Work4Me Accounting Simulations. Problem Nineteen

Transcription

1 Work4Me Accounting Simulations 3 rd Web-Based Edition Problem Nineteen Statement of Cash Flows Page 1

2 Introduction The Deco-Block Company buys decorative pre-cast cement blocks for retaining walls and structures direct from a supplier located 120 miles north of its main sales yard in Loomis, California. Deco-Block sells exclusively to building contractors. Deco-Block takes delivery of the blocks at the factory of its supplier and, when possible, ships directly to the job sites of its customers. Deco-Block currently rents the building from which it conducts its sales business and truck and equipment maintenance, and the adjacent lot used for employee parking, truck parking and security, shipment redistribution, and maintaining some inventory. The business is quickly outgrowing the capacity of these rented facilities. The business is family operated, with each family member handling multiple tasks, and they have devised the following accounting system to meet their needs: Activities 1. Cash receipts are deposited daily by Deco-Block Company. However, total cash receipts received from credit customers and cash sales are recorded on a weekly basis only, directly from a cash receipts and sale summary sheet. 2. Individual customer accounts are posted to the Accounts Receivable Subsidiary Ledger on a daily basis. 3. Total cash disbursements and merchandise purchases are recorded on a weekly basis only, directly from a cash disbursements and purchases summary sheet. 4. Payments to vendors are made when due. 5. Individual vendor accounts are posted to the Account Payable Subsidiary Ledger on a daily basis. 6. All other daily transactions are recorded in the general journal, as they occur. 7. The cost of goods sold and the reduction in inventory is recorded at the end of the month. 8. Adjusting entries are recorded at the end of each month. 9. Ledgers are closed at the end of each month. For this problem, you are responsible for recording only the activities listed in the transactions that begin at the bottom of page 4. Page 2

3 CHART OF ACCOUNTS ASSETS 101 Cash 105 Accounts Receivable 115 Merchandise Inventory 121 Prepaid Insurance 123 Prepaid Rent 127 Office Supplies 128 Shop Supplies 131 Office Equipment 132 Accum. Depreciation Office Equipment 135 Shop Equipment 136 Accum. Depreciation Shop Equipment 139 Trucks 140 Accum. Depreciation Trucks 150 Land LIABILITIES 201 Accounts Payable 215 Interest Payable 251 Long-Term Notes Payable STOCKHOLDERS EQUITY 301 Common Stock 305 Retained Earnings 310 Cash Dividends 401 Sales REVENUE Page 3

4 EXPENSES 501 Cost of Goods Sold 601 Salaries and Wages Expense 602 Office Supplies Expense 603 Shop Supplies Expense 604 Advertising Expense 608 Truck Operating Expense 610 Depreciation Expense Office Equipment 611 Depreciation Expense Shop Equipment 612 Depreciation Expense Trucks 621 Rent Expense 622 Insurance Expense 624 Electric and Gas Expense 625 Telephone Expense OTHER REVENUE ACCOUNTS 711 Interest Earned 720 Gain on Disposal of Assets OTHER EXPENSE ACCOUNTS 811 Interest Expense 820 Loss on Sales of Assets 821 Income Tax Expense INCOME SUMMARY 901 Income Summary ************************ Log on to Work4Me II and from the Problems Menu Bar, select Problem 19: Statement of Cash Flows. From the Journals/Ledgers/Statements Menu Bar, select General Ledger and print a copy of the Trial Balance. Page 4

5 RECORD THE TRANSACTIONS FOR DECEMBER TRANSACTIONS FOR DECEMBER December 3: Purchase an asset On December 3, a vacant lot which is adjacent to the office building rented by Deco-Block was purchased at a bargain price of $150,000. Deco-Block issued a long-term note for $120,000 and a check (10200) for $30,000. At the invoice prompt, type LANDP. Student Analysis December 4: Purchase of assets Deco-Block purchased new office equipment for $8,000 (Check 10201) from ABC Suppliers (Invoice A3456). December 6: Purchase of assets Deco-Block purchased additional Shop equipment from Emory Equipment at a cost of $14,000, paying cash (Check 10202). The supplier s invoice is EE506. December 6: Record the weekly credit sales Credit sales for the week totaled $15,000. Debit Accounts Receivable and credit Sales for $15,000. At the invoice prompt, type Week1. Remember, the individual customer accounts are posted daily and this is not a part of your assignment. December 6: Record the weekly cash receipts Total receipts cash for the week total $20,000. Cash sales were $12,000 and total collections of accounts receivable were $8,000. At the invoice prompt, type Week1. Remember, the individual customer accounts are posted daily and is not a part of your assignment. Page 5

