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M2-26.
E2-44.
Transaction
Page 1 of 7
(4) Receive €15,000 cash +15,000 +15,000 +15,000
from customers for +15,000
Cash = Retained Revenue - =
services provided.
Earnings
E2-48.
a.
1. Cash (+A).................................................................................
20,000
Common stock (+SE)........................................................... 20,000
2. Inventory (+A)...........................................................................
2,000
Accounts payable (+L)......................................................... 2,000
5. Cash (+A).................................................................................
3,000
Accounts receivable (-A)...................................................... 3,000
6. Equipment (+A)........................................................................
5,000
Notes payable (+L).............................................................. 5,000
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Cash (-A).............................................................................. 5,000
b.
+ Cash (A) - - Common Stock (SE) +
(1) 20,000 1,000 (7) 20,000 (1)
(5) 3,000 5,000 (8)
2,000 (9)
- Sales Revenue (R) +
3,000 (3)
+ Inventory (A) -
(2) 2,000 2,000 (4)
+ Cost of Goods Sold (E) -
(4) 2,000
+ Accounts Receivable (A) -
(3) 3,000 3,000 (5)
+ Wages Expense (E) -
+ Equipment (A) - (7) 1,000
(6) 5,000
P2-58.
a.
1. Cash (+A).................................................................................
7,000
Common stock (+SE)........................................................... 7,000
Page 3 of 7
4. Cash (+A).................................................................................
15,000
Notes payable (+L).............................................................. 15,000
5. Cash (+A).................................................................................
1,200
Counseling services revenue (+R,+SE).............................. 1,200
b.
+ Cash (A) - - Accounts Payable (L) +
(1) 7,000 750 (2) 500 (3)
(4) 15,000 2,200 (7)
(5) 1,200 370 (8)
900 (9) - Notes Payable (L) +
13,000 (10) 15,000 (4)
100 (11)
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(2) 750 6,800 (6)
E4-38.
The solution to this is that X = -$54,823 + 776 - 320 = -$54,367. So, the payments to suppliers
reduced cash by $54,367 million in fiscal year 2014.
b. The net property and equipment account increased by $119 million (=$12,257 – $12,138).
Depreciation expense would have decreased this balance by $1,316 million in fiscal year 2014,
so the net investment must have been $1,435 million (=$119 + $1,316) to result in the ending
balance of $12,257 million.
Page 5 of 7
c. With the beginning balance of $21,523 million in retained earnings, net earnings of $2,031
would have increased retained earnings to $23,554 million. But the ending balance in retained
earnings is $22,229 million, so Walgreens must have paid $1,325 million in dividends
(=$23,554 - $22,229).
E4-40.
a. The net increase in property and equipment was $2,151,755 (= $95,174,198 - $93,022,443), and
the expenditures should have increased this by $2,380,287. Therefore, the original cost of the
property and equipment sold must have been $228,532 (= $2,380,287 - $2,151,755).
b. The book value of the property and equipment sold was $25,434 (=$228,532 – $203,098), and
the reported gain on sale of the property and equipment was $22,693. Therefore, the cash
proceeds must have been $48,127 (= $25,434 + $22,693).
c.
Cash (+A) $ 48,127
Accumulated depreciation (-XA, +A) 203,098
Property and equipment, cost (-A) $ 228,532
Gain on sale of property and equipment (+R, +SE) 22,693
d. Retained earnings decreased by $544,752 (= $18,728,462 – 19,273,214), and net income was
$921,829, which would increase retained earnings. The overall decrease would be accounted
for by cash dividends paid to shareholders, and the amount is $1,466,581 ($544,752 +
$921,829). The dividends paid are approximately equal to previous years and demonstrates that
companies are reluctant to cut dividends, even when earnings are lower.
E4-44.
1. True ---
2. False $25
3. False $10
4. False $0
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P4-46. (INDIRECT METHOD)
WOLFF COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
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