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E13-1 E13-3 E13-5 E13-8 P13-2A P13-5A

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ACC560 Chapter 13

E13-1 Quarshee Corporation had these transactions during 2014.
(a) Issued $50,000 par value common stock for cash.
(b) Purchased a machine for $30,000, giving a long-term note in exchange.
(c) Issued $200,000 par value common stock upon conversion of bonds having a face
value of $200,000.
(d) Declared and paid a cash dividend of $18,000.
(e) Sold a long-term investment with a cost of $15,000 for $15,000 cash.
(f) Collected $16,000 of accounts receivable.
(g) Paid $18,000 on accounts payable.

Analyze the transactions and indicate whether each transaction resulted in a cash fl ow
from operating activities, investing activities, financing activities, or noncash investing
and financing activities.

E13-3 Tim Latimer Corporation had the following transactions.
1. Sold land (cost $12,000) for $10,000.
2. Issued common stock for $22,000.
3. Recorded depreciation on buildings for $14,000.
4. Paid salaries of $7,000.
5. Issued 1,000 shares of $1 par value common stock for equipment worth $9,000.
6. Sold equipment (cost $10,000, accumulated depreciation $8,000) for $3,200.

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

E13-5 The current sections of Nasreen Inc.’s balance sheets at December 31, 2013 and 2014,
are presented here. Nasreen’s net income for 2014 was $153,000. Depreciation expense was
2014 2013
Current assets 
Cash   105,000  99,000
 Accounts receivable   110,000  79,000
 Inventory   158,000  172,000
 Prepaid expenses   27,000  25,000
 Total current assets   400,000  375,000
Current liabilities 
Accrued expenses payable   15,000  9,000
 Accounts payable   85,000  95,000
 Total current liabilities   100,000  104,000

Prepare the net cash provided by operating activities section of the company’s statement of
cash fl ows for the year ended December 31, 2014, using the indirect method.

E13-8 Here are comparative balance sheets for Syal Company.

Syal Company
Comparative Balance Sheet
Assets 2014 2013
Cash   73,000  33,000
Accounts receivable   85,000  71,000
Inventory   170,000  187,000
Land   73,000  100,000
Equipment   260,000  200,000
Accumulated depreciation-equipment   (66,000)  (34,000)
 Total   595,000  557,000
Liabilities and astockholder's equity
Accounts payable   35,000  47,000
Bonds payable   150,000  200,000
Common stock ($1 par)   216,000  174,000
Retained earnings   194,000  136,000
 Total   595,000  557,000

Additional information:
1. Net income for 2014 was $103,000.
2. Depreciation expense was $32,000.
3. Cash dividends of $45,000 were declared and paid.
4. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
5. Common stock was issued for $42,000 cash.
6. No equipment was sold during 2014.
7. Land was sold for its book value of $27,000.

Prepare a statement of cash flows for 2014 using the indirect method.

P13-2A The following account balances relate to the stockholders’ equity accounts of
Chipo Corp. at year-end.

Common stock, 10,500 and 10,000 shares, 
respectively, for 2014 and 2013  155,000 130,000
Preferred stock, 5,000 shares  125,000 125,000
Retained earnings  300,000 250,000

A small stock dividend was declared and issued in 2014. The market value of the shares
was $11,200. Cash dividends were $16,000 in both 2014 and 2013. The common stock has
no par or stated value.

(a) What was the amount of net income reported by Chipo Corp. in 2014?
(b) Determine the amounts of any cash inflows or outflows related to the common stock
and dividend accounts in 2014.
(c) Indicate where each of the cash inflows or outflows identified in (b) would be classified
on the statement of cash flows.

P13-5A Rattigan Company’s income statement contained the condensed information below

Sales revenue  970,000
Operating expenses, excluding depreciation  624,000
Depreciation expense  55,000
Loss on disposal of plant assets  25,000 704,000
Income before income taxes  266,000
Income tax expense  40,000
Net income  226,000

Rattigan’s balance sheet contained the comparative data at December 31, shown below.
Accounts receivable  75,000 60,000
Accounts payable  41,000 27,000
Income taxes payable  13,000 7,000

Accounts payable pertain to operating expenses.

Prepare the operating activities section of the statement of cash flows using the indirect

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