An increase to Cash is a positive effect. The company paid $10,000 cash in dividends. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change … * Made a $39,500 cash payment on the note payable from the purchase of equipment. * Sold a piece of equipment for cash of $27,000. Half the sales are normally paid for in the month in which they occur and the customers are rewarded with a 5% cash discount. Capital expenditures are the amount of money that a company spends on property, its plant and equipment to reinvest in its business. A one-time increase in cash dividends resulted in $33,500,000,000 paid to the owners of the company during the second quarter of fiscal year 2005 (three months ended December 31, 2004). 2 The company prepaid $7,200 cash … The remaining sales are paid for net in the month following the sale. The cash ratio—a company's total cash and cash equivalents divided by its current liabilities—measures a company's ability to repay its short-term debt. When a company acquires a plant asset, accountants record the asset at the cost of acquisition (historical cost). Total assets will decrease by $70,000. Bought equipment for cash viii. o. 4. Therefore, the amount of its inventory purchases during the period is calculated as: ($350,000 Ending inventory - $500,000 Beginning inventory) + $600,000 Cost of goods sold = $450,000 Inventory purchases. m. The company paid $2,000 cash to settle the account payable created in transaction h. n. The company paid $985 cash for minor maintenance of its drafting equipment. [Notes] Debit: Increase in equipment Credit: Decrease in cash [Q2] The entity purchased $150,000 new equipment on account. The company depreciates the equipment evenly over the 48 months ($1, 250/month). Tanner invests $125,000 cash along with office equipment valued at $30,000 in the company in exchange for common stock. Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day at an $2,840 cost. The $663 decrease is added to sales per the income statement of $129,000 to determine the cash collections from customers reported in the cash flow statement of $129,663. The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June; both purchases will be for cash. B. q. The amount of purchases is less than the cost of goods sold, since there was a net drawdown in inventory levels during the period. Note: Enter Debits Before Credits. Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. A. The cost of property, plant, and equipment includes the purchase price of the asset and all expenditures necessary to prepare the asset for its intended use. A cash flow statement is a financial report that describes the sources of a company's cash and how that cash was spent over a specified time period. The new note will be due in one year. Paid for a purchase of inventory on account within the discount period x. Land . Land purchases often involve real estate commissions, legal fees, bank fees, title search fees, and similar expenses. The company uses straight-line depreciation, and has a 40% tax rate. (11) Pays $825 to Express Trucking Company for delivering the equipment … D. purchases journal: iv. The opportunity cost of saving up CCE is the return on equity that company could earn by investing in a new product or service or expansion of business. Calculate the expected cash disbursements for merchandise purchases for May. Calculate the expected cash collections for May. When a plant asset is purchased for cash, its acquisition cost is simply the agreed on cash price. The equipment is expected to produce $240,000 in cash inflows and $160,000 in cash outflows annually. Third, the company took out a loan to purchase a building. asked Oct 2, 2016 in Business by malachi. The company predicts the machine will be used for six years and have a $14,000 salvage value. Recorded an adjusting entry for supplies ix. Sold shares of stock for cash vii. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. Total assets will increase by $70,000. 2. Forten Company, a merchandiser, recently completed its calendar-year 2015 operations. The Balance Sheet shows the company's Assets - its resources - such as Cash, Inventory and PP&E, as well as its Liabilities - such as Debt and Accounts Payable - and Shareholders' Equity. Golden Corp., a merchandiser, recently completed its 2017 operations. Apr. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in … (9) Purchases a patent on a machine process for $90,000 cash. This cost is objective, verifiable, and the best measure of an asset’s fair market value at the time of purchase. Textbook solution for Advanced Accounting 12th Edition Paul M. Fischer Chapter 6 Problem 6.1P. During May, the company will borrow $27,400 from its bank by giving a new note payable to the bank for that amount. * Purchased $198,000 of equipment by making a $69,000 cash down payment and signing a note payable for the balance. 2 The company prepaid $9,000 cash … Prepare a cash budget for May. Peloton Interactive Inc. agreed to buy fitness-equipment company Precor for $420 million to gain U.S. manufacturing capabilities and new expansion opportunities. Cash Flow from Investing Activities is the section of a company’s cash flow statement Cash Flow Statement A Cash Flow Statement (officially called the Statement of Cash Flows) contains information on how much cash a company has generated and used during a given period. The Gain on Sale of Equipment was an increase to … High cash reserves can also indicate that the company is not effective at deploying its CCE resources, whereas for big companies it might be a sign of preparation for substantial purchases. It does not include non-cash … For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in … First, the company acquired equipment by a contribution from its owners. 3. Question: Cash dividends paid on capital stock would be reported in the statement of cash flows in Your … Wrong. The purchases line item on the income statement is the total invoice cost the company's suppliers billed for the inventory, and net purchases is the amount the company paid excluding returns and discounts. At the time of purchase, the equipment is expected to be used in operations for four years (48 months) and have no resale or scrap value at the end. On January 3, it is installed on a required operating platform costing $1,160, and it is further readied for operations. Date General Journal Debit Credit Dec 31 (10) Purchases office equipment for $2,700, making a down payment of $250 and agreeing to pay the balance in 30 days. (ii) Goods are sold at a mark-up of 25% on the goods purchased one month before sale. 29. Exercise A Diane Manufacturing Company is considering investing $600,000 in new equipment with an estimated useful life of 10 years and no salvage value. What is Cash Flow from Investing Activities? Question: If a gain of $9,000 is incurred in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is Your Answer: Points Received: 0 of 2 Comments: 9. l. The company paid $1,200 cash for wages to a drafting assistant. Accounts receivable decreased by $663 because the company received more cash from its customers than credit sales made by the company. After reviewing its options, the company chose to give much of this cash back to shareholders in the form of cash dividends. The company will be increasing its Cash by issuing new shares of stock. C. Total assets will remain the same. Which of the following is correct if a company purchases equipment for $70,000 cash? Second, the company used its own assets to purchases more assets when it bought additional equipment with its cash. The Gain on the Sale of Equipment formerly used in the business. The equipment was sold at cost, so there is no It contains 3 sections: cash from operations, cash from investing and cash … A company can report purchases and net purchases on its income statement to show the costs it paid to buy inventory during an accounting period. A company purchases new equipment for S60.000 cash on August 1, 2018. Paid cash to purchase inventory: E. general journal: v. Paid a cash dividend to shareholders vi. Rather, different items appearing in the operating section of a company's income statement are impacted by the balance of cash purchases, credit purchases and other previously recorded transactions. D. The company's total owners' equity will decrease. Required: 1. Question: On December 31, The Company Purchases Equipment For $10,000 And Pays For The Purchase In Cash. Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock. Prepare a journal entry to record this transaction. We have step-by-step solutions for your textbooks written by Bartleby experts! Calculate the amount of a company's capital expenditures in an accounting period from its cash flow statement. Positive . p. The company paid $1,700 cash for wages to a drafting assistant. The Income Statement gives the company's revenue and expenses, and goes down to Net Income, the final line on the statement.

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