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Hi Business Tutor, I just want to verify my answer on this question below. I have used you below and have been very happy. If you can help me on this that would be great. I need this by tomorrow and it is from Kieso Intermediate Accounting 13th Edition. Thank you.
The comparative balance sheets for Hinckley Corporation show the following information: December 31 2010 2009 Cash $33,500 $13,000 Accounts receivable 12,250 10,000 Inventory 12,000 9,000 Investments 0 3,000 Building 0 29,750 Equipment 45,000 20,000 Patent 5,000 6,250 Totals $107,750 $91,000 Allowance for doubtful accounts $3,000 $4,500 Accumulated depreciation on equipment 2,000 4,500 Accumulated depreciation on building 0 6,000 Accounts payable 5,000 3,000 Dividends payable 0 5,000 Notes payable, short-term (nontrade) 3,000 4,000 Long-term notes payable 31,000 25,000 Common stock 43,000 33,000 Retained earnings 20,750 6,000 Totals $107,750 $91,000 Additional data related to 2010 are as follows: 1. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500 2. $10,000 of the long-term note payable was paid by issuing common stock. 3. Cash dividends paid were $5,000 "4. On January 1, 2010, the building was completely destroyed by a flood. Insurance proceeds on the" building were $30,000 (net of $2,000 taxes). 5. Investments (available-for-sale) were sold at $1,700 above their cost. The company has made similar sales and investments in the past. 6. Cash of was paid for the acquisition of equipment. 7. A long-term note for $16,000 was issued for the acquisition of equipment. 8. Interest of $2,000 and income taxes of $6,500 were paid in cash. Instructions: Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country. HINCKLEY CORPORATION Statement of Cash Flows For the Year Ended December 31, 2010 Cash flows from operating activities Net income (a) AmountAdjustments to reconcile net income to net cash provided by operating activities: Loss on sale of equipment (b) Amount Gain from flood damage Amount Depreciation expense (c) Amount Patent amortization Amount Gain on sale of investments Amount Increase in accounts receivable (net) Amount Increase in inventory Amount Increase in accounts payable Amount FormulaNet cash provided by operating activities Formula Cash flows from investing activities Sale of investments Amount Sale of equipment Amount Purchase of equipment (d) #VALUE! Proceeds from flood damage to building Amount Net cash provided by investing activities Formula Cash flows from financing activities Payment of dividends Amount Payment of short-term note payable Amount Net cash used by financing activities Formula Increase in cash AmountCash, January 1, 2010 AmountCash, December 31, 2010 Formula Supplemental disclosures of cash flow information: Cash paid during the year for: Interest Amount Income taxes: Amount Noncash investing and financing activities Retired note payable by issuing common stock Amount Purchased equipment by issuing note payable Amount Formula Supporting Computations: (a) Ending retained earnings Amount Beginning retained earnings Amount Net income Formula (b) Cost Amount Accumulated depreciation Amount Book value Formula Proceeds from sale Amount Loss on sale Formula (c) Accumulated depreciation on equipment sold Amount Decrease in accumulated depreciation Amount Depreciation expense Formula (d) Beginning equipment balance Amount Cost of equipment sold Amount Remaining balance Formula Purchase of equipment with note Amount Adjusted balance Formula Ending equipment balance Amount Purchased with cash Formula
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