(1). For each of the three independent situations below prepare journal entries that summarize the selling and collection activities for the reporting period in order to determine the amount of cash received from customers and to explain the change in each account shown. All dollars are in millions. (If no entry is required for a transaction/event select No journal entry required in the first account field. Enter your answers in millions (i.e. 10000000 should be entered as 10).)
In preparation for developing its statement of cash flows for the year ended December 31 2016 Rapid Pac Inc. collected the following information:
($ in millions)Fair value of shares issued in a stock dividend$48.0
Payment for the early extinguishment of
long-term bonds (book value: $76.0 million)
81.0
Proceeds from the sale of treasury stock (cost: $12.0 million)
17.0
Gain on sale of land
2.1
Proceeds from sale of land
6.3
Purchase of Microsoft common stock
132.0
Declaration of cash dividends
46.0
Distribution of cash dividends declared in 2015
42.0
Required:1.
In Rapid Pacs statement of cash flows what were net cash inflows (or outflows) from investing activities for 2016? (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e. 5500000 should be entered as 5.5).)
2. In Rapid Pacs statement of cash flows what were net cash inflows (or outflows) from financing activities for 2016? (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (i.e. 5500000 should be entered as 5.5).)
(3)
Comparative balance sheets for 2016 and 2015 and a statement of income for 2016 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.
METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31 2016 and 2015
($ in 000s)
2016
2015Assets
Cash$460 $190 Accounts receivable
470
250Inventory
620
380Land
625
575Building
800
800 Less: Accumulated depreciation
(200)
(170)Equipment
2800
2510 Less: Accumulated depreciation
(451)
(420)Patent
1600
1800
$6724 $5915
Liabilities
Accounts payable$720 $470 Accrued expenses payable
210
165 Lease liabilityland
150
0 Shareholders’ Equity
Common stock
2650
2500Paid-in capitalexcess of par
500
470Retained earnings
2494
2310
$6724 $5915
METAGROBOLIZE INDUSTRIES
Income Statement
For the Year Ended December 31 2016
($ in 000s)Revenues
Sales revenue$2807
Gain on sale of land
60$2867
Expenses
Cost of goods sold$920
Depreciation expensebuilding
30
Depreciation expenseequipment
328
Loss on sale of equipment
10
Amortization of patent
200
Operating expenses
600
2088
Net income
$779
Additional information from the accounting records:a.During 2016 equipment with a cost of $330000 (90% depreciated) was sold.b.
The statement of shareholders’ equity reveals reductions of $180000 and $415000 for stock dividends and cash dividends respectively.
Required:
Prepare the statement of cash flows of Metagrobolize for the year ended December 31 2016. Present cash flows from operating activities by the direct method. (Enter your answers in thousands (i.e. 5000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)
Portions of the financial statements for Parnell Company are provided below.
PARNELL COMPANY
Income Statement
For the Year Ended December 31 2016
($ in 000s)Revenues and gains:
Sales$720
Gain on sale of buildings11
$731
Expenses and loss:
Cost of goods sold$260
Salaries112
Insurance32
Depreciation115
Interest expense42
Loss on sale of machinery10
571
Income before tax
160
Income tax expense
80
Net income
$80
PARNELL COMPANY
Selected Accounts from Comparative Balance Sheets
December 31 2016 and 2015
($ in 000s)
Year
20162015ChangeCash$126 $108 $18
Accounts receivable316 224 92
Inventory329 417 (88) Prepaid insurance69 80 (11) Accounts payable202 125 77
Salaries payable118 101 17
Deferred income tax liability76 60 16
Bond discount180 208 (28)
Required:1.
Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. (Enter your answers in thousands (i.e. 5000 should be entered as 5).Amounts to be deducted should be indicated with a minus sign.)
Comparative balance sheets for 2016 and 2015 and a statement of income for 2016 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.
METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31 2016 and 2015
($ in 000s)
2016
2015Assets
Cash$530 $265 Accounts receivable
610
320Inventory
760
415Land
600
525Building
700
700 Less: Accumulated depreciation
(250)
(220)Equipment
3150
2930 Less: Accumulated depreciation
(418)
(380)Patent
1300
1600
$6982 $6155
Liabilities
Accounts payable$860 $710 Accrued expenses payable
280
235 Lease liabilityland
150
0 Shareholders’ Equity
Common stock
3650
3500Paid-in capitalexcess of par
550
485Retained earnings
1492
1225
$6982 $6155
METAGROBOLIZE INDUSTRIES
Income Statement
For the Year Ended December 31 2016
($ in 000s)Revenues
Sales revenue$3101
Gain on sale of land
95$3196
Expenses
Cost of goods sold$1060
Depreciation expensebuilding
30
Depreciation expenseequipment
524
Loss on sale of equipment
20
Amortization of patent
300
Operating expenses$400
2334
Net income
$862
Additional information from the accounting records:a.During 2016 equipment with a cost of $540000 (90% depreciated) was sold.b.
The statement of shareholders equity reveals reductions of $215000 and $380000 for stock dividends and cash dividends respectively.
Required:
Prepare the statement of cash flows for Metagrobolize Industries using the indirect method. (Enter your answers in thousands. (i.e. 10000 should be entered as 10).) Amounts to be deducted should be indicated with a minus sign.)