devrt acct312 week homework assignment

Week Seven – Homework Exercises P21-5 and P21-6

P21-5 Comparative
balance sheets for 2013 and 2012 and a statement of income for 2013 are given
below for Metagrobolize Industries. Additional information from the accounting
records of Metagrobolize also is provided.

METAGROBOLIZE INDUSTRIES
Comparative Balance Sheets
December 31, 2013 and 2012
($ in 000s)

2013 2012
Assets
Cash $600
$375
Accounts receivable 600 450
Inventory 900 525
Land 675 600
Building 900 900
Less:
Accumulated depreciation (300) (270)
Equipment 2,850 2,250
Less:
Accumulated depreciation (525) (480)
Patent 1,200 1,500
$6,900
$5,850
Liabilities
Accounts payable $750
$450
Accrued expenses payable 300 225
Lease liability–land 150 0
Shareholders’ Equity
Common stock 3,150 3000
Paid-in capital—excess of par 750 675
Retained earnings 1,800 1,500

Revenues
Sales revenue $2,645

Gain on sale of
land 90 $2,735
Expenses
Cost of goods
sold $600

Depreciation
expense–building 30
Depreciation
expense–equipment 315
Loss on sale of
equipment 15
Amortization of
patent 300
Operating
expenses 500 1,760
Net income $975

Additional information from the accounting records:

a. During 2013, equipment with a cost of $300,000 (90%
depreciated) was sold.
b. The statement of shareholders’ equity reveals reductions
of $225,000 and $450,000 for stock dividends and cash dividends, respectively.

Required: Prepare
the statement of cash flows of Metagrobolize for the year ended December 31,
2013. Present cash flows from operating activities by the direct method. (You
may omit the schedule to reconcile net income to cash flows from operating
activities.)
P21-6 The income
statement and a schedule reconciling cash flows from operating activities to
net income are provided below ($ in millions) for Mike Roe Computers.

PEACH COMPUTERS Reconciliation
of Net Income
Income Statement To
Net Cash Flows from Operating Activites
For the Year Ended December 31, 2013
Sales $150
Net income $13

Cost of goods sold (90) Adjustments for noncash
effects:
Gross margin 60 Decrease in accounts
receivable 5
Salaries expense $20
Gain
on sales of equipment (12)
Insurance expense 12 Increase
in inventory (6)
Depreciation expense 5 Increase
in accounts payable 9
Interest expense 6 (43) Increase in salaries payable 3
Gain and losses: Depreciation
expense 5
Gain on sale of
equipment 12 Decrease in bond
discount 3
Loss on sale of
land (3) Decrease in prepaid
insurance 2
Income before tax 26 Loss on sale of land 3
Income tax
expense (13) Increase in income tax
payable 6
Net income $13

Net cash flows from operating activities $31

Required: 1.
Calculate each of the following amounts for Mike Roe Computers:
a. Cash received from customers
during the reporting period.
b. Cash paid to suppliers of goods
during the reporting period.
c. Cash paid to employees during the
reporting period.
d. Cash paid for interest during the
reporting period.
e. Cash
paid for insurance during the reporting period.
f. Cash
paid for income taxes during the reporting period.
2.
Prepare the cash flows from operating activities section of the statement of
cash flows (direct method).