WORK OUT PROBLEMS POINTS FOR EACH PROBLEM ARE MARKED. YOU MUST SHOW YOUR CALCULATIONS TO EARN FULL CREDIT. WHERE NECESSARY ROUND YOUR CALCULATIONS USING TWO DECIMAL PLACES.
Selected financial statement information and additional data for ABC Co. is presented below.
Prepare a statement of cash flows for the year ending December 31, 2013 December 31
Accounts receivable (net)
Notes payable - Short-term
Notes payable - Long-term
Additional data for 2013:
1. Net income was $240,200.
2. Depreciation was $31,600.
3. Land was sold at its original cost.
4. Dividends of $101,600 were paid.
5. Equipment was purchased for $84,000 cash.
6. A long-term note for $201,600 was used to pay for an equipment purchase.
7. Common stock was issued to pay a $67,200 long-term note payable.
(1)Net cash provided (used) by operating activities (4 points)
(2)Net cash provided (used) by investing activities (4 points)
(3)Net cash provided (used) by financing activities (2 points)
(4)Changes in cash account (2 points)
(5)Disclosure of noncash transactions (2 points)
(26 points) John Smith established an animal clinic (PetGo) on July 1, 2013, by purchasing all of its common stock for $125,000 (no par value). The same day PetGo paid $2,500 to an attorney who prepared its legal documents and filed incorporation documents (Administration Expense); paid $90,000 for medical instruments, furniture, and equipment; and signed a three-year lease on office space for $5,000 per month, payable the first day of each month, and paid that the first month rent. PetGo had billed clients an additonal $3,000 for care delivered in July but did not receive payments until August. During July 2013, PetGo received $18,500 from clients for office visits, surgery, medical supplies, and drugs. During July, PetGo also paid $1,500 for drugs and medical supplies, $500 for office supplies, and $13,750 for wages and benefits. At the end of July, PetGo had negligible drugs, medical supplies, or office supplies in inventory.
1. Prepare an income statement for July 2013 (5 Points)
2. Prepare a balance sheet as of July 31, 2013 (7 Points)
3. Calculate PetGo's free cash flow for July 2013 (5 Points)
4. Was PetGo successful during its first month of operation? Explain (5 Points)
5. PetGo was doing pretty well for the rest of 2013. During the year, PetGo sold $5,000 giftcard
to customers and recorded $5,000 sales revenue. Was PetGo doing the correct accounting
treatment? Explain (4 Points)
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- Submitted On 19 Jan, 2015 11:53:33