9..new You have completed the field work in connection with your audit of Carla Corporation for the year ended December 31, 2020. The balance sheet accounts at the beginning and end of the year are shown below. Dec. 31, 2020 Dec. 31, 2019 Increase or (Decrease) Cash $311,248 $333,760 ($22,512 ) Accounts receivable 525,755 395,360 130,395 Inventory 830,704 683,200 147,504 Prepaid expenses 13,440 8,960 4,480 Investment in subsidiary 123,760 0 123,760 Cash surrender value of life insurance 2,580 2,016 564 Machinery 231,840 212,800 19,040 Buildings 599,424 456,848 142,576 Land 58,800 58,800 0 Patents 77,280 71,680 5,600 Copyrights 44,800 56,000 (11,200 ) Bond discount and issue cost 5,042 0 5,042 $2,824,673 $2,279,424 $545,249 Income taxes payable $101,079 $89,152 $11,927 Accounts payable 335,194 313,600 21,594 Dividends payable 78,400 0 78,400 Bonds payable—8% 140,000 0 140,000 Bonds payable—12% 0 112,000 (112,000 ) Allowance for doubtful accounts 39,536 44,800 (5,264 ) Accumulated depreciation—buildings 474,880 448,000 26,880 Accumulated depreciation—machinery 193,760 145,600 48,160 Premium on bonds payable 0 2,688 (2,688 ) Common stock—no par 1,317,344 1,627,584 (310,240 ) Paid-in capital in excess of par—common stock 122,080 0 122,080 Retained earnings—unappropriated 22,400 (504,000 ) 526,400 $2,824,673 $2,279,424 $545,249 STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020 January 1, 2020 Balance (deficit) $(504,000 ) March 31, 2020 Net income for first quarter of 2020 28,000 April 1, 2020 Transfer from paid-in capital 476,000 Balance 0 December 31, 2020 Net income for last three quarters of 2020 100,800 Dividend declared—payable January 21, 2021 (78,400 ) Balance $22,400 Your working papers from the audit contain the following information: 1. On April 1, 2020, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock. 2. On November 1, 2020, 33,152 shares of no-par stock were sold for $287,840. The board of directors voted to regard $5 per share as stated capital. 3. A patent was purchased for $16,800. 4. During the year, machinery that had a cost basis of $18,368 and on which there was accumulated depreciation of $5,824 was sold for $10,080. No other plant assets were sold during the year. 5. The 12%, 20-year bonds were dated and issued on January 2, 2008. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2020. 6. The 8%, 40-year bonds were dated January 1, 2020, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $940. 7. Carla Corporation acquired 70% control in Crimson Company on January 2, 2020, for $112,000. The income statement of Crimson Company for 2020 shows a net income of $16,800. 8. Major repairs to buildings of $8,064 were charged to Accumulated Depreciation—Buildings. 9. Interest paid in 2020 was $11,760 and income taxes paid were $38,080. From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to 0 decimal places, e.g. 2,500. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) CARLA CORPORATION Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to $

9..new You have completed the field work in connection with your audit of Carla Corporation for the year ended December 31, 2020. The balance sheet accounts at the beginning and end of the year are shown below. Dec. 31, 2020 Dec. 31, 2019 Increase or (Decrease) Cash $311,248 $333,760 ($22,512 ) Accounts receivable 525,755 395,360 130,395 Inventory 830,704 683,200 147,504 Prepaid expenses 13,440 8,960 4,480 Investment in subsidiary 123,760 0 123,760 Cash surrender value of life insurance 2,580 2,016 564 Machinery 231,840 212,800 19,040 Buildings 599,424 456,848 142,576 Land 58,800 58,800 0 Patents 77,280 71,680 5,600 Copyrights 44,800 56,000 (11,200 ) Bond discount and issue cost 5,042 0 5,042 $2,824,673 $2,279,424 $545,249 Income taxes payable $101,079 $89,152 $11,927 Accounts payable 335,194 313,600 21,594 Dividends payable 78,400 0 78,400 Bonds payable—8% 140,000 0 140,000 Bonds payable—12% 0 112,000 (112,000 ) Allowance for doubtful accounts 39,536 44,800 (5,264 ) Accumulated depreciation—buildings 474,880 448,000 26,880 Accumulated depreciation—machinery 193,760 145,600 48,160 Premium on bonds payable 0 2,688 (2,688 ) Common stock—no par 1,317,344 1,627,584 (310,240 ) Paid-in capital in excess of par—common stock 122,080 0 122,080 Retained earnings—unappropriated 22,400 (504,000 ) 526,400 $2,824,673 $2,279,424 $545,249 STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020 January 1, 2020 Balance (deficit) $(504,000 ) March 31, 2020 Net income for first quarter of 2020 28,000 April 1, 2020 Transfer from paid-in capital 476,000 Balance 0 December 31, 2020 Net income for last three quarters of 2020 100,800 Dividend declared—payable January 21, 2021 (78,400 ) Balance $22,400 Your working papers from the audit contain the following information: 1. On April 1, 2020, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock. 2. On November 1, 2020, 33,152 shares of no-par stock were sold for $287,840. The board of directors voted to regard $5 per share as stated capital. 3. A patent was purchased for $16,800. 4. During the year, machinery that had a cost basis of $18,368 and on which there was accumulated depreciation of $5,824 was sold for $10,080. No other plant assets were sold during the year. 5. The 12%, 20-year bonds were dated and issued on January 2, 2008. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2020. 6. The 8%, 40-year bonds were dated January 1, 2020, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $940. 7. Carla Corporation acquired 70% control in Crimson Company on January 2, 2020, for $112,000. The income statement of Crimson Company for 2020 shows a net income of $16,800. 8. Major repairs to buildings of $8,064 were charged to Accumulated Depreciation—Buildings. 9. Interest paid in 2020 was $11,760 and income taxes paid were $38,080. From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to 0 decimal places, e.g. 2,500. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) CARLA CORPORATION Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to $

