ACC 421 Week 3 Assignment Problems - Ex. 5-15, 5-17 and 5-18

Exercise 5-15
Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31.
  2012  2011
Cash  $279,774   $138,996 
Accounts receivable  320,760   329,670 
Investments  92,664   131,868 
Equipment  531,036   427,680 
Less: Accumulated depreciation—equipment  (188,892 )  (158,598 )
Current liabilities  238,788   269,082 
Capital stock  285,120   285,120 
Retained earnings  511,434   315,414 

Additional information:

Investments were sold at a loss (not extraordinary) of $12,474; no equipment was sold; cash dividends paid were $89,100; and net income was $285,120.

(a) Prepare a statement of cash flows for 2012 for Sondergaard Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

(b) Determine Sondergaard Corporation’s free cash flow.
Free cash flow  $ 


Exercise 5-17
Chekov Corporation’s balance sheet at the end of 2011 included the following items.
Current assets  $236,606   Current liabilities  $151,606
Land  32,025   Bonds payable  101,606
Buildings  121,606   Common stock  182,025
Equipment  92,025   Retained earnings  46,025
Accum. depr.—buildings  (31,606 )      Total  481,262
Accum. depr.—equipment  (11,000 )    
Patents  41,606      
    Total  $481,262      

The following information is available for 2012.
1.  Net income was $55,181.
2.  Equipment (cost $21,606 and accumulated depreciation $9,606) was sold for $10,606.
3.  Depreciation expense was $5,606 on the building and $10,606 on equipment.
4.  Patent amortization was $2,500.
5.  Current assets other than cash increased by $25,000. Current liabilities increased by $14,606.
6.  An addition to the building was completed at a cost of $28,606.
7.  A long-term investment in stock was purchased for $16,000.
8.  Bonds payable of $52,025 were issued.
9.  Cash dividends of $25,000 were declared and paid.
10.  Treasury stock was purchased at a cost of $11,000.

(a)Prepare a statement of cash flows for 2012. (Show only totals for current assets and current liabilities.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Exercise 5-18
The comparative balance sheets of Menachem Corporation at the beginning and end of the year 2012 appear below.
Net income of $35,995 was reported, and dividends of $25,092 were paid in 2012. New equipment was purchased and none was sold.

(a)Prepare a statement of cash flows for the year 2012. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

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    ACC 421 Week 3 Assignment Problems - Ex. 5-15, 5-17 and 5-18 Solution

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