Directions: Answer the following questions on a separate Microsoft Word or Excel document.

Explain how
you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your
assignment using the assignment link in Blackboard.
Exercises
E13-3. Cushenberry Corporation had the following transactions.
1.
2.
3.
4.
5.
6.

Sold land (cost $12,000) for $15,000.

Issued common stock at par for $20,000.
Recorded depreciation on buildings for $17,000.
Paid salaries of $9,000.
Issued 1,000 shares of $1 par value common stock for equipment worth $8,000.
Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200.

Instructions
For each transaction above, (a) prepare the journal entry, and (b) indicate how it would affect the
statement of cash ows using the indirect method.
E13-4. Gutierrez Company reported net income of $225,000 for 2015. Gutierrez also reported
depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative
balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in
accounts payable, and a $4,000 decrease in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash ows for 2015. Use the indirect method.

Problems
P13-3A. The income statement of Whitlock Company is presented here.

Additional information:
1. Accounts receivable increased $200,000 during the year, and inventory decreased $500,000.
2. Prepaid expenses increased $150,000 during the year.
3. Accounts payable to suppliers of merchandise decreased $340,000 during the year.
4. Accrued expenses payable decreased $100,000 during the year.
5. Operating expenses include depreciation expense of $70,000.
Instructions
Prepare the operating activities section of the statement of cash ows for the year ended November 30,
2015, for Whitlock Company, using the indirect method.

P13-7A. Presented below are the nancial statements of Nosker Company.

Additional data:
1. Dividends declared and paid were $20,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and
had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.
Instructions
a) Prepare a statement of cash ows using the indirect method.
b) Compute free cash ow.