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Chapter 23: Q7BE (page 1373)
Moxley Corporation had January 1 and December 31 balances as follows.
1/1/17 12/31/17
Inventory \(95,000 \)113,000
Accounts payable 61,000 69,000
For 2017, cost of goods sold was $500,000. Compute Moxley’s 2017 cash payments to suppliers.
The cash payment to suppliers is computed as$510,000
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Question: . Classify the following items as (1) operating, (2) investing, (3) financing, or (4) significant noncash investing and financing activities, using the direct method.
(a) Cash payments to employees.
(b) Redemption of bonds payable.
(c) Sale of building at book value.
(d) Cash payments to suppliers.
(e) Exchange of equipment for furniture.
(f) Issuance of preferred stock.
(g) Cash received from customers.
(h) Purchase of treasury stock.
(i) Issuance of bonds for land.
(j) Payment of dividends.
(k) Purchase of equipment.
(l) Cash payments for operating expenses.
For purposes of the statement of cash flows, under IFRS, income taxes paid are treated as:
Question: Collinsworth Co. reported sales on an accrual basis of \(100,000. If accounts receivable increased \)30,000 and the allowance for doubtful accounts increased \(9,000 after a write-off of \)2,000, compute cash sales.
Differentiate between the direct method and the indirect method by discussing each method
Red Hot Chili Peppers Co. had the following activity in its most recent year of operations.
(a) Purchase of equipment. (g) Amortization of intangible assets.
(b) Redemption of bonds payable. (h) Purchase of treasury stock.
(c) Sale of building. (i) Issuance of bonds for land.
(d) Depreciation. (j) Payment of dividends.
(e) Exchange of equipment for the furniture. (k) Increase in interest receivable on notes receivable.
(f) Issuance of common stock. (l) Pension expense exceeds the amount funded.
Instructions
Classify the items as (1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method.
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