Cash ? Loan payable 100,000
Revenues 120,000 Prepaid rent 24,000
A/P 20,000 Wage expense 30,000
Purchases 70,000 Common Shares 100,000
FV-OCI at cost 8,000 Equipment 50,000
Gains on sales of land 15,000
1 Middleham borrowed on July 1, 2014, $50,000, 5% loan. Interest and principal to be paid in full on June 30,2016
2 Middleham acquired equipment by signing a loan $50,000, 5%, interest and principal to be paid in 2015. Land was purchased for 70,000 in cash and sold after 2 months.
3 Depreciation on equipment is 10% of ending balance.
4 The fair value of the FV-OCI investment on December 31, 2014 is $5,000. No investment was traded after the acquisition on November 30, 2014.
5 The physical count reports ending inventory to be $10,000.
6 Middleham rented a store on January 1, 2014, signing a two-year agreement.
Answer the following questions:
• How much is the net income for the year ended December 31, 2014?
• What is the ending balance of cash as of December 31, 2014?
As of December 31, 2014, on the statement of Cash flow:
• How much is cash from operating activities?
• How much is cash from investing activities?
• How much is cash from financing activities?
This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.1 Middleham borrowed on July 1, 2014, $50,000, 5% loan. Interest and principal to be paid in full on June 30,2016
For net income calculation we need to accrue interest on the loan for 2014. Accrued interest is as follows:
Loan value 50.000
Interest rate (Annual) 5%
Annual interest 2.500
Divided by months in year 12
Times months loan held in 2014 6
Accrued interest/interest expense 1.250...