Q1

 

 

Furst Ltd. had the following transactions.

1. Paid salaries of NT$140,000.

2. Issued 1,000 shares of NT$10 par value ordinary shares for equipment worth

NT$160,000.

3. Sold equipment (cost NT$100,000, accumulated depreciation NT$60,000) for NT$30,000.

4. Sold land (cost NT$120,000) for NT$160,000.

5. Issued another 1,000 shares of NT$10 par ordinary shares for NT$180,000.

6. Recorded depreciation of NT$200,000.

Instructions:

For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the statement of cash flows. Assume the indirect method.

Question 2

 

Strong AG’s comparative statements of financial position are presented below.

STRONG AG

Comparative Statements of Financial Position

December 31

2017           2016

Investments                                                                   € 23,000     € 16,000

Equipment                                                           60,000        70,000

Accumulated depreciation—equipment               (14,000)      (10,000)

Accounts receivable                                             24,200        22,300

Cash                                                                      28,200       17,700

                                                                             ----------       -----------

Total                                                                    €121,400    €116,000

                                                                             =======    ======

Ordinary shares                                                   € 60,000     € 45,000

Retained earnings                                                          31,800        29,900

Bonds payable                                                     10,000        30,000

Accounts payable                                                          19,600        11,100

                                                                             --------          --------

Total                                                                    €121,400    €116,000

                                                                             ======      =======

Additional information:

1. Net income was €28,300. Dividends declared and paid were €26,400.

2. Equipment which cost €10,000 and had accumulated depreciation of €1,200 was sold for €4,300.

3. All other changes in non-current account balances had a direct effect on cash flows, except the change in accumulated depreciation.

Instructions:

(a) Prepare a statement of cash flows for 2017 using the indirect method.

Answer rating: 100% (QA)

1 Will decrease cash as it is a cash outflow Dr Cr Salaries 140000 Cash 140000 2 No effect on cash a... View the full answer