Jacoby Corporation, a merchandiser, recently completed its calendar year 2016 op
ID: 2399101 • Letter: J
Question
Jacoby Corporation, a merchandiser, recently completed its calendar year 2016 operations. For the year:
? All sales are credit sales
? All credits to Accounts Receivable reflect cash receipts from customers
? All purchases of inventory are on credit
? All debits to Accounts Payable reflect cash payments for inventory
? Other expenses are paid in advance and are initially debited to Prepaid Expenses.
? The company’s balance sheets and income statement follow.
Additional Information on Year 2011 Transactions
a. The loss on the cash sale of equipment was $2,100 (details in b).
b. Sold equipment costing $51,000, with accumulated depreciation of $20,850, for $28,050 cash.
c. Purchased equipment costing $113,250 by paying $38,250 cash and signing a long-term note
payable for the balance.
d. Borrowed $6,000 cash by signing a short-term note payable.
e. Paid$45,000cashtoreducethelong-termnotespayable.
f. Issued 3,000 shares of common stock for $11 cash per share.
g. Declaredandpaidcashdividendsof$63,000.
Explanation / Answer
SOLUTION:
Cash Flow Statement Net Income $57,000 Add Decrease in Accounts Receivable $16,650 Decrease in Inventory $35,700 Decrease in Prepaid Expenses $2,100 Loss on Sale of Equipment $2,100 Depreciation Expense $36,600 Increase in Short Term Notes Payable $6,000 $99,150 Minus Decrease in Accounts Payable -$6,000 -$6,000 Cash Flow provided by Operating Activities (A) $150,150 Cash Flow from Investing Activities Add: Sale of Equipment $28,050 Minus: Purchase of Equipment -$38,250 Cash Flow used by Investing Activities (B -$10,200 Cash Flow from Financing Activities Plus: Proceeds from Issuance of Common Stock $33,000 $33,000 Minus: Payment of Cash Dividend -$63,000 Payment of Long Term Note -$45,000 -$108,000 Cash Flow used by Financing Activities (C -$75,000 Increase/Decrease in Cash Equivalents (A+B+C) $64,950 Opening cash balance $71,550Related Questions
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