BADM 710: Homework 9 (Chapter 11)
Total Points Available: 10 (Due: November 22)
Holiday, Inc. provides you with the following trial balance for the 2013 and 2014 fiscal years:
The company purchased new inventory of $2.25M
Of the sales 80% are cash, the rest is on account. (Note: there were no write-offs in the current year.)
The company sold old equipment for $30,000 (cash); the equipment had originally been purchased for $42,000 and had been fully depreciated at the time of the sale.
The company purchased new equipment for $456,000.
All expenses except depreciation, bad debt, and part of salaries are cash expenses
Of the salaries expenses 90% are cash; the rest is an accrual (to be paid next year)
Prior year accrued salaries are paid (in cash)
Holiday Corporation – Trial Balance
Beginning Balance
Ending Balance
Description
Debit
Credit
Debit
Credit
Cash
144,000.00
378,270.00
Marketable securities
837,000.00
837,600.00
Other securities & investments
543,900.00
543,900.00
Accounts receivable
236,400.00
1,448,400.00
Allowance for doubtful accounts
2,280.00
17,880.00
Inventory
1,266,000.00
546,000.00
Building and leasehold improvements
336,000.00
336,000.00
Accumulated depreciation – building
120,000.00
150,000.00
Equipment
42,000.00
456,000.00
Accumulated depreciation – equipment
42,000.00
45,600.00
Accounts payable
4,620.00
4,620.00
Accrued salaries & vacation
22,800.00
81,600.00
Deferred revenues
52,620.00
52,620.00
Common stock
600.00
600.00
Retained earnings
900,000.00
3,160,380.00
Dividends (cash)
3,000.00
12,000.00
Unrealized gain (loss)
–
600.00
Revenues from sales & services
6,300,000.00
6,060,000.00
Cost of goods sold
2,598,000.00
2,970,000.00
General & administrative expenses
8,700.00
11,100.00
Salaries
711,000.00
816,000.00
Research & development
210,000.00
219,000.00
Office expenses
57,000.00
48,000.00
Travel expenses
30,600.00
28,800.00
Accounting & auditing
138,000.00
153,000.00
Rental expenses
192,000.00
187,200.00
Advertising expenses
348,000.00
292,800.00
Legal & professional services
150,000.00
189,000.00
Miscellaneous other expenses
34,800.00
42,600.00
Penalties
7,440.00
6,030.00
Bad debt expense
1,080.00
15,600.00
Depreciation expense
30,000.00
75,600.00
Gain (loss) on the sale of fixed assets
–
30,000.00
Other income (cash)
480,000.00
9,000.00
Totals
$ 7,924,920
$ 7,924,920
$ 9,612,900
$ 9,612,900
Requirements: Prepare a statement of cash flows using the direct and the indirect method
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