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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
