Chapter 21 Each installment payment includes both an amount

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Exercise 217
Bond
interest Bond interest Unamortized Cash paid
Situation expense payable discount for interest
increase increase
(decrease) (decrease)
1 10 0 0 10
1. Summary Entry Bond interest expense 10
2. Summary Entry Bond interest expense 10
3. Summary Entry Bond interest expense 10
4. Summary Entry Bond interest expense 10
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2122 Intermediate Accounting, 8/e
Exercise 217 (concluded)
Bond
interest Bond interest Unamortized Cash paid
Situation expense payable discount for interest
increase increase
(decrease) (decrease)
5 10 2 (3) 5
5. Summary Entry Bond interest expense 10
Bond interest payable 2
6. Summary Entry Bond interest expense 10
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Exercise 218
Bond
interest Bond interest Unamortized Cash paid
Situation expense payable discount for interest
increase increase
(decrease) (decrease)
1 20 0 0 20
1. Summary Entry Bond interest expense 20
2. Summary Entry Bond interest expense 20
3. Summary Entry Bond interest expense 20
4. Summary Entry Bond interest expense 20
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Exercise 219
Income Deferred
tax Income tax tax Cash paid
Situation expense payable liability for taxes
increase increase
(decrease) (decrease)
1 10 0 0 10
1. Summary Entry Income tax expense 10
2. Summary Entry Income tax expense 10
3. Summary Entry Income tax expense 10
4. Summary Entry Income tax expense 10
5. Summary Entry Income tax expense 10
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Exercise 219 (concluded)
Income Deferred
tax Income tax tax Cash paid
Situation expense payable liability for taxes
increase increase
(decrease) (decrease)
6 10 3 2 5
6. Summary Entry Income tax expense 10
Income tax payable 3
7. Summary Entry Income tax expense 10
Deferred income tax liability 2
8. Summary Entry Income tax expense 10
Income tax payable 3
9. Summary Entry Income tax expense 10
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2126 Intermediate Accounting, 8/e
Exercise 2110
Income Deferred
tax Income tax tax Cash paid
Situation expense payable liability for taxes
increase (decrease) increase (decrease)
1 10 0 0 10
1. Summary Entry Income tax expense 10
2. Summary Entry Income tax expense 10
3. Summary Entry Income tax expense 10
4. Summary Entry Income tax expense 10
Income tax payable 3
5. Summary Entry Income tax expense 10
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Exercise 2111
Most would report the cash inflow of $566,589,440 from the sale of the bonds as a
cash inflow from financing activities in its statement of cash flows.
June 30, 2016*
Interest expense (6% x $566,589,440) ................... 33,995,366
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Exercise 2112
National would report the cash inflow of $4 million from the borrowing as a cash
inflow from financing activities in its statement of cash flows.
*December 31, 2016
Interest expense (10% x outstanding balance) 400,000
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Exercise 2113
Requirement 1
Cash Flows from Investing Activities:
Proceeds from sale of land $ 12
Requirement 2
Cash Flows from Financing Activities:
Payment for the early extinguishment of
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2130 Intermediate Accounting, 8/e
Exercise 2114
Requirement 1
Cash Flows from Investing Activities:
Proceeds from sale of equipment $ 8
Requirement 2
Cash Flows from Financing Activities:
Payment for the early extinguishment of
long-term notes (book value: $50 million) $ (54)
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Exercise 2115
Wilson would report the $3,000,000* investment in the commercial food
processor and its financing with a capital lease as a significant noncash
investing and financing activity in the disclosure notes to the financial
statements.
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Exercise 2115 (concluded)
Calculations:
September 30, 2016*
Leased equipment (calculated below) ..................... 3,000,000
December 31, 2016**
Interest expense (3% x [$3 million 195,774]) ........... 84,127
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Exercise 2116
Investing Activities:
Beilich would report the $600 million investment as a cash outflow among investing
Operating Activities:
By the direct method of reporting cash flows from operating activities, Beilich would
report the $12 million cash dividend as a cash inflow from operating activities.
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2134 Intermediate Accounting, 8/e
Exercise 2117
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income $50,000
Adjustments for noncash effects:
Depreciation expense 7,000
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Exercise 2118
($ in millions)
Net income closed to retained earnings
Income summary .................................................................................... 75
Retained earnings (given) ................................................ 75
Cash dividend
Retained earnings (given) .................................................... 25
Stock dividend
Retained earnings (given) .................................................... 16
Property dividend
Retained earnings (given) .................................................... 12
Short-term investments ................................................................... 12
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Exercise 2118 (concluded)
Sale of treasury shares
Cash (difference)* ................................................................ 43
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Exercise 2119
Income Statement
Sales $600a
Cost of goods sold 360b
Salaries expense 78c
a Summary Entry Cash (received from customers) 612
Accounts receivable 12
Sales revenue 600
d Summary Entry Insurance expense 42
Prepaid insurance 18
Cash (paid for insurance) 24
f Depreciation expense and the loss on sale of land are noncash reductions in
income.
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2138 Intermediate Accounting, 8/e
Exercise 2120
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 26
Adjustments for noncash effects:
Depreciation expense 11
Changes in operating assets and liabilities:
Increase in accounts receivable (54)
Increase (decrease) in inventory 0
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Exercise 2121
Requirement 1:
a. Summary Entry Cash (received from customers) 311
Accounts receivable 6
Sales revenue 305
d. Summary Entry Insurance expense 19
Prepaid insurance 9
Cash (paid for insurance) 10
Requirement 2:
Cash Flows from Operating Activities:
Cash received from customers $311
Cash paid to suppliers (206)
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Exercise 2122
RECONCILIATION OF NET INCOME TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,000)
Adjustments for noncash effects:
Depreciation expense 6,000

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