ANSWER KEY ACC422 WEEK 4 E11-4 E11-11 E12-6 E12-16

Click Here For The ANSWERS

• Ch. 11: Exercises E11-4 & E11-11• Ch. 12: Exercises E12-6 & E12-16

E11-4 (Depreciation Computations—Five Methods) Jon Seceda Furnace Corp. purchased machineryfor $315,000 on May 1, 2007. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of 25,000. During 2008 Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units.

Instructions
From the information given, compute the depreciation charge for 2008 under each of the following
methods. (Round to the nearest dollar.)
(a) Straight-line.
(b) Units-of-output.
(c) Working hours.
(d) Sum-of-the-years’-digits.
(e) Declining-balance (use 20% as the annual rate).

E11-11 (Depreciation—Change in Estimate) Machinery purchased for $60,000 by Tom Brady Co. in2003 was originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2008, it is determined that the total estimated life should be 10 years with a salvage value of $4,500 at the end of that time. Assume straight-line depreciation.

Instructions
(a) Prepare the entry to correct the prior years’ depreciation, if necessary.
(b) Prepare the entry to record depreciation for 2008.

E12-6 (Recording and Amortization of Intangibles) Rolanda Marshall Company, organized in 2006,has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2007.
1/2/07 Purchased patent (8-year life) $ 350,000
4/1/07 Purchased goodwill (indefinite life) 360,000
7/1/07 Purchased franchise with 10-year life; expiration date 7/1/17 450,000
8/1/07 Payment of copyright (5-year life) 156,000
9/1/07 Research and development costs 215,000
$1,531,000

Instructions
Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2007, recording any necessary amortization and reflecting all balances accurately as of that date. (Use straight-line amortization.)

E12-16 (Accounting for R&D Costs) Leontyne Price Company from time to time embarks on a researchprogram when a special project seems to offer possibilities. In 2006 the company expends $325,000
on a research project, but by the end of 2006 it is impossible to determine whether any benefit will be derived
from it.
Instructions
(a) What account should be charged for the $325,000, and how should it be shown in the financial
statements?
(b) The project is completed in 2007, and a successful patent is obtained. The R&D costs to complete
the project are $110,000. The administrative and legal expenses incurred in obtaining patent number
472-1001-84 in 2007 total $16,000. The patent has an expected useful life of 5 years. Record
these costs in journal entry form. Also, record patent amortization (full year) in 2007.
(c) In 2008, the company successfully defends the patent in extended litigation at a cost of $47,200,
thereby extending the patent life to December 31, 2015. What is the proper way to account for
this cost? Also, record patent amortization (full year) in 2008.
(d) Additional engineering and consulting costs incurred in 2008 required to advance the design of
a product to the manufacturing stage total $60,000. These costs enhance the design of the product
considerably. Discuss the proper accounting treatment for this cost. 

ANSWER KEY Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $0.75 out of annual

Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $0.75 out of annual earnings per share of $2.25. Currently, Rubenstein Bros. stock is selling for $12.50 per share. Adhering to the company’s target capital structure, the firm has $10 million in assets, of which 40% is funded by debt. Assume that the firm’s book value of equity equals its market value. In past years, the firm has earned a return on equity (ROE) of 18%, which is expected to continue this year and into the foreseeable future. 
a. Based on that information, what long-run growth rate can the firm be expected to maintain? (Hint: g = Retention rate x ROE.)

b. What is the stock’s required return? 


c. If the firm changed its dividend policy and paid an annual dividend of $1.50 per share, financial analysts would predict that the change in policy will have no effect on the firm’s stock price or ROE. Therefore, what must be the firm’s new expected long-run growth rate and required return? 

d. Suppose instead the the firm has decided to proceed with its original plan of disbursing $.75 per share to shareholders, but the firm intends to do so in the form of a stock dividend rather than a cash dividend. The firm will allot new shares based on the current stock price of $12.50. In other words, for every $12.50 in dividends dues to shareholders,a share of stock will be issued. How large will the stock dividend be relative to the firms current market capitalization? (Hint: REmember that market capitalization = 


Click Here For ANSWER KEY

ANSWER In the following situation identify the implied population

1. In the following situation identify the implied population.

A recent report on the weekly news presented the findings of a study on the effectiveness of Onglyza, along with diet and exercise, for treating diabetes.