6 TRANSACTIONS FOR DECEMBER December 8: Record the weekly merchandise purchases Purchases of merchandise inventory during the week total $16,000. Debit Merchandise Inventory and credit Accounts Payable for $16,000. At the invoice prompt, type Week1. Remember, the individual vendor accounts are posted daily and this is not a part of your assignment. Student Analysis December 8: Record the weekly cash disbursement Total cash disbursements for week total $16,600. This includes salaries and wages of $4,000, payment on accounts payable of $12,000, and $600 for an advertisement scheduled to run in the local newspaper on each Friday for the month of December. At the check prompt, type At the invoice prompt, type Week1. Remember, the individual vendor accounts are posted daily and is not a part of your assignment. December 9: Issuing common stock for cash Deco-Block sold 5,000 additional shares of common stock at its par value of $5 per share. At the invoice prompt, type CMSTK. December 9: Sale of assets at book value Deco-Block sold one of its trucks for $2,000 cash. The truck originally cost $8,000 and has been depreciated $6,000 (assume that depreciation has been recorded to November 30). At the invoice number enter ASALE. December 13: Record the weekly credit sales Credit sales for the week totaled $14,500. Debit Accounts Receivable and credit Sales for $14,500. At the invoice prompt, type Week2. Page 6

7 TRANSACTIONS FOR DECEMBER December 13: Record the weekly cash receipts Total cash receipts for the week total $26,000. Cash sales were $5,000 and total collections of accounts receivable were $21,000. At the invoice prompt, type Week2. Student Analysis December 13: Record the weekly merchandise purchases Purchases of merchandise inventory during the week total $8,000. At the invoice prompt, type Week2. December 13: Record the weekly cash disbursements Cash disbursements for week 2 total $20,200. This includes salaries and wages of $4,200, and payment on accounts payable of $16,000. At the check prompt, type At the invoice prompt, type Week2. Print a trial balance and check your account totals against the Check It Out box. CHECK IT OUT 101 Cash $40, Accounts Receivable 49, Merchandise Inventory 68, Prepaid Insurance 2, Accounts Payable 1, Salaries and Wages Expense 8, TRIAL BALANCE TOTAL $479, If your account balances are in agreement with the Check It Out box above, then continue with the adjusting entries. If your account balances are not in agreement, then print a copy of your General Journal and compare your entries with the data entry information for the month of December, and make necessary correcting entries. If you match the check figures above, continue with your journal entries. Page 7

8 TRANSACTIONS FOR DECEMBER December 20: Updating depreciation prior to disposal Deco-Block is going to sell two pieces of its outdated office equipment. The specific office equipment to be sold is depreciated at a total of $2,400 per year (straight-line method). Record the update of the depreciation for December (use DEPRE as the invoice number). Student Analysis December 20: Sale of assets at a price in excess of book value Two pieces of the outdated office equipment, which originally cost $6,000 and have accumulated depreciation of $3,000 (including the update of the previous transaction), are sold for $3,500 (use ASALE as the invoice number). December 20: Updating depreciation prior to disposal Outdated shop equipment is scheduled to be sold. The shop equipment is depreciated $500 per month. At the invoice prompt, type DEPRE. December 20: Sale of assets at a price less than book value Outdated shop equipment which originally cost $8,000 and has accumulated depreciation of $7,000 (depreciated has already been updated), is sold for $400 (use ASALE as the invoice number). December 20: Record the weekly credit sales Credit sales for the week totaled $9,500. Debit Accounts Receivable and credit Sales for $9,500. At the invoice prompt, type Week3. December 20: Record the weekly cash receipts Total receipts cash for the week total $40,000. Cash sales were $8,000 and total collections of accounts receivable were $32,000. At the invoice prompt, type Week3. Page 8

9 TRANSACTIONS FOR DECEMBER December 20: Record the weekly merchandise purchases Purchases of merchandise inventory during the week total $3,000. At the invoice prompt, type Week3. Student Analysis December 20: Record the weekly cash disbursements Total cash disbursements for week are $5,100. This includes salaries and wages of $4,100, truck operating expenses of $700, and telephone expense of $300. At the check prompt, type At the invoice prompt, type Week3. December 24: Payment of a cash dividend Deco-Block paid a cash dividend of $1.50 per share to its common stockholders with check Look at the current trial balance and determine the number of shares outstanding at a par value of $5 per share, then record the appropriate amount of the cash dividend. At the invoice prompt, type CSDIV for cash dividends. December 24: Payment of long-term note, with accrued interest Deco-Block issued check to pay off a long-term note of $10,000 plus accrued interest of $1,400. There has been no prior accrued interest on this note. At the invoice number, enter NOTEP for note payable. December 27: Record the weekly credit sales Credit sales for the week totaled $8,000. Debit Accounts Receivable and credit Sales for $8,000. At the invoice prompt, type Week4. December 27: Record the weekly cash receipts Total receipts cash for the week total $40,000. Cash sales were $25,000 and total collections of accounts receivable were $15,000. At the invoice prompt, type Week4. Page 9

