ACC 557 Homework 5: Chapter 13

Directions: Answer the following questions on a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your
assignment using the assignment link in Blackboard.

Exercises

E13-3. Cushenberry Corporation had the following transactions.

1. Sold land (cost $12,000) for $15,000.

2. Issued common stock at par for $20,000.
3. Recorded depreciation on buildings for $17,000.
4. Paid salaries of $9,000.
5. Issued 1,000 shares of $1 par value common stock for equipment worth $8,000.
6. Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200.

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

E13-4. Gutierrez Company reported net income of $225,000 for 2015. Gutierrez also reported
depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative
balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in
accounts payable, and a $4,000 decrease in prepaid expenses.

Instructions
Prepare the operating activities section of the statement of cash flows for 2015. Use the indirect method.

2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information
and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of
Strayer University.
ACC 557 Homework 5: Chapter 13 (4-22-2015) Page !1 of ! 3
 ACC 557 Homework 5: Chapter 13

Problems

P13-3A. The income statement of Whitlock Company is presented here.

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Additional information:
1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Operating expenses include depreciation expense of $70,000.

Instructions
Prepare the operating activities section of the statement of cash flows for the year ended November 30,
2015, for Whitlock Company, using the indirect method.

2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information
and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of
Strayer University.
ACC 557 Homework 5: Chapter 13 (4-22-2015) Page !2 of ! 3
 ACC 557 Homework 5: Chapter 13

P13-7A. Presented below are the financial statements of Nosker Company.

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Additional data:
1. Dividends declared and paid were $20,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and
had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.

Instructions
a) Prepare a statement of cash flows using the indirect method.

b) Compute free cash flow.

2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information
and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of
Strayer University.
ACC 557 Homework 5: Chapter 13 (4-22-2015) Page !3 of ! 3