15-1 Solutions
CHAPTER 15
STATEMENT OF CASH FLOWS: ANOTHER LOOK
Problems and Cases: Answers and Solutions
15.1 (Effects of transactions on statement of cash flows.)
a. The journal entry to record this transaction is:
b. The journal entry to record this transaction is:
Cash …………………………………………………………….. 75,000
Solutions 15-2
15.1 continued.
c. The journal entry to record this transaction is:
Cash …………………………………………………………….. 20,000
Accumulated Depreciation ………………………………. 35,000
d. The journal entry for this transaction is:
Rent Expense ………………………………………………… 28,000
The credit to the Cash account reduces Line (11) by $28,000. The
e. The journal entry to record this transaction is:
15-3 Solutions
Solutions 15-4
15.1 continued.
f. The journal entry to record this transaction is:
Accumulated Depreciation ………………………………. 14,000
g. The journal entry to record this event is:
Unrealized Holding Loss of Marketable Secur-
h. The journal entry to record this transaction is:
Interest Expense ……………………………………………. 15,000
Bonds Payable …………………………………………… 500
15-5 Solutions
Solutions 15-6
15.1 continued.
i. The journal entry for this event is:
Goodwill Impairment Loss ……………………………….. 22,000
15.2 (Effects of transactions on statement of cash flows.)
a. The journal entry to record this transaction is:
Building ………………………………………………………… 400,000
b. The journal entry for this event is:
Bad Debt Expense …………………………………………. 32,000
15-7 Solutions
15.2 b. continued.
c. The journal entry for this event is:
Allowance for Uncollectible Accounts ………………… 28,000
d. The journal entry to record this transaction is:
Cash …………………………………………………………….. 15,000
The debit to the Cash account results in an increase in Line (11) of
$15,000. Line (1) increases by $15,000 for the dividend received. The
Solutions 15-8
15-9 Solutions
15.2 continued.
e. The journal entries to record this transaction are:
Cash …………………………………………………………….. 22,000
The debit to the Cash account results in an increase in Line (11) of
$22,000. Selling marketable securities is an investing transaction so Line
f. The journal entry to record this transaction is:
Preferred Stock ……………………………………………… 10,000
This transaction affects neither the Cash account [Line (11)] nor net
Solutions 15–10
15.2 continued.
g. The journal entry to record this transaction is:
Legal Expense ………………………………………………. 5,000
Land …………………………………………………………. 5,000
h. The journal entry for this transaction is:
i. The journal entry to record this event is:
Long-Term Debt …………………………………………….. 30,000
15–11 Solutions
Solutions 15–12
15.3 (Effects of transactions on statement of cash flows.)
a. The journal entry to record this event is:
Contracts in Process ………………………………………. 15,000
b. The journal entry to record this transaction is:
Land …………………………………………………………….. 50,000
Donated Capital …………………………………………. 50,000
c. The journal entry to record this event is:
Unrealized Holding Loss on Investments in
Securities (Other Comprehensive Income) …….. 8,000
Investments in Securities …………………………. 8,000
15–13 Solutions
Solutions 15–14
15.3 continued.
d. The journal entry to record the recognition of depreciation is:
Inventories…………………………………………………….. 60,000
Accumulated Depreciation …………………………... 60,000
e. The journal entry to record this transaction is:
Warranty Expense ………………………………………….. 35,000
Estimated Warranty Liability …………………………. 35,000
f. The journal entry to record this transaction is:
Estimated Warranty Liability …………………………….. 28,000
15–15 Solutions
Solutions 15–16
15.3 f. continued.
The credit to the Cash account reduces Line (11) by $28,000. Honoring
warranties is an operating item so Line (2) increases the amount to be
g. The journal entry to record this event is:
Income Tax Expense ……………………………………… 80,000
h. The journal entry to record this event is:
Loss from Writedown of Inventories ………………….. 18,000
Inventories ………………………………………………… 18,000
15–17 Solutions
15.4 (Metals Company; working backwards from statement of cash flows.) (Based
on financial statements of Alcoa.)
(2) Cash (Operations—Depreciation Expense Add-
back) ………………………………………………………….. 664.0
Accumulated Depreciation …………………………. 664.0
(6) Cash (Operations—Decrease in Accounts Re-
ceivable) ……………………………………………………… 74.6
Accounts Receivable …………………………………. 74.6
(7) Inventories ……………………………………………………. 198.9
Cash (Operations—Increase in Inventories) …….. 198.9
Solutions 15–18
Securities) ……………………………………………….. 73.2
15–19 Solutions
15.4 continued.
(15) Cash (Financing—Common Stock Issued to
Employees) …………………………………………………. 34.4
Common Stock…………………………………………. 34.4
(16) Treasury Stock ……………………………………………….. 100.9
Cash (Financing—Repurchase of Common
Stock) ……………………………………………………. 100.9
(20) Bonds Payable ………………………………………………… 476.4
Cash (Financing—Payments to Long-Term
Borrowing) ……………………………………………….. 476.4
(21) Property, Plant and Equipment ………………………….. 76.9
Mortgage Payable ………………………………………… 76.9