BUSINESS COLLEGE

Determine proper classification (LO11-1) Analysis of an income statement, balance sheet, and additional information from the accounting records of Gadgets, Inc., reveals the following items. Required: Select the section of the statement of cash flows in which each of these items would be reported: operating activities (indirect method), investing activities, financing activities, or a separate noncash activities note.1. Purchase of a patent.
2. Depreciation expense
3. Issuance of a note payable
4. Increase in inventory

Answers

Answer 1

Answer:

Answer:

Patent-investing activity

depreciation expense-operating activity

issuance of note payable-financing activity

Increase in inventory-operating activity

Explanation:

The purchase of patent as intangible asset is reported as an investing activity item as an outflow of cash from the business.

Depreciation expense is meant to added to net income in arriving at the net cash flows from operating activities

Issuance of a note payable is a financing item under the financing activities' segment of the cash flow as an inflow.

Increase in inventory is increase in net working capital which is deducted as an operating activity item .

Answer 2

Answer:

Answer:

1. Purchase of a patent - Investing activities

2. Depreciation expense - Operating activities

3. Issuance of a note payable - Financing activity

4. Increase in inventory - Operating activity

Explanation:

Operating activity of cash flows include cash inflows and cash outflows from day to day business activities. This includes cash flows use from ongoing business activities.

Investing activity of cash flows includes cash inflows and cash outflows from investments of the business. This includes purchase of assets, sale of assets, investment in securities.

Financing activity of cash flows include cash inflows and cash outflows to fund the company. The activities that are incurred to fiance the business are classified as financing activity.

Related Questions

The Precision Widget Company had the following balances in their accounts at the end of the accounting period: Work-in-Process $ 5,000 Finished Goods 20,000 Cost of Goods Sold 200,000 If their manufacturing overhead was overallocated by $8,000 and Precision Widget adjusts their accounts using a proration based on total ending balances, the revised ending balance for Cost of Goods Sold would be
Drag the account types to form the expanded accounting equation. Begin the equity section with Contributed Capital + Retained Earnings. Then, identify whether the item increases, '+', or decreases, '-', equity. Common Accounts Receivable Cash Dividends Revenues Expenses Assets Stock Unearned Revenues Accounts Liabilities Payable 2 Enter the missing value to balance the equation. E25,000 38,000 38,000 35,000. 28,000 22,000 30,000-48,000 +31,000 2,000 - 39,000 32.000 25,000 31.000 39,000 3 Identify the part of the expanded accounting equation for each account title. Prepaid Insurance Common Stock Dividends Insurance Expense Accounts Payable Service Revenue 4 Build a T-account for each account title. Label the DR (debit), CR (credit), NB (normal balance), and "+" or "-". Credit Debit Normal Balance Accounts Receivable Dividends Common Stock + + + + Insurance Expense Rent Payable Interest Revenue + + + + + + Using the expanded accounting equation, calculate and enter the answers for each question. You will need to use the answers you calculate for beginning and ending equity to answer the rest of the questions. Liabilities Assets Beginning of Year: $27,000 $15,000 End of Year: $60.000 $27,000 1) What is the equity at the beginning of the year? 2) What is the equity at the end of the year? Ending Equity Beginning Equity 3) If the company issues common stock of $6,300 and pay dividends of $37,300, how much is net income (loss)? 4) If net income is $1,100 and dividends are $6,000, how much is common stock? Net Income (Loss) Common Stock 5) If the company issues common stock of $19,600 and net income is $19,100, how much is dividends? 6) If the company issues common stock of $42,900 and pay dividends of $3,400, how much is net income (loss)? Dividends Net Income (Loss)
Rebel Technology maintains its records using cash-basis accounting. During the year, the company received cash from customers, $43,000, and paid cash for salaries, $23,500. At the beginning of the year, customers owe Rebel $1,000. By the end of the year, customers owe $6,600. At the beginning of the year, Rebel owes salaries of $5,600. At the end of the year, Rebel owes salaries of $3,300. Determine cash-basis net income and accrual-basis net income for the year.
Consider a firm with a contract to sell an asset for $138,000 five years from now. the asset costs $74,000 to produce today. given a relevant discount rate on this asset of 12 percent per year, calculate the profit the firm will make on this asset.
Mountain High Ice Cream Company transferred $76,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $6,600). Mountain High anticipates a $4,600 recourse obligation. The bank charges a 2% fee (2% of $76,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them. Required: Prepare the journal entry to record the transfer on the books of Mountain High, considering whether the sales criteria under IFRS have been met.

