130) For each of the transactions listed below, indicate whether it is an investing (I) or financing
(F) activity on the statement of cash flows. Also, indicate if the transaction increases (+) or
decreases (—) cash.
Transaction
Type of
Activity
Effect on
Cash
Ex.
Paid dividends to the owners
F
–
A.
Purchased equipment to use in
the business.
B.
Issued stock for cash.
C.
Borrowed money at the bank.
D.
Sold a piece of land adjacent to
the plant.
E.
Paid the principal balance of a
note payable.
Transaction
Activity
Cash
A.
Purchased equipment to use in
the business.
B.
Issued stock for cash.
F
C.
Borrowed money at the bank.
F
D.
the plant.
E.
Paid the principal balance of a
note payable.
F
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131) The Alex Company, a consulting firm, recorded the following selected business
transactions during May, 2019. Indicate whether each transaction would increase, decrease, or
have no effect on the total assets of the company.
1. Issued capital stock in exchange for cash contributed by owners.
2. Purchased office supplies for cash.
3. Purchased office supplies on credit.
4. Paid cash on accounts payable to a supplier.
5. Collected cash on accounts receivable.
6. Borrowed money from the bank on a promissory note payable.
7. Loaned money to an employee in exchange for a note.
8. Purchased a building by using cash and signing a mortgage loan
payable for the balance.
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132) Classify the following balance sheet accounts as current assets, noncurrent assets, current
liabilities, noncurrent liabilities, or stockholders’ equity.
1. Building
2. Retained earnings
3. Notes payable due in 3 months
4. Land
5. Prepaid expenses
6. Supplies inventory
7. Common stock
8. Notes payable due in 5 years
9. Income taxes payable
10. Accounts receivable
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133) The following journal entries with the amounts omitted were taken from the records of
Lena Company:
1.
Cash
Common stock
Additional paid in capital
2.
Supplies
Accounts Payable
3.
Accounts Payable
Cash
4.
Buildings
Cash
Mortgage Payable
5.
Retained Earnings
Dividends Payable
6.
Cash
Notes Payable
Write a brief explanation for each of the above transactions.
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134) What is the primary objective of financial reporting?
135) How is the current ratio calculated and what does it measure?
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136) The Lake Company has provided the following account balances:
Cash $76,000;
Short-term investments $8,000;
Accounts receivable $96,000;
Supplies $12,000;
Long-term notes receivable $4,000;
Equipment $192,000;
Factory Building $360,000;
Intangible assets $12,000;
Accounts payable $90,000;
Accrued liabilities payable $12,000;
Short-term notes payable $42,000;
Long-term notes payable $184,000.
What is Lake’s current ratio?
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137) The Superior Company has provided the following account balances:
Cash $152,000;
Short-term investments $18,000;
Accounts receivable $36,000;
Inventory $116,000;
Long-term notes receivable $44,000;
Equipment $174,000;
Factory Building $270,000;
Intangible assets $33,000;
Accounts payable $130,000;
Accrued liabilities payable $19,000;
Short-term notes payable $84,000;
Long-term notes payable $169,000.
What is Superior’s stockholders’ equity?
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138) The Smith Corporation has provided the following information:
Cash dividend payments were $25,000.
Long-term investments were sold for $79,000 cash.
A building costing $198,000 was purchased using $19,800 cash, and the balance was financed
with a mortgage note payable.
Stock was issued to stockholders in exchange for $110,000 cash.
A $44,000 loan was made to a local inventory supplier; the loan will be repaid in twelve months.
Equipment used in operations was sold for $37,000.
Repaid a long-term note payable for $92,000 cash.
Cash received from short-term bank loans totaled $71,000.
Land costing $57,000 was purchased in exchange for a long-term note payable.
Determine Smith’s cash flows to be reported on the statement of cash flows for
1. investing activities, and 2. financing activities
139) Describe both the investing activities and financing activities section of the statement of
cash flows. Provide some examples of each activity.
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140) On December 31, 2019, the accounting records for Mountain Trail Corp. showed the
following amounts:
Accounts Payable
$23,000
Long-term Investments
$16,000
Accounts Receivable
$87,200
Dividends Payable
$21,400
Cash
$91,400
Common Stock
$14,800
Income Taxes Payable
$54,000
Additional Paid-in Capital
$73,200
Buildings
$17,800
Unearned Revenue
$7,500
Office Supplies
$3,500
Retained Earnings
$12,000
Mortgage Payable (due in 2025)
$10,000
1. Prepare a balance sheet using GAAP as of December 31, 2019.
2. Prepare a balance sheet using IFRS as of December 31, 2019.
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Answer:
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