Intermediate Accounting Homework

TRADITIONAL HOMEWORK ITEMS – Spring 2024 – ACT 3391General Instructions for the Traditional Homework – refer to the instructions for traditional item no. 3.
11. (3 points) The following items may be reflected in a company’s statement of cash flows. For each item, indicate which, if any, of
the 3 sections of the statement of cash flows the item would be reflected in. Assume the statement is prepared using the indirect
method.
1.
Selling a fixed asset for more than book value.
2.
Borrowing money.
3.
Using cash to pay a dividend to stockholders.
4.
Using cash to buy back company stock, i.e., treasury stock.
5.
Issuing company stock in exchange for a fixed asset.
12. (10 points) Diane’s balance sheets as of December 31, 2021 and 2022 are presented below:
Cash
Accounts receivable
Prepaid expenses
Property, plant, and equipment – at cost
Accumulated depreciation
TOTAL ASSETS
2021
$ 85,000
240,000
45,000
300,000
( 75,000)
$595,000
2022
$ 70,000
295,000
55,000
375,000
( 80,000)
$715,000
Accrued wages payable
Unearned revenues
Dividends payable
Long-term debt
Common stock
Additional paid-in-capital
Retained earnings
TOTAL LIABILITIES & SE
$ 36,000
14,000
0
50,000
25,000
70,000
400,000
$595,000
$ 15,000
22,750
6,250
90,000
26,000
90,000
465,000
$715,000
SELECTED OTHER INFORMATION:
1. During 2022, Diane reported net income of $90,000.
2. During 2022, Diane both borrowed on a long-term basis and paid back some long-term debt. During 2022, Diane paid back
$20,000 of long-term debt.
3. During 2022. Diane both bought and sold some property, plant, and equipment (PP&E). A machine Diane sold during 2022
originally cost her $20,000. Diane sold the PP&E for $12,000. At the time of the sale, the PP&E had accumulated
depreciation of $15,000.
4. During 2022, Diane issued additional common stock.
5. During 2022, Diane declared four quarterly dividends. 2022 was the first year in which Diane declared dividends.
6. During 2022, Diane did NOT enter into any non-cash investing or financing activities.
Prepare Diane’s Statement of Cash Flows (in good form) for the year ended December 31, 2022. Diane uses the indirect method.
13. (3 points) Write the best accounting word/phrase that is defined. Write ONLY ONE word/phrase next to each item. DO NOT
ABBREVIATE.
a. The term used to describe the equity account that is increased by a company’s
net income and decreased by dividends the company declares.
b. This is calculated by subtracting a company’s total current liabilities from the
company’s total current assets.
c. A company calculates this as (Net Income minus Preferred Dividends) divided by
a weighted-average number of common shares outstanding.
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