2. In the following scenario identify the type of statistical study that was conducted.

A Gallop poll surveyed 1,018 adults by telephone, and 22% of them reported that they smoked cigarettes within the past week.

3. In the following scenario what is the statistic and the parameter it would estimate.

A recent study of 460 drivers age 70 and over by the National Highway Traffic Safety Administration reported that 75% of those drivers had uncorrected vision problems.

4. What type of sampling procedure was used to collect the data in the MM207 Student Data Set?

 5. From the MM207 Student Data Set identify one variable that is discrete and one variable that is continuous. Explain your reasoning. How do you know?

6. From the MM207 Student Data Set identify the following:

7. What is the approximate percentage of students represented in the data set who are between the ages of 30 and 48 inclusive?

8. Assume that you are preparing a report on MM207 statistics students at Kaplan University to present to the Kaplan Board of Trustees. Prepare an appropriate graphical representation for each of the following variables.

9. Using the range rule of thumb estimate the standard deviation for the number of credit hours students in this sample are taking and the shoe sizes of the females in the class. Then using StatCrunch compute the actual standard deviation. Compare the results.

10. Using measures of center and measures of variability compare the number of hours on school work (Q11) and the number of hours watching television (Q14).

Click Here For ANSWER

ANSWER KEY The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer

The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January 2010:
a. Estimated sales for January:
Batting helmet . . . . . . . . . . . . . 3,700 units at $70 per unit
Football helmet . . . . . . . . . . . . 7,200 units at $142 per unit

b. Estimated inventories at January 1:
Direct materials: Finished products:
Plastic . . . . . . . . . . 800 lbs. Batting helmet . . . . . . 310 units at $33 per unit
Foam lining . . . . . . 520 lbs. Football helmet . . . . . 420 units at $57 per unit

c. Desired inventories at January 31:
Direct materials: Finished products:
Plastic . . . . . . . . . . 1,240 lbs. Batting helmet . . . . . . 290 units at $34 per unit
Foam lining . . . . . . . 450 lbs. Football helmet . . . . . . 520 units at $58 per unit

d. Direct materials used in production:
In manufacture of batting helmet:
Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20 lbs. per unit of product
Foam lining . . . . . . . . . . . . . . . . . . . . . . . . 0.50 lb. per unit of product
In manufacture of football helmet:
Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.80 lbs. per unit of product
Foam lining . . . . . . . . . . . . . . . . . . . . . . . . 1.40 lbs. per unit of product

e. Anticipated cost of purchases and beginning and ending inventory of direct materials:
Plastic . . . . . . . . . . . . . . . . . $7.50 per lb.
Foam lining . . . . . . . . . . . . . $5.00 per lb.

f. Direct labor requirements:


Batting helmet:
Molding Department . . . . . . . . . . . . . . . . . 0.20 hr. at $15 per hr.
Assembly Department . . . . . . . . . . . . . . . . 0.50 hr. at $13 per hr.
Football helmet:
Molding Department . . . . . . . . . . . . . . . . . 0.30 hr. at $15 per hr.
Assembly Department . . . . . . . . . . . . . . . . 0.65 hr. at $13 per hr.
g. Estimated factory overhead costs for January:

Indirect factory wages $115,000 Power and light $18,000
Depreciation of plant and equipment 32,000 Insurance and property tax 8,700

h. Estimated operating expenses for January:
Sales salaries expense $275,300
Advertising expense 139,500
Office salaries expense 83,100
Depreciation expense—office equipment 5,800
Telephone expense—selling 3,200
Telephone expense—administrative 900
Travel expense—selling 46,200
Office supplies expense 4,900
Miscellaneous administrative expense 5,200

i. Estimated other income and expense for January:
Interest revenue $14,500
Interest expense 17,400

j. Estimated tax rate: 30%

Instructions
1. Prepare a sales budget for January.
2. Prepare a production budget for January.
3. Prepare a direct materials purchases budget for January.
4. Prepare a direct labor cost budget for January.
5. Prepare a factory overhead cost budget for January.
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $12,500, and work in process at the end of January is desired to be $13,500.
7. Prepare a selling and administrative expenses budget for January.
8. Prepare a budgeted income statement for January.

