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ACC - Wright Company




Question;The comparative balance sheets for 2013 and 2012 and the statement of income for 2013 are given below for Wright Company. Additional information from Wright's accounting records is provided also.WRIGHT COMPANYComparative Balance SheetsDecember 31, 2013 and 2012($ in 000s)2013 2012AssetsCash $ 102 $ 65Accounts receivable 106 110Short-term investment 49 22Inventory 109 105Land 78 95Buildings and equipment 600 470Less: Accumulated depreciation (157) (110)$ 887 $ 757LiabilitiesAccounts payable $ 36 $ 42Salaries payable 4 7Interest payable 8 5Income tax payable 5 10Notes payable 0 26Bonds payable 222 170Shareholders' EquityCommon stock 340 270Paid-in capital?excess of par 155 135Retained earnings 117 92$ 887 $ 757WRIGHT COMPANYIncome StatementFor Year Ended December 31, 2013($ in 000s)RevenuesSales revenue $ 450ExpensesCost of goods sold $ 200Salaries expense 50Depreciation expense 47Interest expense 16Loss on sale of land 5Income tax expense 62 380Net income $ 70Additional information from the accounting records:a. Land that originally cost $17,000 was sold for $12,000.b.The common stock of Microsoft Corporation was purchased for $27,000 as a short-term investment not classified as a cash equivalent.c. New equipment was purchased for $130,000 cash.d. A $26,000 note was paid at maturity on January 1.e. On January 1, 2013, bonds were sold at their $52,000 face value.f. Common stock ($70,000 par) was sold for $90,000.g. Net income was $70,000 and cash dividends of $45,000 were paid to shareholders.Required:Prepare the statement of cash flows of Wright Company for the year ended December 31, 2013. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income with cash flows from operating activities.)2. Wardell Company purchased a mini computer on January 1, 2011, at a cost of $33,200. The computer has been depreciated using the straight-line method over an estimated five-year useful life with an estimated residual value of $3,200. On January 1, 2013, the estimate of useful life was changed to a total of 10 years, and the estimate of residual value was changed to $600.Required:1. Prepare the appropriate adjusting entry for depreciation in 2013 to reflect the revised estimate2. Prepare the appropriate adjusting entry for depreciation in 2013 to reflect the revised estimate. Assuming that the company uses the sum-of-the-years?-digits method instead of the straight-line method


Paper#39019 | Written in 18-Jul-2015

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