Question

BARCELONA INC. Comparative Balance Sheets June 30, 2019 and 2018
	2019				2018
Assets
Cash	$	86,300			$	41,700
Accounts receivable, net		78,000				61,000
Inventory		66,000				92,000
Prepaid expenses		5,000				6,300
Total current assets		235,300				201,000
Equipment		153,000				142,000
Accum. depreciation—Equipment		(39,000	)			(13,000	)
Total assets	$	349,300			$	330,000
Liabilities and Equity
Accounts payable	$	30,000			$	36,000
Wages payable		8,000				19,000
Income taxes payable		3,600				4,000
Total current liabilities		41,600				59,000
Notes payable (long term)		38,000				75,000
Total liabilities		79,600				134,000
Equity
Common stock, $5 par value		220,000				160,000
Retained earnings		49,700				36,000
Total liabilities and equity	$	349,300			$	330,000

BARCELONA INC. Income Statement For Year Ended June 30, 2019
Sales				$	803,000
Cost of goods sold					491,000
Gross profit					312,000
Operating expenses
Depreciation expense	$	68,000
Other expenses		77,000
Total operating expenses					145,000
					167,000
Other gains (losses)
Gain on sale of equipment					3,300
Income before taxes					170,300
Income taxes expense					52,130
Net income				$	118,170

Additional Information

1. A $38,000 note payable is retired at its $38,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $67,000 cash.
4. Received cash for the sale of equipment that had cost $56,000, yielding a $3,300 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Using the income statement, the comparative balance sheet, and the additional information given above, reconstruct the entries for the summarized activity of the current fiscal year. Upon completion, the trial balance tab should agree with the June 30, 2019 balances.

Requirement General Journal General Ledger Trial Balance Direct Method Indirect Method General Journal tab - Reconstruct the entries to summarize the activity between June 30, 2018 and June 30, 2019. Direct Method tab - Prepare the Statement of Cash flows for the year ended June 30, 2019 using the direct method. Indirect Method tab - Prepare the reconciliation to the indirect method.

2) June 30) Reconstruct the journal entry for cash payments for inventory, incorporating the change in the related balance sheet account(s), if any.

3) June 30) Reconstruct the journal entry for depreciation expense, incorporating the change in the related balance sheet account(s), if any.

4) June 30) Reconstruct the journal entry for cash paid for operating expenses, incorporating the change in the related balance sheet account(s), if any.

5) June 30) Reconstruct the journal entry for the sale of equipment at a gain, incorporating the change in the related balance sheet account(s), if any.

6) June 30) Reconstruct the journal entry for income taxes expense, incorporating the change in the related balance sheet account(s), if any.

7) June 30) Reconstruct the entry to record the retirement of the $38,000 note payable at its $38,000 carrying (book) value in exchange for cash.

8) June 30 ) Reconstruct the entry for the purchase of new equipment.

9) June 30) Reconstruct the entry for the issuance of common stock.

10) June 30) Close all revenue and gain accounts to income summary.

11) June 30) Close all expense accounts to income summary.

12) June 30) Close Income Summary to Retained Earnings.

13) June 30) Reconstruct the journal entry for cash dividends paid.

Options For the Account Title

• 000: No journal entry required
• 101: Cash
• 106: Accounts receivable, net
• 120: Inventory
• 125: Prepaid expenses
• 150: Equipment
• 151: Accumulated depreciation - Equipment
• 201: Accounts payable
• 202: Wages payable
• 210: Income taxes payable
• 220: Notes payable (short-term)
• 251: Notes payable (long-term)
• 310: Common stock, $5 par value
• 312: Paid-in capital in excess of par - Common
• 318: Retained earnings
• 401: Sales
• 413: Sales discounts
• 414: Sales returns and allowances
• 502: Cost of goods sold
• 610: Depreciation expense
• 615: Other expenses
• 620: Loss on sale of equipment
• 621: Gain on sale of equipment
• 630: Income taxes expense
• 700: Income summary

continued

Begin by selecting "Post-closing" from the drop-down menu.  Verify that each balance agrees with the June 30, 2019 balance sheet above.

