Accounting 301 Cash flows case | Complete Solution
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Accounting 301, Intermediate Accounting, Spring 2015
Cash flows case: (indirect method).
The net changes in the balance sheet accounts of Dubai, Inc. for the year 2015 are shown below:
Account Debit Credit
Cash $ 95,600
Accounts receivable $ 64,000
Allowance for doubtful accounts 10,000
Inventory 197,200
Prepaid expenses 20,000
Long-term investments 144,000
Land 400,000
Buildings 650,000
Machinery 100,000
Equipment 28,000
Accumulated depreciation:
Buildings 24,000
Machinery 20,000
Equipment 12,000
Accounts payable 183,200
Accrued liabilities 72,000
Dividends payable 128,000
Premium on bonds 36,000
Bonds payable 900,000
Preferred stock ($50 par)60,000
Common stock ($10 par) 156,000
Additional paid-in capital—common 223,200
Retained earnings 87,200
$1,805,200 $1,805,200
Additional information:
1.Income Statement Data for Year Ended December 31, 2015
Income before extraordinary item $272,000
Extraordinary loss: Condemnation of land 132,000
Net income $140,000
2.Cash dividends of $128,000 were declared December 15, 2015, payable January 15, 2016. A 5% stock dividend was issued March 31, 2015, when the market value was $22.00 per share.
3.The long-term investments were sold for $140,000.
4.A building and land which cost $480,000 and had a book value of $350,000 were sold for $400,000. The cost of the land, included in the cost and book value above, was $20,000.
5.The following entry was made to record an exchange of an old machine for a new one:
Machinery 160,000
Accumulated Depreciation—Machinery 40,000
Machinery 60,000
Cash 140,000
6.A fully depreciated copier machine which cost $28,000 was written off.
7.Preferred stock of $60,000 par value was redeemed for $80,000.
8.The company sold 12,000 shares of its common stock ($10 par) on June 15, 2015 for $25 a share. There were 87,600 shares outstanding on December 31, 2015.
9.Bonds were sold at 104 on December 31, 2015.
10.Land that was condemned had a book value of $240,000.
11.Beginning Cash balance was $0
Instructions
1.Prepare a statement of cash flows (indirect method). Ignore tax effects.
2.What is the free cash
3.What are the advantages of using the statement of cash flows for businesses
[Solved] Accounting 301 Cash flows case | Complete Solution
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