Starting a Company
(1) Issues 50,000 shares of $10 par value common stock at par value for cash.
(2) Acquires land and building costing $225,000 with the payment of $50,000 cash and the assumption of a 20-year, 8-percent mortgage for the balance.
(3) Purchases a used crane for $13,200 cash
(4) Acquires raw materials costing $8,600 on account.
(5) Returns defective raw materials purchased in (4) and costing $900 to the supplier. The account has not yet been paid.
(6) Pays the supplier in (4) and (5) the amount due, less a 2-percent discount for prompt payment. The firm treats cash discount as a reduction in the acquisition cost of raw materials.
(7) Obtains a fire insurance policy providing $500,000 coverage beginning next month. It pays the 1-year premium of $4,950.
(8) Issues a check for $1,800 for 3 months rent in advance for office space.
(9) Purchases a patent on a machine process for $90,000 cash.
(10) Purchases office equipment for $2,700, making a down payment of $250 and agreeing to pay the balance in 30 days.
(11) Pays $825 to Express Trucking Company for delivering the equipment purchased in (3).
a) Prepare the following analysis table.
Cash + Other CA + PP&E + Other NCA = CL + NCA + CC + RE
a) Prepare the following indirect cash flow statement.
Cash Flow Statement
Operating Cash Flows: _______________
Investing Cash Flows: _______________
Financing Cash Flows: _______________
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