devry acct312 week 7 homework assignment

Week Seven - Homework Exercises P21-5 and P21-6

P21-5 Comparative balance sheets for 2013 and 2012 and a statement of income for 2013 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided.

METAGROBOLIZE INDUSTRIES

Comparative Balance Sheets

December 31, 2013 and 2012

($ in 000s)

2013 2012

Assets

Cash $600 $375

Accounts receivable 600 450

Inventory 900 525

Land 675 600

Building 900 900

Less: Accumulated depreciation (300) (270)

Equipment 2,850 2,250

Less: Accumulated depreciation (525) (480)

Patent 1,200 1,500

$6,900 $5,850

Liabilities

Accounts payable $750 $450

Accrued expenses payable 300 225

Lease liability--land 150 0

Shareholders' Equity

Common stock 3,150 3000

Paid-in capital---excess of par 750 675

Retained earnings 1,800 1,500

Revenues

Sales revenue $2,645

Gain on sale of land 90 $2,735

Expenses

Cost of goods sold $600

Depreciation expense--building 30

Depreciation expense--equipment 315

Loss on sale of equipment 15

Amortization of patent 300

Operating expenses 500 1,760

Net income $975

Additional information from the accounting records:

a. During 2013, equipment with a cost of $300,000 (90% depreciated) was sold.

b. The statement of shareholders’ equity reveals reductions of $225,000 and $450,000 for stock dividends and cash dividends, respectively.

Required: Prepare the statement of cash flows of Metagrobolize for the year ended December 31, 2013. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income to cash flows from operating activities.)

P21-6 The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in millions) for Mike Roe Computers.

PEACH COMPUTERS Reconciliation of Net Income

Income Statement To Net Cash Flows from Operating Activites

For the Year Ended December 31, 2013

Sales $150 Net income $13

Cost of goods sold (90) Adjustments for noncash effects:

Gross margin 60 Decrease in accounts receivable 5

Salaries expense $20 Gain on sales of equipment (12)

Insurance expense 12 Increase in inventory (6)

Depreciation expense 5 Increase in accounts payable 9

Interest expense 6 (43) Increase in salaries payable 3

Gain and losses: Depreciation expense 5

Gain on sale of equipment 12 Decrease in bond discount 3

Loss on sale of land (3) Decrease in prepaid insurance 2

Income before tax 26 Loss on sale of land 3

Income tax expense (13) Increase in income tax payable 6

Net income $13

Net cash flows from operating activities $31

Required: 1. Calculate each of the following amounts for Mike Roe Computers:

a. Cash received from customers during the reporting period.

b. Cash paid to suppliers of goods during the reporting period.

c. Cash paid to employees during the reporting period.

d. Cash paid for interest during the reporting period.

e. Cash paid for insurance during the reporting period.

f. Cash paid for income taxes during the reporting period.

2. Prepare the cash flows from operating activities section of the statement of cash flows (direct method).