Following are selected balance sheet accounts of Del Conte Corp. at December 31,
ID: 2589984 • Letter: F
Question
Following are selected balance sheet accounts of Del Conte Corp. at December 31, 2018 and 2017, and the increases or decreases in each account from 2017 to 2018. Also presented is selected income statement information for the year ended December 31, 2018, and additional information. Selected Balance Sheet Accounts 2018 2017 (Decrease) Assets Accounts receivable Property, plant, and equipment Accumulated depreciation Liabilities and StockholdeEquity Bonds payable Dividends payable Common stock, $1 par Addi tional paid-in capital Retained earnings $46, 000 30, 000 253, 000 (190, 000) (173, 000) $16, 000 36, 000 17, 000 289, 000 67, 000 11,000 34, 000 12, 000 116, 000 58, 000 7, 400 25, 000 5, 400 97, 000 9, 000 3, 600 9, 000 6, 600 19, 000 Selected Income Statement Information for the Year Ended December 31, 2018 Sales revenue Depreci1ation Gain on sale of equipment Net income $ 167, 000 45, 000 16, 000 40, 000 Additional information: a. Accounts receivable relate to sales of merchandise. b. During 2018, equipment costing $52,000 was sold for cash. c. During 2018, bonds payable with a face value of $32,000 were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium. Requlrec Items 1 through 5 represent activities that will be reported in Del Conte's statement of cash flows for the year ended December 31 2018. The following two responses are required for each item: a. Determine the amount that should be reported in Del Conte's 2018 statement of cash flows. b. Select the category (i.e., O - Operating activity, I Investing activity and F- Financing activity) in which the amount should be reported in the statement of cash flows. moun ategory 1. Cash collections from customers (direct method) Payments for purchase of property, plant, and 2. equipment 3. Proceeds from sale of equipment. 4. Cash dividends paid 5. Redemption of bonds payableExplanation / Answer
Solution:
Amount
Category
1)
Cash Collections from customers (direct method)
$151,000
O
(30,000 + Sales Revenue 167,000 - 46,000)
2)
Payments for purchase of property, plant and equipment (PPE) (Refer Note 1)
$56,000
I
3)
Proceeds from Sale of Equipment (Note 2)
$40,000
I
4)
Cash dividends paid (Note 3)
$21,000
F
5)
Redemption of bonds payable (Note 4)
$9,000
F
Note 1 -- Property Plant and Equipment
Debit
Credit
Beg. Balance
$253,000
Equipment Sold (at cost)
$52,000
Bonds Payable
$56,000
Equipment Purchase (NEW)
$32,000
Ending Bal.
$289,000
$341,000
$341,000
Note 2 -- Accumulated Depreciation
Beg. Bal
$173,000
Depreciation on Equipment Sold
$28,000
Depreciation Expense
$45,000
Ending Bal
$190,000
$218,000
$218,000
Calculation of Proceeds from Sale of Equipment
Cost of Equipment Sold
$52,000
Less: Depreciation on Equipment Sold (From above)
($28,000)
Book Value of Equipment Sold
$24,000
Add: Profit on sale of equipment (From Income Statement)
$16,000
Cash Proceeds from Sale of Equipment
$40,000
Note 3 - Cash Dividend Paid
Beginning Bal of Retained Earnings
$97,000
Add: Net Income added
$40,000
Less: Ending Retained Earnings
($116,000)
Cash Dividend Paid
$21,000
Note 4 -- Redemption of Bonds Payable
Ending Balance of Bonds Payable
$67,000
Less: Beginning Balance of Bonds Payable
($58,000)
Redemption of Bonds Payable
$9,000
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Amount
Category
1)
Cash Collections from customers (direct method)
$151,000
O
(30,000 + Sales Revenue 167,000 - 46,000)
2)
Payments for purchase of property, plant and equipment (PPE) (Refer Note 1)
$56,000
I
3)
Proceeds from Sale of Equipment (Note 2)
$40,000
I
4)
Cash dividends paid (Note 3)
$21,000
F
5)
Redemption of bonds payable (Note 4)
$9,000
F