acc homework 2

Problem 1:

The 2012 accounting records of Liz Ten Transport reveal the following transactions and events. Prepare the cash flows from operating activities section using the direct method. (Not all of the items will be used.)

Payment of interest

$10,000

Collection of accounts receivable

$182,000

Cash sales

48,000

Payment of salaries and wages

53,000

Receipt of dividend revenue

18,000

Depreciation expense

16,000

Payment of income taxes

12,000

Proceeds from sale of vehicles

12,000

Net income

38,000

Purchase of equipment for cash

22,000

Payment of accounts payable for merchandising

115,000

Payment of dividends

14,000

Payment for land

74,000

Payment of operating expenses

28,000

Problem 2:

An inexperienced accountant for Nerys Corporation showed the following in the income statement: income before income taxes and extraordinary item $400,000, and extraordinary loss from flood (before taxes) $70,000. The extraordinary loss and taxable income are both subject to a 30% tax rate. Prepare a correct income statement.

 

***USE ATTACHED WORKSHEET FOR SOLUTION***