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The comparative balance sheets for 2013 and 2012 and the statement of income for 2013 are given below for Wright Company

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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 COMPANY;Comparative Balance Sheets;December 31, 2013 and 2012;($ in 000s);2013 2012;Assets;Cash $ 102 $ 65;Accounts receivable 106 110;Short-term investment 49 22;Inventory 109 105;Land 78 95;Buildings and equipment 600 470;Less: Accumulated depreciation (157) (110);$ 887 $ 757;Liabilities;Accounts payable $ 36 $ 42;Salaries payable 4 7;Interest payable 8 5;Income tax payable 5 10;Notes payable 0 26;Bonds payable 222 170;Shareholders' Equity;Common stock 340 270;Paid-in capital?excess of par 155 135;Retained earnings 117 92;$ 887 $ 757;WRIGHT COMPANY;Income Statement;For Year Ended December 31, 2013;($ in 000s);Revenues;Sales revenue $ 450;Expenses;Cost of goods sold $ 200;Salaries expense 50;Depreciation expense 47;Interest expense 16;Loss on sale of land 5;Income tax expense 62 380;Net income $ 70;Additional 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 estimate;2. 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#74620 | Written in 18-Jul-2015

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