ACT 201

Assignment

P6-3A

a.

Sekhon Company

Cost of goods available for sale

Date Despcription Quantity Rate Amount

Jan 1 Beginning invent. 160 20 3200
Mar 15 Purchase 400 23 9200
July 20 Purchase 250 24 6000
Sep 4 Purchase 330 26 8580
Dec 2 Purchase 100 29 2900
1240 29880

b.

Ending inventory units

Description Quantity
Units available for sale 1240
Sales 1000
Units remaining in ending inventory 240

1.

FIFO Method

Ending Inventory

Date Description Quantity Rate Amount

Dec 2 Purchase 100 29 2900
Sep 4 Purchase 140 26 3640
Total 240 6540

Cost of goods sold

Description Amount
Cost of goods available for sale 29880
Less: Ending Inventory 6540
23340
 Proof of cost of goods sold

Date Description Quantity Rate Amount

Jan 1 Beginning Inven. 160 20 3200
Mar 15 Purchase 400 23 9200
July 20 Purchase 250 24 6000
Sep 4 Purchase 190 26 4940
Total 1000 23340

2.

LIFO Method

Ending Inventory

Date Description Quantity Rate Amount

Jan 1 Beginning Inven. 160 20 3200
Mar 15 Purchase 80 23 1840
Total 240 5040

Cost of Goods Sold

Description Amount
Cost of goods available for sale 29880
Less: Ending Inventory 5040
23840

Proof Of cost of goods sold

Date Description Quantity Rate Amount

Dec 2 Purchase 100 29 2900
Sep 4 Purchase 330 26 8580
July 20 Purchase 250 24 6000
Mar 15 Purchase 320 23 7360
Total 1000 24840

E17-2

Classification

(a) Payment of interest on notes payable = Operating activities as cash outflow

(b) Exchange of land for patent = Non cash investing activity as it does not involve cash transactions

(c) Sale of building at book value = Investing activities as cash inflow which is represented in a positive
sign

(d) Payment of dividends. = Financing activities as cash outflow which is represented in a negative sign

(e) Depreciation = It is added to net income and shown in operating activities

(f) Receipt of dividends on investment in stock = Operating activities as cash inflow

(g) Receipt of interest on notes receivable =  Operating activities as cash inflow

(h) Issuance of common stock = Financing activities as cash outflow

(i) Amortization of patent = Operating activities as cash inflow and added to the net income

(j) Issuance of bonds for land = Non cash investing activity as it does not involve cash transactions

E17-4

Gutierrez Company

Cash Flow Statement For 2017

Description Amount
Net Income 225000
Add: Depreciation 45000
Add: Loss on disposal of equipment 5000
Add: Decrease in accounts recieveable 15000
Add: Increase In accounts payable 17000
Add: Decrease in prepaid expenses 4000
Net cash inflow from operating activites 311000

P17-7A
(a)

Nosker Company

Cash Flow Statement

December 31

Cash Flows from Operation activities:

Net Income 32000
Adjustments to reconcile net income to:
Depreciation expense 14500
Increase in accounts recieveable (16000)
Increase in inventory (7000)
Increase in accounts payable 9000
Decrease in income taxes payable (1000)
(500)

Net cash provided by operating activites 31500

Cash flows from investing activites:
Sale of equipment 8500
Cash flows from financing activites:
Insurance of common stock 4000
Redemption of bonds (6000)
Payment of dividends (20000)
Net Cash provided by financing activites (22000)

Net increase in cash 18000

Cash at beginning of period 20000

Cash at end of period 38000