Question

The following selected account balances are taken from the records of Cooper Corporation for the past two years.

December 31
2018 2017
Equipment $750 $400
Accumulated depreciation 160 225
Land 92 50
Bonds payable 30 50
Common stock 120 100
Additional paid in capital 400 320
Retained earnings 825 675
Other information available for 2018:
Net income for the year was $200.
Depreciation expense on plant and equipment was $70.
Equipment with an original cost of $200 and Accum. Dep. of $135 was sold at a gain of $5.
No land was sold during the year.
Both new equipment and land were purchased during the year.
Bonds payable were retired
Common stock was issued for cash.
Cash dividends were declared and paid.
1. How much cash did Cooper Corp. receive from the sale of equipment?
a. 60
b. 135
c. 195
d. 70
e. None of the above
2. What is Cooper Corp's net increase (decrease) in cash from investing activities?
a. 18
b. (522)
c. (397)
d. (480)
e. None of the above
3. What is Cooper Corp's net increase (decrease) in cash from financing activities?
a. 50
b. (80)
c. 30
d. (50)
e. None of the above

Answer 1

Cooper Corporation

1. Cash received from the sale of equipment:

= d. 70

2. Decrease in cash from investing activities:

= b. (522)

3. Increase in cash from financing activities:

= c. 30

Step-by-step explanation:

a) Data and Calculations:

December 31

2018 2017 Change

Equipment $750 $400 +$350

Accumulated depreciation (160) (225) +65

Land 92 50 +42

Bonds payable 30 50 -20

Common stock 120 100 +20

Additional paid in capital 400 320 +80

Retained earnings 825 675 +150

Net income for the year = $200

Depreciation expense = $70

Less Gain from sale of equipment $5

Equipment

Account Titles Debt Credit

Beginning balance $400

Cash purchase 550

Sale of equipment $200

Ending balance 750

Sale of equipment

Equipment $200

Accumulated depreciation $135

Cash 70

Gain from sale 5

Retained earnings:

Beginning balance $675

Net income 200

Dividends 50

Ending balance 825

Statement of Cash Flows (partial):

Investing activities:

Sale of equipment $70

Purchase of equipment -550

Purchase of land -42

Decrease in cash $522

Financing activities:

Bonds payable -20

Common stock +20

Additional paid in capital +80

Dividends paid -50

Increase in cash $30