Click Here For ANSWER KEY

ANSWER KEY Victor Vroom developed the expectancy approach.Explain the expectancy model in terms of Vroom's

Q: Explain the nature of each of these three skills' Z, With respect to organization and control, 

Technical skills  

Conceptual skills

Human skills

Q: Victor Vroom developed the expectancy approach.Explain the expectancy model in terms of Vroom's concepts of expectancy, instrumentality, and valence, 

Q: What can managers do to improve employee motivation in light of the Vroom model?

Q:1, Briefly define a transactional leader.

Q2, Explain the terms leniency, central tendency, and recency as they relate to conducting appraisal interviews

Q3, In the context of organizational development, what is sensitivity training?

1. What is required to implement an organization's commitment to social responsibility?

2. What are the main obstacles to implementing socially responsible policies?

3. Name specific actions that can be taken toward increased social responsibility

Click Here For ANSWER KEY

ANSWER KEY Donna Jamison was brought in as assistant to Fred Campo, Computron’s chairman,

MINI CASE The first part of the case, presented in chapter 3, discussed the situation that Computron Industries was in after an expansion program.  Thus far, sales have not been up to the forecasted level, costs have been higher than were projected, and a large loss occurred in 2004, rather than the expected profit.  As a result, its managers, directors, and investors are concerned about the firm’s survival.

Donna Jamison was brought in as assistant to Fred Campo, Computron’s chairman, who had the task of getting the company back into a sound financial position. Computron’s 2003 and 2004 balance sheets and income statements, together with projections for 2005, are shown in the following tables.  Also, the tables show the 2003 and 2004 financial ratios, along with industry average data.  The 2005 projected financial statement data represent Jamison’s and Campo’s best guess for 2005 results, assuming that some new financing is arranged to get the company “over the hump.”

Jamison examined monthly data for 2004 (not given in the case), and she detected an improving pattern during the year.  Monthly sales were rising, costs were falling, and large losses in the early months had turned to a small profit by December.  Thus, the annual data looked somewhat worse than final monthly data.  Also, it appears to be taking longer for the advertising program to get the message across, for the new sales offices to generate sales, and for the new manufacturing facilities to operate efficiently.  In other words, the lags between spending money and deriving benefits were longer than Computron’s managers had anticipated.  For these reasons, Jamison and Campo see hope for the company--provided it can survive in the short run.

Jamison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions should be taken.  Your assignment is to help her answer the following questions.  Provide clear explanations, not yes or no answers.

Click Here For ANSWER KEY

ANSWER KEY Listed below are the transactions that affected the shareholders' equity of Branch-Rickie Corporation

Listed below are the transactions that affected the shareholders' equity of Branch-Rickie Corporation during the period 2011–2013. At December 31, 2010, the corporation's accounts included:

a.		November 1, 2011, the board of directors declared a cash dividend of $.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
b.		On March 1, 2012, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickie was holding as an investment. The bonds had a fair value of $1.6 million, but were purchased two years previously for $1.3 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5.
c.		On July 12, 2012, the corporation declared and distributed a 5% common stock dividend (when the market value of the common stock was $21 per share). Cash was paid in lieu of fractional shares representing 250,000 equivalent whole shares.
d.		On November 1, 2012, the board of directors declared a cash dividend of $.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
e.		On January 15, 2013, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $22 per share.
f.		On November 1, 2013, the board of directors declared a cash dividend of $.65 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.