10 TRANSACTIONS FOR DECEMBER December 27: Record the weekly merchandise purchases There were no purchases for the week ended December 27. Student Analysis December 27: Record the weekly cash disbursements Total cash disbursements for week total $6,200. This includes $3,600 for salaries and wages, $800 for electricity and gas, and $1,800 for a one-year personal liability insurance policy on the land purchased on December 3. At t the check prompt, type At the invoice prompt, type Week4. December 28: Record the cost of goods sold Look at the current trial balance for the total sales for December. The cost of goods sold is estimated to be 60% of total sales for the month. Record the debit to Cost of Goods Sold and the credit to Merchandise Inventory for the cost of goods sold during the month of December. At the invoice prompt, type C/G/S for Cost of Goods Sold. December 28, 29, 30, and 31 Deco-Block closed its doors until January 2 in order to complete year-end physical inventories of merchandise, office supplies, and shop supplies, and do year-end maintenance of shop equipment and trucks. Page 10

11 Print a trial balance and check your account totals against the Check It Out box. CHECK IT OUT 101 Cash $44, Accounts Receivable 19, Prepaid Insurance 4, Cash Dividends 56, Cost of Goods Sold 58, Salaries and Wages Expense 15, Truck Operating Expense Gain on Disposal of Assets Loss on Sale of Assets TRIAL BALANCE TOTAL $514, If your account balances are in agreement with the Check It Out box on page 10, then continue with the adjusting entries. If your account balances are not in agreement, then print a copy of your General Journal and compare your entries with the data entry information for the month of December, and make necessary correcting entries. Adjusting Entries For The Month Ended, December 31. Record the following monthly adjusting entries: 1. The beginning balance of prepaid insurance of $2,400 is for six month s of insurance. There is no adjustment for the policy purchased on December The prepaid rent of $6,000 was for one year s rent. 3. $300 of office supplies are on hand. 4. $1,200 of shop supplies were used. 5. Depreciation on office equipment is $500 per month. 6. Depreciation on shop equipment is $800 per month. 7. Depreciation on trucks is $900 for the month of December. 8. Accrued interest on the $120,000 note is $800. Page 11

12 Print an Adjusted Trial Balance and check your account totals against the Check It Out box below. CHECK IT OUT 101 Cash $44, Accounts Receivable 19, Prepaid Insurance 3, Prepaid Rent 5, Shop Supplies 3, Accum. Depreciation, Office Equipment 10, Accum. Depreciation, Shop Equipment 13, Salaries and Wages Expense 15, Depreciation Expense, Trucks Telephone Expense Interest Expense 2, ADJUSTED TRIAL BALANCE TOTAL $517, If your account balances are in agreement with the Check It Out box, then print the required documents listed below. Use those documents to answer the Problem 19 Examination Questions. If your account balances are not in agreement, then print a copy of your General Journal and compare your adjusting entries with the adjusting data entry information given for the month of December, and make appropriate correcting entries. Print the following documents: 1. Income statement (Income From Operations is $14,200) 2. Cash Flows from Operating Activities (indirect method). 3. Use your document to answer the following questions. Page 12

13 WORK4ME - PROBLEM 19 STATEMENT OF CASH FLOWS NAME CLASS DAY AND TIME DATE 1. What was the amount of net income? $ 2. What was the cost of goods sold? $ 3. What was the net increase or (decrease) in the cash account? A. $16,500 B. $26,000 C. $(11,300) D. $(37,900) 4. What was the net cash flow provided from operations? A. $76,500 B. $76,000 C. $(11,300) D. $(75,900) 5. What was the net cash flow from investing activities? A. $(52,000) B. $(50,000) C. $(46,100) D. $(42,600) 6. What was the net cash flow from financing activities? A. $(41,700) B. $(68,100) C. $25,000 D. $56, Beginning Accounts Receivable + Credit Sales Ending Accounts Receivable equals which of the following? A. Cash collected from customers B. Net cash sales C. Increase in Accounts Receivable D. Cash flows from operations Page 13

14 8. Ending Inventory + Cost of Goods Sold Beginning Inventory + Beginning Accounts Payable - Ending Accounts Payable equals which of the following? A. Cash collected from customers B. Cash paid to merchandise suppliers C. Cash from operating activities D. Cash paid for operations 9. What was the amount of cash paid to suppliers of merchandise? $ 10. What was the amount of cash paid for interest? $ 11. The cash dividends paid represent what percentage of the cash provided by operations? A % B % C % D % 12. Add the total of the net cash flows from investing activities (your answer to question #5) to the total of the net cash flows from financing activities (your answer to Question #6). What is the combined total? A. $16,700 B. $(25,000) C. $(87,700) D. $(87,800) 13. Add the dollar amount of your answer to Question #12 to the dollar amount of the net cash flows provided by operations (Question # 4). What is the total? A. $(51,000) B. $(11,300) C. $(12,700) D. $(9,600) 14. Add the dollar amount of your answer to Question #13 to the beginning cash balance. What is the total? $ 15. What is the ending balance of the Cash account? $ Page 14