Reference no: EM131942294

Questions: 1. For the following account activities, indicate the adjustment to be made, if any, to cash flows in the operating section of the cash flow statement. Assume that the statement is prepared on the indirect method:

(A) Increase net income

(B) Decrease net income

(C) No adjustment (investing activity).

(D) No adjustment (financing activity)

1. Accounts receivable decreased by $5,000 from last year to this year.

2. Depreciation was $30,000.

3. Prepaid Expenses decreased $10,000.

4. Accounts Payable increased $20,000.

5. Merchandise inventory decreased by $15,000.

6. Office furniture increased $8,000.

7. Sold a building at a gain of $5,000.

8. Issued a cash dividend.

9. Amortization of intangible assets was $10,000.

10. Purchased 100 shares of Google common stock for $15,000.

2. The stockholders' equity section of the XYZ Corporation's balance sheet shows these balances in the capital stock accounts:

Preferred Stock 5% $100 par cumulative$100,000.

Common Stock $1 Par $ 1,000,000.

The board of directors made the following dividend declarations and payments:

2013 $ 0

2014 $120,000

2015 $200,000

Required: Prepare a schedule showing the distribution of the dividends between preferred and common stockholders for all three years. Also indicate the dividend per share as well.

3. The following information is available for the A Big Gazint Corporation:

A Big Gazint Corporation

Income Statement

For the Year Ended December 31, 2017

Service Revenue                                                                                 $ 900,000

Operating Expenses                                                                            700,000          

     Operating Income                                                 $ 200,000

Gain on Investment Sale                                                                           10,000

Net income Before Income Taxes                                  $ 210,000

Loss on Sale of Investments                                25,000

$ 185,000

Income Tax Expense   90,000

   Net Income                                                                          $  95,000

The following partial balance sheet information is also available for 2015 and 2014:

                                                                        2017                2016

 

Cash                                                              $ 655,000        $ 435,000

Accounts Receivable                                       120,000          100,000

Merchandise Inventory                                      40,000             50,000

Supplies                                                         10,000            20,000

L.T. Investments                                             35,000          80,000

Accounts Payable                                           70,000            60,000

Income Taxes Payable                                    10,000          15,000

In addition, the following transactions took place during 2017:

1. Common stock was issued for $100,000 cash.

2. Long-term investments were sold for $55,000.

3. Cash dividends of $80,000 were paid.

4. The operating expenses included depreciation of $30,000.

Required: Prepare in good form,a cash flow statement for 2017 using the indirect method for A Big Gazint Corporation.