Required:

1.		Prepare the journal entries that Branch-Rickie recorded during the three-year period for these transactions.
2.		Prepare comparative statements of shareholders' equity for Branch-Rickie for the three-year period ($ in 000s). Net income was $330 million, $395 million, and $455 million for 2011, 2012, and 2013, respectively. Click Here For ANSWER KEY

CORRECT ANSWER Week 6 In the USER_CONSTRAINTS view, the value displayed in the CONSTRAINT_TYPE

True/False

Indicate whether the statement is true or false.

____    1.   A character is a basic unit of data and can consist of a number, letter, or special symbol. 

____    2.   Partial dependency can only exist if the data is uniquely identified by a composite primary key. 

____    3.   There are six editions available for Oracle10g. 

____    4.   The DESCRIBE command is used to view data in a table. 

____    5.   The asterisk symbol (*) can be used in a SELECT statement to indicate that all rows in the table should be displayed in the results. 

____    6.   The INTERVAL datatype can be used to identify a specific interval, or amount, of time. 

____    7.   When a column is deleted, the deletion is permanent. 

____    8.   You cannot delete the last column in a table. 

____    9.   The DELETE TABLE command can be used to remove a table from a database.  

____  10.   When two conditions are joined by the AND logical operator, both of the conditions must be evaluated as FALSE to be included in the query results. 

Multiple Choice

Identify the choice that best completes the statement or answers the question.

____  11.   Which of the following usually correlates to a primary key in another table?

a.	transitive dependency	c.	foreign key
b.	composite primary key	d.	partial dependency

____  12.   Which of the following types of constraints is used to enforce referential integrity?

a.	UNIQUE	c.	FOREIGN KEY
b.	REFERS	d.	CHECK

____  13.   In the USER_CONSTRAINTS view, the value displayed in the CONSTRAINT_TYPE column will be a(n) ____ for a CHECK constraint.

a.	C	c.	U
b.	K	d.	R

Structure of the PROMOTION table

____  14.   Which of the following commands will add a UNIQUE constraint to the MINRETAIL column of the PROMOTION table?

a.	ALTER TABLE promotion ADD CONSTRAINT orderitems_minretail_uk UNIQUE (minretail);
b.	ALTER TABLE promotion MODIFY UNIQUE (minretail);
c.	ALTER TABLE promotion ADD UNIQUE minretail;
d.	ALTER TABLE promotion MODIFY minretail;

____  15.   Which of the following statements about COMMIT and ROLLBACK commands is incorrect?

a.	All DML commands (INSERT, UPDATE, DELETE) are explicitly committed and cannot be rolled back.
b.	All DDL commands (CREATE, TRUNCATE, ALTER TABLE) are explicitly committed and cannot be rolled back.
c.	A ROLLBACK command will reverse all DML operations performed since the last COMMIT was performed.
d.	all of the above

____  16.   Which of the following is a correct statement?

a.	A PUBLIC synonym allows any user to access the specified table.
b.	A PUBLIC synonym can be referenced by any user.
c.	A PUBLIC synonym can only be deleted by the user that created the synonym.
d.	all of the above

____  17.   Which of the following operators would be most appropriate to determine whether or not the retail price of a book is at least $24.00?

a.	LIKE	c.	>
b.	BETWEEN	d.	>=

____  18.   Which of the following is a valid comparison operator?

a.	!=	c.	^=
b.	IN	d.	all of the above

____  19.   Which of the following search conditions can be used to identify records that do not have data stored in a column named ColB?

a.	ColB = NULL	c.	ColB IS NULL
b.	ColB IS NOT NULL	d.	ColB = ' '

Contents of the ORDERS table

____  20.   Which of the following SQL statements will display all orders contained in the ORDERS table that have been shipped to the customer?

a.	SELECT * FROM orders WHERE shipdate = 'NOT NULL';
b.	SELECT * FROM orders WHERE shipdate = NOT NULL;
c.	SELECT * FROM orders WHERE shipdate IS NULL;
d.	SELECT * FROM orders WHERE shipdate IS NOT NULL;

Click   Here   For   CORRECT ANSWER

CORRECT ANSWERS

(TCO A) The variable portion of advertising costs is a: (Points : 6) 
Conversion YES... Period NO
Conversion YES .... Period YES
Conversion NO.... Period YES 
Conversion NO.... Period NO


2. (TCO A) Fixed costs expressed on a per unit basis: (Points : 6) 
will increase with increases in activity. 
will decrease with increases in activity. 
are not affected by activity. 
should be ignored in making decisions since they cannot change. 


