of $200,000 cash and signing a $300,000 mortgage note. The president of Company ABC, Jackie Brown understand that debt transactions are considered a financing activity from a business perspective and also, that purchases of long-term assets are investing activities. Summarize how this transaction is to be reported on the State of Cash Flows using the related GAAP. Required: - What are the issues of the given case? List them. - Show how the transaction is to be recorded on the statement of cash flows (Journal entries). - Give an example of the disclousure required for the particular items . - Give your reasoning/support based on guidance from the codification.
Dolente Ltd is a small company which designs, manufactures and sells innovative electronic instruments. The directors of the company have discussed the financial statements prepared for the year ended 31st March 2020 and have made the following remarks.“We are surprised to see that we have a loss for the year as our bank balance seems to be healthy and has increased from the 2019 figure”. task: Using the information provided by the cash flow statement, comment on the remarks of the directors on the results for the year
Boombayah has recorded the following transactions on its book for the year 2020. How much total Cash Inflow from financing activities that Boombayah should reflected on its Statement of Cash Flow:i. Payment for interest of the issued bonds on April 1, 2020, 90.ii. Cash dividend received on the short-term investment, 500iii. Depreciation on plant that manufactures goods for sale, 600.iv. Payment of income tax on gain on sale of treasury bills, 200.v. Issued 50 ordinary shares for 5,000.vi. Received cash from interest on the acquired treasury bonds of Sheshe, 240.vii. Payment for marketable securities, 1200.
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BT21 Inc. has recorded the following transactions on its book for the year 2021. How much total Cash Inflow from financing activities that BT21 should reflected on its Statement of Cash Flow:i. Payment for interest of the issued bonds on April 1, 2021, 900.ii. Cash dividend received on the short-term investment, 5,000iii. Depreciation on plant that manufactures goods for sale, 6,000.iv. Payment of income tax on gain on sale of treasury bills, 2,000.v. Issued 500 ordinary shares for 50,000.vi. Received cash from interest on the acquired treasury bonds of BigHit Corp, 2,400.vii. Payment for marketable securities, 12,000.
BTS Inc. has recorded the following transactions on its book for the year 2021. How much total Cash Inflow from financing activities that BTS should reflected on its Statement of Cash Flow:i. Payment for interest of the issued bonds on April 1, 2021, 900.ii. Cash dividend received on the short-term investment, 5,000iii. Depreciation on plant that manufactures goods for sale, 6,000.iv. Payment of income tax on gain on sale of treasury bills, 2,000.v. Issued 500 ordinary shares for 50,000.vi. Received cash from interest on the acquired treasury bonds of BigHit Corp, 2,400.vii. Payment for marketable securities, 12,000
Dolente Ltd is a small company which designs, manufactures and sells innovative electronic instruments. The directors of the company have discussed the financial statements prepared for the year ended 31st March 2020 and have made the following remarks.“We are surprised to see that we have a loss for the year as our bank balance seems to be healthy and has increased from the 2019 figure”. Required: Using the information provided by the cash flow statement, comment on the remarks of the directors on the results for the year (120-170 words at least).
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The financial year for Gamma Limited ends on 30 June 2019. Management has asked you what effect each of the following June transactions will have on net profit before tax, cash flow from operations, cash flow from investing and cash flow from financing for the year ended 30 June 2019: 1 Sent invoices for $40 000 to customers during June for work carried out in June; $19 000 of this had been collected by year-end. 2 Borrowed $300 000 from the bank on 10 June, with principal and interest repayable in six months. Accrued interest at 30 June is $2500. 3 Paid salaries for the month of $80 000, with $5000 in wages owing at year-end. 4 Received $30 000 deposit on a job that will be carried out in July 2019. 5 Paid accounts payable of $35 000 which was outstanding at 31 May 2019. 6 Sold old equipment for $20 000. The equipment originally cost $300 000 with accumulated depreciation at the time of sale of $250 000. 7 Purchased new equipment on 20 June 2019 for $220 000 cash. Depreciation on this…
O’Malley Corporation was incorporated and began business on January 1, 2017. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for the year 2020. The accountant for O’Malley Corporation provides you with the following income statement which O’Malley plans to submit to the bank. O’Malley CorporationIncome Statement Sales revenue $850,000 Dividends 32,300 Gain on recovery of insurance proceeds from earthquake loss 38,500 920,800 Less: Selling expenses $101,100 Cost of goods sold 510,000 Advertising expense 13,700 Loss on obsolescence of inventories 34,000 Loss on discontinued operations 48,600 Administrative expense 73,400 780,800 Income before income tax 140,000 Income tax 56,000 Net income $ 84,000 Instructions Indicate the deficiencies in the…
As part of your analysis, you are required to investigate Insignia Corporation Limited’s cash flows. Required: Using the financial statement provided: Calculate the following for 2020: Cash Flow from Assets Cash Flow to Creditors Cash Flow to Stockholders
1. Study the following items related to transactions during the year to September 30,2020 for Thompson’s Tours’ Inc. All transactions are reported on the financialstatements in $XCD. I. A bank overdraft of $200,000 in a chequing account at St Kitts National Bank. II. A saving account with a balance of $400,000 at Open Campus Bank andchequing account with an overdraft of $100,000 at the same bank repayable ondemand. III. The Operation Manager was given a salary advance of $2,000 on August 24, 2020 and this amount was deducted from his October salary. IV. CAD$3,045 on hand from tips up to March 31, 2020, its pre-COVID operationswhen the exchange rate was CAD$1 = $2.01 XCD. On September 30, 2020, theexchange rate was CAD$1 = $1.95 XCDV. Special Edition Independence postage stamps on hand valued at $200.VI. Cash holdings of US$100,000, the exchange rate on September 30, 2020 is$2.70.VII. Petty cash on hand valued at $1,500.VIII. A cheque in the amount of $5,000 and dated October 23, 2020…