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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Partially Completed Spreadsheet Hanks Company has prepared the following changes in account balances for the spreadsheet to support its 2019 statement of cash flows:

Chapter 21, Problem 9E, Partially Completed Spreadsheet Hanks Company has prepared the following changes in account balances

Additional information: The net income was $1,300. Depreciation expense was $350, and patent amortization expense was $100. At the end of 2019, long-term investments were purchased at a cost of $1,550. Land that cost $700 was sold for $900. On December 31, 2019, bonds payable with a face value of $2,000 were issued for equipment valued at $2,300. Two hundred shares of common stock were issued at $7 per share. Forty shares of common stock were issued as a “’small” stock dividend, the relevant market price being $5 per share. Cash dividends declared and paid totaled $600.

Required:

On the basis of the preceding information, complete the spreadsheet.

To determine

Report the completed spreadsheet entries of H Company for the year 2019.

Explanation

Worksheet: A worksheet is a spreadsheet used while preparing a financial statement. It is a type of form having multiple columns and it is used in the adjustment process. The use of a worksheet is optional for any organization. A worksheet can neither be considered as a journal nor a part of the general ledger.

Report the completed spreadsheet entries.

Table (1)

Working notes:

  1. a) Net income as on 2019 is $1,300
  2. b) Depreciation expense as on 2019 is $350
  3. c) Plant amortization as on 2019 is $100
  4. d) Decrease in accounts receivable by $290
  5. e) Inventory increased by $1,280
  6. f) Accounts payable increased by $120
  7. g) Payment for purchase of long term investment is $1,550
  8. h) Calculate the gain on sale of land

Gain on saleof land = Selling price  Book value=$900$700=$200

i-1) Calculate the issuance of bond for equipment

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