The following balance sheet is for Review Co. as of December 31, 2005. Review Co. Balance...

 

 

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The following balance sheet is for Review Co. as of December 31, 2005. Review Co. Balance Sheet December 31, 2005 (amounts in thousands) Assets Cash Accounts receivable Inventories Prepaid rent Total current assets Buildings & machinery Accumulated depreciation Buildings & machinery, net Land Total noncurrent assets Total assets $ 68.0 340.0 75.0 32.0 $515.0 $100.0 (25.0) $75.0 25.0 $100.0 $615.0 Liabilities and Equity Accounts payable Wages payable Interest payable Taxes payable Other accrued liabilities Total current liabilities Senior debt Subordinated debt Total noncurrent liabilities Common stock APIC Retained earnings Shareholders' equity Total liabilities & shareholders' equity $63.0 13.0 3.0 6.0 5.0 $90.0 $100.0 30.0 $130.0 $ 15.0 115.0 265.0 $395.0 $615.0 CHAPTER 4 STATEMENT OF CASH FLOWS: OPERATING, INVESTING, AND FINANCING ACTIVITIES . 85 The following information pertains to 2006 (all amounts are in thousands): a. Sales were $3,000, all on account. b. Collections on accounts receivable were $3,100. c. A physical count of inventory found $95 on hand at December 31, 2006. d. On January 1, 2006, Review bought a building for $50 cash. On January 1, 2006, Review sold machinery for $1.5 that cost $10 and had accumu- lated depreciation as of January 1, 2006, of $8. f. Review calculates depreciation expense using the straight-line method and an asset life of 10 years for buildings and machinery. eraing Inventory g. The senior debt has an interest rate of 6%. h. The subordinated debt has an interest rate of 8%. Dividends paid totaled $14. Wages payable at the end of the year were $17. you still ove Wages expense was $57. S. Cash payments for miscellaneous expenses totaled $50. These payments are in addi- tion to any miscellaneous expenses derived from prepaids or liability accounts. m. Interest paid by Review was $7. Purchases were $2,820, all on account. Purchases = indemory Payments on accounts payable were $2,700. p. The balance of prepaid rent at December 31, 2003, was $30. Additions to prepaid rent totaled $25. The beginning balance of other accrued liabilities was paid off in cash. Other accrued liabilities at the end of the year, all relating to miscellaneous expenses, amounted to $9. t. Review's tax expense for 2006 was $12. u. Unpaid taxes at December 31, 2006, were $7. Required: 1. In a set of T-accounts, make all entries required under U.S. GAAP. 2. Prepare a balance sheet for December 31, 2006. 3. Prepare an income statement for the year ended December 31, 2006. 4. Prepare a statement of cash flows, using the indirect method, for the year ended De- cember 31, 2006. The following balance sheet is for Review Co. as of December 31, 2005. Review Co. Balance Sheet December 31, 2005 (amounts in thousands) Assets Cash Accounts receivable Inventories Prepaid rent Total current assets Buildings & machinery Accumulated depreciation Buildings & machinery, net Land Total noncurrent assets Total assets $ 68.0 340.0 75.0 32.0 $515.0 $100.0 (25.0) $75.0 25.0 $100.0 $615.0 Liabilities and Equity Accounts payable Wages payable Interest payable Taxes payable Other accrued liabilities Total current liabilities Senior debt Subordinated debt Total noncurrent liabilities Common stock APIC Retained earnings Shareholders' equity Total liabilities & shareholders' equity $63.0 13.0 3.0 6.0 5.0 $90.0 $100.0 30.0 $130.0 $ 15.0 115.0 265.0 $395.0 $615.0 CHAPTER 4 STATEMENT OF CASH FLOWS: OPERATING, INVESTING, AND FINANCING ACTIVITIES . 85 The following information pertains to 2006 (all amounts are in thousands): a. Sales were $3,000, all on account. b. Collections on accounts receivable were $3,100. c. A physical count of inventory found $95 on hand at December 31, 2006. d. On January 1, 2006, Review bought a building for $50 cash. On January 1, 2006, Review sold machinery for $1.5 that cost $10 and had accumu- lated depreciation as of January 1, 2006, of $8. f. Review calculates depreciation expense using the straight-line method and an asset life of 10 years for buildings and machinery. eraing Inventory g. The senior debt has an interest rate of 6%. h. The subordinated debt has an interest rate of 8%. Dividends paid totaled $14. Wages payable at the end of the year were $17. you still ove Wages expense was $57. S. Cash payments for miscellaneous expenses totaled $50. These payments are in addi- tion to any miscellaneous expenses derived from prepaids or liability accounts. m. Interest paid by Review was $7. Purchases were $2,820, all on account. Purchases = indemory Payments on accounts payable were $2,700. p. The balance of prepaid rent at December 31, 2003, was $30. Additions to prepaid rent totaled $25. The beginning balance of other accrued liabilities was paid off in cash. Other accrued liabilities at the end of the year, all relating to miscellaneous expenses, amounted to $9. t. Review's tax expense for 2006 was $12. u. Unpaid taxes at December 31, 2006, were $7. Required: 1. In a set of T-accounts, make all entries required under U.S. GAAP. 2. Prepare a balance sheet for December 31, 2006. 3. Prepare an income statement for the year ended December 31, 2006. 4. Prepare a statement of cash flows, using the indirect method, for the year ended De- cember 31, 2006.

Answer rating: 100% (QA)

1 TAccounts Cash Beginning balance 68 Sales on account 3000 Collections on accounts receivable 3100 Payments for miscellaneous expenses 50 Interest paid 7 Dividends paid 14 Purchases on account 2820 P... View the full answer