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 16P

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9..new

You have completed the field work in connection with your audit of Carla Corporation for the year ended December 31, 2020. The balance sheet accounts at the beginning and end of the year are shown below.

	Dec. 31, 2020	Dec. 31, 2019		Increase or (Decrease)
Cash	$311,248	$333,760			($22,512	)
Accounts receivable	525,755	395,360			130,395
Inventory	830,704	683,200			147,504
Prepaid expenses	13,440	8,960			4,480
Investment in subsidiary	123,760	0			123,760
Cash surrender value of life insurance	2,580	2,016			564
Machinery	231,840	212,800			19,040
Buildings	599,424	456,848			142,576
Land	58,800	58,800			0
Patents	77,280	71,680			5,600
Copyrights	44,800	56,000			(11,200	)
Bond discount and issue cost	5,042	0			5,042
	$2,824,673	$2,279,424			$545,249

Income taxes payable	$101,079	$89,152			$11,927
Accounts payable	335,194	313,600			21,594
Dividends payable	78,400	0			78,400
Bonds payable—8%	140,000	0			140,000
Bonds payable—12%	0	112,000			(112,000	)
Allowance for doubtful accounts	39,536	44,800			(5,264	)
Accumulated depreciation—buildings	474,880	448,000			26,880
Accumulated depreciation—machinery	193,760	145,600			48,160
Premium on bonds payable	0	2,688			(2,688	)
Common stock—no par	1,317,344	1,627,584			(310,240	)
Paid-in capital in excess of par—common stock	122,080	0			122,080
Retained earnings—unappropriated	22,400	(504,000	)		526,400
	$2,824,673	$2,279,424			$545,249

STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2020
January	1, 2020	Balance (deficit)	$(504,000	)
March	31, 2020	Net income for first quarter of 2020	28,000
April	1, 2020	Transfer from paid-in capital	476,000
		Balance	0
December	31, 2020	Net income for last three quarters of 2020	100,800
		Dividend declared—payable January 21, 2021	(78,400	)
		Balance	$22,400

Your working papers from the audit contain the following information:

1.		On April 1, 2020, the existing deficit was written off against paid-in capital created by reducing the stated value of the no-par stock.
2.		On November 1, 2020, 33,152 shares of no-par stock were sold for $287,840. The board of directors voted to regard $5 per share as stated capital.
3.		A patent was purchased for $16,800.
4.		During the year, machinery that had a cost basis of $18,368 and on which there was accumulated depreciation of $5,824 was sold for $10,080. No other plant assets were sold during the year.
5.		The 12%, 20-year bonds were dated and issued on January 2, 2008. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2020.
6.		The 8%, 40-year bonds were dated January 1, 2020, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was $940.
7.		Carla Corporation acquired 70% control in Crimson Company on January 2, 2020, for $112,000. The income statement of Crimson Company for 2020 shows a net income of $16,800.
8.		Major repairs to buildings of $8,064 were charged to Accumulated Depreciation—Buildings.
9.		Interest paid in 2020 was $11,760 and income taxes paid were $38,080.

From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest. (Round answers to 0 decimal places, e.g. 2,500. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

CARLA CORPORATION Statement of Cash Flows (Indirect Method)

		$
Adjustments to reconcile net income to

	$

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