Continued

Options for the left column except for the last boxes of all the cash flows

• Amortization expense
• Cash paid for dividends
• Cash paid for equipment
• Cash paid for income taxes
• Cash paid for merchandise
• Cash paid for operating expenses
• Cash paid to retire notes
• Cash received from customers
• Cash received from sale of equipment
• Cash received from stock issuance
• Decrease in accounts payable
• Decrease in accounts receivable
• Decrease in income taxes payable
• Decrease in inventory
• Decrease in prepaid expenses
• Decrease in wages payable
• Depreciation expense
• Gain on sale of equipment
• Increase in accounts payable
• Increase in accounts receivable
• Increase in income taxes payable
• Increase in inventory
• Increase in prepaid expenses
• Increase in wages payable
• Loss on sale of equipment
• Net income

Options for the remaining boxes of all the cash flows

• Net cash provided by financing activities
• Net cash provided by investing activities
• Net cash provided by operating activities
• Net cash used by financing activities
• Net cash used by investing activities
• Net cash used by operating activities

Prepare the operating activities section of the statement of cash flows using the indirect method.  Enter reductions to net cash provided by operating activities as negative values.

Options for the left column except for the last box

• Amortization expense
• Cash paid for dividends
• Cash paid for equipment
• Cash paid for income taxes
• Cash paid for merchandise
• Cash paid for operating expenses
• Cash paid to retire notes
• Cash received from customers
• Cash received from sale of equipment
• Cash received from stock issuance
• Decrease in accounts payable
• Decrease in accounts receivable
• Decrease in income taxes payable
• Decrease in inventory
• Decrease in prepaid expenses
• Decrease in wages payable
• Depreciation expense
• Gain on sale of equipment
• Increase in accounts payable
• Increase in accounts receivable
• Increase in income taxes payable
• Increase in inventory
• Increase in prepaid expenses
• Increase in wages payable
• Loss on sale of equipment
• Net income

Options for the last box

• Net cash provided by financing activities
• Net cash provided by investing activities
• Net cash provided by operating activities
• Net cash used by financing activities
• Net cash used by investing activities
• Net cash used by operating activities

Answer 1

Income Statement Sales Cost of Goods Sold Cash Flows From Operations 786,000 Cash Collected from Accounts Receivable (471,000) Cash Paid to Suppliers Adjustments 803,000 Increase in Accounts Receivable (491,000) Decrease in Inventory Decrease in Accounts Payable 3,300 (77,000) Decrease in prepaid expenses Decrease in Wages Payable (68,000) Amountof reported Depreciation expense (52,130) Decrease in Income Tax Payable 118,170 Increase in Retained Earnings (17,000) 26,000 (6,000) (3,300) 1,300 (11,000) Gain on sale of Equipment Other Expenses (86,700) Cash paid for Other expenses Depreciation Expense Income Tax Expense Net Income 68,000 (400) 13,700 (52,530) Cash paid for Income Tax 104,470 Cash Paid for Dividend Note; As for journal entry only one requirement is given in the question that's why I am passing only one journal entry Credit Debit 786,000 Date Account Title & Explanation 30-Jun Cash Accounts Receivable (To record cash collected) 786,000 77 471,000 30-Jun Accounts Payable Cash (To record cash paid for Inventory) 471,000 80

BARCELONA INC. Cash flow Statement (Ctrl) For the period ending June 30,2017 (Direct method) Details $ Amount $ Particulars Cash flows from operating Activities Cash Collected from Accounts Receivable Less Cash Paid to Suppliers Cash Paid for Other Expenses Cash paid for Income Tax expense Net Cash provided by Operating Activities 786,000 (471,000) (86,700) (52,530) 175,770 Equipment Cash Flows from Investing Activities Cash received from sale of Equipment Cash paid for purchase of equipment Net Cash used by Investing Activities 17,300 (67,000) 142000 3300 67000 212300 42000 17300 153000 212300 (49,700) 100 13000 Cash Flows from Financing Activities Issue of Common Stock Retirement of Notes Payable Payment of Dividend Net cash used by Financing Activities 102 Accumulated Dep 42000 39000 81000 60000 (37,000) (104,470) 68000 81000 103 104 (81,470)

Net Increase in Cash & its equivalents Add Opening Balance of Cash Closing Balance of Cash 44,600 41,700 86,300 107 110 111 112 113 114 115 116 118 119 120 BARCELONA INC. Cash flow Statement For the period ending June 30, 2017 (Indirect method) (In millions) (In millions) Particulars Details $ Amount $ Cash flows from operating Activities Net Income 118,170 Add Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 68,000 Gain on sale of Equipment (3,300) Increase in Accounts Receivable (17,000) Decrease in Inventory 26,000 Decrease in prepaid expenses 1,300 Decrease in Accounts Payable (6,000) Decrease in Wages Payable (11,000) Decrease in Income Tax Payable (400) 57,600 Net Cash provided by Operating Activities 175,770 122 123 125 127 128