Question No. 1 (6 Marks)
The major classifications of activities reported inthe statement of cash flows are Operating (O), Investing (I), and Financing (F). Classify each of the transactions listedbelow as:
1. Operating activity—add to net income.
2. Operating activity—deduct from net income.
3. Investing activity.
4. Financing activity.
5. Reported as significant non-cash activity in the notes to the financial statements.
The transactions are as follows.
| Transactions | Activity (O, I, F) | ADD or LESS + or – |
| Issuance of ordinary shares. | ||
| Purchase of land and building, | ||
| Redemption of bonds, | ||
| Sale of equipment | ||
| Depreciation of machinery. | ||
| Issuance of bonds for plant assets, | ||
| Payment of cash dividends, | ||
| Exchange of furniture for office equipment. | ||
| Purchase of treasury shares. | ||
| Loss on sale of equipment. | ||
| Increase in accounts receivables during the year, | ||
| Decrease in accounts payable during the year. |
Question No. 2: (9 Marks)
| Abbey INC. | |||
| Balance Sheet | |||
| Assets | Dec. 31, 2010 | Jan. 1, 2010 | Inc./Dec. |
| Equipment | $39,000 | $22,000 | $17,000 Inc. |
| Less: Accumulated depreciation | -17,000 | $ (11,000) | 6,000 Inc. |
| Accounts receivable | 91000 | 88,000 | 3,000 Inc. |
| Cash | 45,000 | 13,000 | 32,000 Inc. |
| Total | $158,000 | $112,000 | |
| Equity and Liabilities | |||
| Share capital—ordinary | 100000 | $80,000 | 20,000 Inc. |
| Retained earnings | 38,000 | 17,000 | 21 ,OOO Inc. |
| Accounts payable | 20,000 | 15,000 | 5,000 Inc. |
| Total | $158,000 | $112,000 |
Net Income of $34000 was reported and Dividend of $13000 were paid in 2010. New Equipment was purchased and none was sold.
Requirement:
Prepare Statement of Cash Flow for the year 2010.
Question No. 3: (10 Marks)
A Comparative Statement of Financial Position for Vivaldi Corporation is given below;
| Dec-31 | ||
| Assets | 2010 | 2009 |
| Land | $71,000 | $110,000 |
| Equipment | 270,000 | 200,000 |
| Accumulated depreciation—equipment | -69,000 | -42,000 |
| Inventories | 180,000 | 189,000 |
| Accounts receivable | 82000 | 66,000 |
| Cash | 63,000 | 22,000 |
| Total | $597,000 | $545,000 |
| Equity and Liabilities | ||
| Share capital—ordinary ($1 par) | $214,000 | $164,000 |
| Retained earnings | 199,000 | 134,000 |
| Bonds payable | 150,000 | 200,000 |
| Accounts payable | 34,000 | 47000 |
| Total | $597,000 | $545,000 |
Additional Information
1. Net Income for 2010 was $105000
2. Cash Dividend of $40000 were declared and paid
3. Bonds payable amounting to $50000 were retired.
Requirement:
Prepare Statement of Cash Flow for the year 2010.
Question No. 4: (5 Marks)
Smart Co Sales made on credit. On July 1, 2018 it made sales of $60 000 with the term 3/10, n/30. On July 9, 2018 Smart Co received $30000 payment for July 1 sales. Remaining Payment received by smart Co on 15th July, 2018.
Requirement:
Record the Journal Transaction with discount amount with Gross Method and Net Method