A rumor of "right sizing" at Ojai's engineering firm has him and his wife, Kaya, concerned about their preparation for meeting financial emergencies. Help them calculate their net worth or complete Worksheet 4, and calculate and interpret the current ratio, given the following assets and liabilities:Checking account ………………… $2,000Savings account ………………….. $4,000
Stocks ……………………………. $8,000
Utility bills ………………………. $500
Credit card bills …………………. $1,000
Auto loan ……………………….. $2,600

Answers

Answer:

Explanation:

Net assets = Total assets - Total debt

We know:

Checking account ………………… $2,000

Savings account ………………….. $4,000

Stocks ……………………………. $8,000

Utility bills ………………………. $500

Credit card bills …………………. $1,000

Auto loan ……………………….. $2,600

Let's classify them as asset or liability:

Assets: Checking account, Stocks, Savings account = 2000+4000+8000=14000

Liability: Utility bills, Credit card bills, Auto loan = 500+1000+2600=4100

So, net worth is 14000-4100=9900

Current ratio = Monetary assets/ Current liabilities;

Monetary assets = 2000+4000 = 6000

Current liabilities = 1000 + 500 = 1500

Current ratio = 6000/1500 = 4

QUESTION 16 Which of the following will cause the equilibrium price of widgets to fall and the equilibrium quantity to rise? A. Widget workers agree a large wage decrease so that none of them will have to be laid off. B. A decrease in the price of an item that consumers consider a substitute. C. The government raises taxes on widget firms. D. An increase in the price of an item that producers consider a substitute

Answers

Answer: A. Widget workers agree a large wage decrease so that none of them will have to be laid off.

Explanation:

There are activities that affects supply function cost, like wages cost going down, pushing prices down as well. In this case, with everything else constant, when cost go down the productivity per factor increase, making it possible to produce the same quantity at a lower price, or to produce more at a same price

The winner of a state lottery will receive $5,000 per week for the rest of her life. If the winner's interest rate is 6.5% per year compounded weekly, what is the present worth of this jackpot? Assume there are 52 weeks per year.

Answers

Answer:

$4,000,000

Explanation:

The computation of Present Value of Annuity is shown below:-

Present Value of Annuity = Amount ÷ Rate of Interest

Rate of Interest = 6.5% per year compounded weekly

or Rate of Interest = 6.5 ÷ 52

= 0.125% per week

Present Value of Annuity = Amount ÷ Rate of Interest

= $5,000 ÷ 0.00125

= $4,000,000

Therefore for computing the present value of annuity we simply applied the above formula.

Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Office Supplies (108); Office Equipment (163); Automobiles (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); Common Stock (307); Dividends (319); Fees Earned (402); Salaries Expense (601); and Utilities Expense (602).

Answers

Answer:

Eric Pense Journal Entries:

a. Dr Cash$23,000

Dr Office Equipment12,000

Cr Pense, Capital$35,000

b. Dr Land $8,000

Dr Building $33,000

Cr Cash$15,000

Cr Notes payable$26,000

c.Dr Supplies 600

Cr Accounts payable$600

d.Dr Automobile$7,000

Cr Capital$7,000

e.Dr Office Equipment$1,100

Cr Accounts payable$1,100

f.Dr Salary $800

Cr Cash$800

g.Dr Cash$2,700

Cr Fees Earned$2,700

h. Dr Utilities Expense$430

Cr Cash$430

i.Dr Account payable$600

Cr Cash$600

J. Dr Office Equipment $4,000

Cr Cash$4,000

k. Dr Accounts receivables$2,400

Cr Fees Earned$2,400

l. Dr Salary$800

Cr Cash$800

m. Dr Cash$1,000

Cr Accounts Receivable$1,000

n.Dr Pense, Withdrawal$1,050

Cr Cash$1,050

Explanation:

Final answer:

To record the transactions using the given account titles, journal entries need to be prepared. Each transaction must be debited and credited to the appropriate accounts based on the nature of the transaction.

Explanation:

In order to record the transactions provided, journal entries need to be prepared using the given account titles. Here is an example of how to record a transaction using these accounts:

On June 1, the company received $5,000 cash from a customer as payment for services rendered.
The journal entry to record this transaction would be:
Debit: Cash (101) $5,000
Credit: Fees Earned (402) $5,000

Continue the same process for all other transactions, making sure to debit and credit the appropriate accounts based on the nature of the transaction. Use the given account numbers to assign each entry to the correct account.

Overall, journal entries are used to record the financial transactions of a business, showing how money is received or spent and the impact on various accounts.

Learn more about Recording transactions here:

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A company purchases a remote building site for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and recarpeted and there will also be some plumbing work done. Which of the following statements is true?a. The cost of the building will not include the repainting and recarpeting costs.b. The cost of the building will include the cost of replacing the roof.c. The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements.d. The wiring is part of the computer costs, not the building cost.

Answers

Answer:

B. The cost of the building will include the cost of replacing the roof.

Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $1.75 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of .80, a cost of equity of 11.5 percent, and an aftertax cost of debt of 4.3 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 3 percent to the cost of capital for such risky projects.

Answers

Answer:

The question is: "What is the maximum initial cost the company would be willing to pay for the project?"

The maximum initial investment cost the company would be willing to pay for the project is $18,817,204.

Explanation:

We have D/E = 0.8 => D/ (D+E) = 4/9; E/(D+E) = 5/9.

WACC of the firm = 4/9 x 4.3% + 5/9 x 11.5% = 8.3%.

Adjustment for cost capital due to higher risk of the project: 8.3% + 3% = 11.3%.

=> Maximum initial investment cost is equal to the net present value of the cash saving the project brings about discounting at project's cost of capital, calculated as:

1,750,000/ (11.3% - 2%) = $18,817,204.

Thus, the Maximum initial investment cost is $18,817,204.

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Shares of common stock of the Samson Co. offer an expected total return of 13.00 percent. The dividend is increasing at a constant 5.40 percent per year. The dividend yield must be: Multiple Choice 2.41% 13.00% 5.40% 7.60% 18.40%

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