An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp

An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate how each item should be classified in the statement of cash flows using the four major classifications listed to the right.

a. Payment of interest on notes payable
b. Exchange of land for patent
c. Sale of building at book value
d. Payment of dividends
e. Depreciation
f. Receipt of dividends on investment in stock
g. Receipt of interest on notes receivable
h. Issuance of capital stock
i. Amortization of patent
j. Issuance of bonds for land
k. Purchase of land
l. Conversion of bonds into common stock
m. Loss on sale of land
n. Retirement of bonds

Click here for the solution: An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Conard Corp

These three accounts appear in the general ledger of Tovar Corp. during 2010

These three accounts appear in the general ledger of Tovar Corp. during 2010:

Equipment
Date Debit Credit Balance
Jan. 1 Balance 160,000
July 31 Purchase of equipment 70,000 230,000
Sept.2 Cost of equipment constructed 53,000 283,000
Nov.10 Cost of equipment sold 49,000 234,000

Accumulated Depreciation — Equipment
Date Debit Credit Balance
Jan. 1 Balance 71,000
Nov. 10 Accumulated depreciation on
equipment sold 30,000 41,000
Dec. 31 Depreciation for year 28,000 69,000

Retained Earnings
Date Debit Credit Balance
Jan. 1 Balance 105,000
Aug. 23 Dividends (cash) 19,000 86,000
Dec. 31 Net income 72,000 158,000

From the postings in the accounts, indicated how the information is reported on the statement of cash flows, using the indirect method below. The loss on sale of equipment was $8,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)


Click here for the solution: These three accounts appear in the general ledger of Tovar Corp. during 2010