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PXE Company presented the following comparative balance sheets

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Question;P1. PXE Company presented the following comparative balance sheets at December 31, 2005 and 2006, and the income statement for the year ended December 31, 2006:PXE CompanyBalance SheetsDecember 31, 2006 and 2005;December 31, 2006 December 31, 2005Assets Cash $ 12,200 $ 28,200Accounts receivable 16,000 18,000Inventory 19,500 22,000Prepaid rent 200 300Total current assets $ 47,900 $ 68,500Land 58,000 30,000Equipment 65,000 60,000Accumulated depreciation (11,000) (4,000)Total assets $159,900 $154,500;Liabilities and stockholders? equity Accounts payable $ 13,000 $ 25,000Salaries payable 2,000 2,500Interest payable 2,500 4,000Income tax payable 6,500 3,000Dividends payable 4,000 0Total current liabilities $ 28,000 $ 34,500Long-term notes payable 10,000 40,000Common stock, $1 par 30,000 28,000Preferred stock, $4 par 24,000 10,000Additional paid-in capital 45,000 30,000Retained earnings 22,900 12,000Total liabilities and stockholders? equity $159,900 $154,500;PXE CompanyIncome StatementFor the Year Ended December 31, 2006;Sales $ 400,000Cost of goods sold (250,000)Gross profit $ 150,000General and administrative expenses $80,000 Salaries expense 31,000 Rent expense 3,600 Depreciation expense 7,000 Total operating expenses (121,600)Other revenue and expenses: Gain on sale of land $ 3,000 Interest revenue 300 Interest expense (2,800) 500Income before income taxes $ 28,900Income tax expense (8,000)Net income $ 20,900;Additional information:a. The company declared dividends in the amount of $10,000 during the year.b. Additional land and equipment were purchased for cash.c. Land that had originally cost $9,000 was sold for $12,000 cash.d. All accounts payable are related to merchandise purchases.e. The company uses a perpetual LIFO inventory system and uses straight-line depreciation for all depreciable assets.;Required:1. Prepare the operating activities section of the statement of cash flows using the indirect method.;P2. Salary expense on the books was $43000. Salary payable at the beginning of the year was $11000 and at the end of the year was $12500. How much cash was paid out for salaries?;P3. Rent expense on the books was $15000. Prepaid rent at the beginning of the year was $3000 and at the end of the year was $1250. How much cash was paid out for rent?;P4. Sales revenue on the books was $118000. Accounts receivable at the end of the year was $14000 and accounts receivable at the beginning of the year was $16000. How much cash was received for sales?;P5. Sales revenue on the books was $175000. Unearned revenue at the end of the year was $12000 and unearned revenue at the beginning of the year was $4500. How much cash was received from revenue?;P6. Harp?s Business Machines Inc. reported the following items from its comparative balance sheet for the calendar year 2008;2008 2007Inventory $125,000 $100,000Land 100,000 200,000Building 570,000 500,000Equipment 45,000 30,000Accumulated depreciation (105,000) (50,000)Notes payable 100,000 150,000Common stock 300,000 200,000;Additional information for 2008:1. A piece of land was sold for $65,000, resulting in a $5,000 gain.2. A smaller section of land was sold for $26,000, resulting in a $14,000 loss.3. A building was started and completed costing $70,000. All costs were paid in cash.4. Depreciation expense totaled $55,000 for the year.;Required:Determine the cash flows from investing activities for Harp?s Business Machines Inc. for 2008.;P7. Checker?s Games Co. reported the following items on its comparative balance sheet for 2008;2008 2007Accounts payable $200,000 $175,000Dividends payable 10,000 0Notes payable 280,000 240,000Common stock 315,000 290,000Additional paid-in capital 120,000 100,000Land 175,000 150,000Goodwill 45,000 75,000;Additional information for 2008:1. A $70,000 note payable was issued for cash.2. Interest expense totaled $15,000 for the year of which $13,500 was paid in cash.3. Stock was issued for cash (the transaction involved common stock).4. A note payable for $30,000 was repaid.5. Dividends of $50,000 were declared of which $40,000 have been paid.;Required: Prepare the financing section of the cash flow statement in good form for Checker?s Games Co.;P8. On January 1, 2006, ABC Company bought equipment for $12,000 with an estimated useful life of 5 years and no salvage value. ABC uses straight-line depreciation. On January 1, 2008, it was decided that the sum-of-the-years-digits was more appropriate.;What journal entry do you make on January 1, 2008?

 

Paper#44839 | Written in 18-Jul-2015

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