Driftwood Shipbuilders entered into the following transactions during 2015:
1. Sold $6,000 of no-par common stock.
2. Purchased $6,000 of inventory on account.
3. Purchased new equipment for $5,000 in cash.
4. Collections on accounts receivable totaled $10,000.
5. Made payments of $5,000 to suppliers.
6. Declared and paid dividends of $2,000.
7. Paid rent of $6,000 for the last six months of 2014 and $6,000 for the first six months of 2015.
8. Made sales totaling $100,000: $35,000 on account and the remainder for cash.
9. Paid $40,000 in cash for miscellaneous expenses.
10. Sold investments with a cost of $20,000 for $25,000.
a. Prepare journal entries for each transaction.
b. Prepare a cash T-account and post all transactions affecting cash to the account. Assume a beginning cash balance of $25,000.
c. Prepare a statement of cash flows (direct method) from the cash T-account.

  • CreatedAugust 19, 2014
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