ACC 300 Week 4 Individual Problem Set I

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ACC 300 Week 4 Individual Problem Set I
Problem Set 2: Week Four


You are given the following transactions that occurred in the latest fiscal year.
Distinguish among operating, investing, and financing activities.
Complete the table, indicating whether each item (1) should be reported as an operating (O) activity, investing (I) activity, financing (F) activity, or as a noncash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.
Transaction Where Reported Cash Inflow, Outflow, or No Effect?
Depreciation expense on the plant assets Noncash (NC) Inflow
Paid interest expense. Investing (I) Outflow
Cash from a sale of plant assets. Investing (I) Inflow
Acquired land by issuing common stock. Noncash (NC) No Effect
Paid a cash dividend Financing (F) Inflow
Distributed a stock dividend Noncash (NC) No Effect
Recorded cash sales. Operating (O) Inflow
Recorded sales on account. Operating (O) Outflow
Purchased inventory for cash. Operating (O) Outflow
Purchased inventory on account Noncash (NC) No Effect

The aforementioned account balances relate to the stockholder’s equity accounts of Patil Corporation at the end of the year. 2012 2011
Common stock, 10,500 and 10,000 shares, respectively, for 2012 and 2011 $160,800 $140,000
Preferred stock, 5,000 shares 125,000 125,000
Retained earnings 300,000 270,000

A minimal stock dividend was announced and assigned in 2012. The market value of the shares is $8,800. In 2011 and 2012, the cash dividends were $20,000. The common stock has no declared value.
Determine cash flow effects of changes in equity accounts.
(SO 4), AN
A. What was the amount of net income declared by the Patil Corporation in 2012?
Net Income = Beginning Balance Retained Earnings + Cash Dividends – Ending Balance Retained Earnings
Net Income = $300,000 + $20,000 – $270,000
Net Income =

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