3. (TCO A) Depreciation of office buildings and equipment are also known as: (Points : 6) 
variable costs
conversion costs
product costs
period costs


4. (TCO A) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following? 
Fixed Cost Per Unit Variable Cost Per Unit
(Points : 6) 
Increase No Change
Increase Increase
decrease No Change
No Change Increase


5. (TCO F) Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company included in direct labor cost a portion of indirect labor. The effect of this misclassification will be to: (Points : 6) 
understate the predetermined overhead rate
overstate the predetermined overhead rate
have no effect on the predetermined overhead rate
cannot be determined from the information given


6. (TCO F) Under a job-order costing system, the product being manufactured: (Points : 6) 
is homogeneous.
passes from one manufacturing department to the next before being completed. 
can be custom manufactured.
has a unit cost that is easy to calculate by dividing total production costs by the units produced.

7. (TCO F) Equivalent units for a process costing system using the FIFO method would be equal to: (Points : 6) 
units completed during the period, plus equivalent units in the ending work in process inventory
units started and completed during the period, plus equivalent units in the ending work in process inventory
units completed during the period and transferred out
units started and completed during the period, plus equivalent units in the ending work in process inventory, plus work needed to complete units in the beginning work in process inventory

8. (TCO B) The contribution margin ratio always decreases when the: (Points : 6) 
break-even point increases
break-even point decreases
variable expenses as a percentage of net sales increase
variable expenses as a percentage of net sales decrease


9. (TCO B) The unit sales needed to attain the target profit is found by: (Points : 6) 
dividing fixed costs by the contribution margin.
adding variable expenses to fixed expenses and dividing the total by the contribution margin.
adding target profit to the fixed expenses and then dividing the total by the unit contribution margin.
adding target profit to the fixed expenses and then dividing the total by the contribution margin.

10. (TCO E) Under variable costing: (Points : 6) 
net operating income will tend to move up and down in response to changes in levels of production
inventory costs will be lower than under absorption costing
net operating income will tend to vary inversely with production changes
net operating income will always be higher than under absorption costing
Click Here For CORRECT ANSWERS

CORRECT ANSWERS

1. PDF Corp. needs to replace an old lathe with a new, more efficient model. The old lathe was purchased for $50,000 nine years ago and has a current book value of $5,000. (The old machine is being depreciated on a straight-line basis over a ten-year useful life.) The new lathe costs $100,000. It will cost the company $10,000 to get the new lathe to the factory and get it installed. The old machine will be sold as scrap metal for $2,000. The new machine is also being depreciated on a straight-line basis over ten years. Sales are expected to increase by $8,000 per year while operating expenses are expected to decrease by $12,000 per year. PDF's marginal tax rate is 40%. Additional working capital of $3,000 is required to maintain the new machine and higher sales level. The new lathe is expected to be sold for $5,000 at the end of the project's ten-year life. What is the incremental free cash flow during years 2 through 10 of the project?
$13,600
$14,400
$15,800
$16,400

2. Jones Company has a target capital structure of 30% debt, 15% preferred stock, and 55% common equity. The company's after-tax cost of debt is 7%, its cost of preferred stock is 11%, its cost of retained earnings is 15%, and its cost of new common stock is 16%. The company stock has a beta of 1.5 and the company's marginal tax rate is 35%. What is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion?
11.20%
12.00%
13.80%
14.45%

3. Welltran Corp. can purchase a new machine for $1,875,000 that will provide an annual net cash flow of $650,000 per year for five years. The machine will be sold for $120,000 after taxes at the end of year five. What is the net present value of the machine if the required rate of return is 13.5%.
$558,378
$513,859
$473,498
$447,292

4. PDF Corp. needs to replace an old lathe with a new, more efficient model. The old lathe was purchased for $50,000 nine years ago and has a current book value of $5,000. (The old machine is being depreciated on a straight-line basis over a ten-year useful life.) The new lathe costs $100,000. It will cost the company $10,000 to get the new lathe to the factory and get it installed. The old machine will be sold as scrap metal for $2,000. The new machine is also being depreciated on a straight-line basis over ten years. Sales are expected to increase by $8,000 per year while operating expenses are expected to decrease by $12,000 per year. PDF's marginal tax rate is 40%. Additional working capital of $3,000 is required to maintain the new machine and higher sales level. The new lathe is expected to be sold for $5,000 at the end of the project's ten-year life. What is the project's terminal cash flow?
$3,000
$5,000
$6,000
$8,000

5. Project XYZ requires an investment in equipment of $600,000 to replace existing equipment. The existing equipment will produce after-tax salvage value of $70,000. Net working capital requirements are increased by $50,000. What is the total cash outflow at time zero?
$720,000
$650,000
$530,000
$580,000

6. Five Rivers Casino is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070 each. Gamblers flotation expense on the new bonds will be $50 per bond. Gamblers marginal tax rate is 35%. What is the pre-tax cost of debt for the newly-issued bonds?
8.76%
8.12%
7.49%
10.25%

7. The risk free rate of return is 2.5% and the market risk premium is 8%. Penn Trucking has a beta of 2.2 and a standard deviation of returns of 28%. Penn Trucking's marginal tax rate is 35%. Analysts expect Penn Trucking's dividends to grow by 6% per year for the foreseeable future. Using the capital asset pricing model, what is Penn Trucking's cost of retained earnings?
16.4%
17.7%
19.6%
20.1%

8. Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Zellars, Inc.'s required rate of return for these projects is 10%. The profitability index for Project B is:
1.55
1.48
1.39
1.33

9. Zellars, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Zellars, Inc.'s required rate of return for these projects is 10%. The internal rate of return for Project B is (Points : 1)
29.74%, 30.79%, 35.27%, or 36.77%

Click Here For CORRECT ANSWERS

ANSWER KEY McCormick Corporation issued a 4-year, $64,000, 5% note to Greenbush Company on

McCormick Corporation issued a 4-year, $64,000, 5% note to Greenbush Company on 
January 1, 2011, and received a computer that normally sells for $50,392. The 
note requires annual interest payments each December 31. The market rate of 
interest for a note of similar risk is 12%. Prepare McCormick's journal entries 
for (a) the January 1 issuance and (b) the December 31 interest.
Click Here For ANSWER KEY

ANSWER KEY Below are a number of transactions that took place in Seneca Company during the past year:

Below are a number of transactions that took place in Seneca Company during the past year:

a. Common stock was sold for cash

b. Interest was paid on a note, decreasing Interest Payable

c. Bonds were retired

d. A long-term loan was made to a subsidiary

e. Interest was received on the loan in (d) above, reducing Interest Receivable

f. A stock dividend was declared and issued on common stock

g. A building was acquired by issuing shares of common stock

h. Equipment was sold for cash

i. Short-term investments were sold

j. Cash dividends were declared and paid

k. Preferred stock was converted into common stock

l. Deferred Income Taxes, a long-term liability, was reduced

m. Dividends were received on stock of another company held as an investment

n. Equipment was purchased by giving a long-term note to the seller

Required:

Prepare an answer sheet with the following column headings:

Transaction

Source, Use or Neither

Activity/Operating Investing Financing

Reported in a Seperate Schedule

Not on Statement

*Enter the letter of the transaction in the left column and indicate whether the transaction would be a source, use or neither. Then place an X in the appropriate column to show the proper classification of the transaction on the statement of cash flows, or to show if it would be reported in a seperate schedule or not reported on the statement at all.

Click Here For ANSWER KEY