[Anonymous]

Wiley Question –

Can anyone help me with a simulation question? I am studying for my exam on Friday and I am doing a SCF simulation. It is the Task-Based Simulation 1 on page 712. I can’t figure out how they calculated the amount they got for Redeem Bonds in the From Financing Activities. I also don’t seem to see how they got the amount for dividends declared. Any help would be greatly appreciated. Thank you in advance.

[LKD CPA]

Is this the SIM with the trial balance for Probe Co? I have the 2013 Wiley book. Different page, but likely the same SIMS. Does yours show Redeemed bonds from financing activities of (485000)?

FAR: 74, 83
REG: 76
BEC: 77
AUD: 89

[Iggy1985]

I'm checking it out, but I don't get why it's 485,000 either, I get 481,000 >_>

It is Probe Co.

edit: I guess instead of using the unamortized premium on the trial balance (71,000) you have to use the 75,000 that they give you in the information below?

Dr B/P 500,000

Dr Premium 75,000

Cr Gain on Extinguishment 90,000

Cr Cash 485,000 (Plug)

No clue about the dividends.. I am so screwed on SCFs :/

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[LKD CPA]

This is how I calculate the redeemed bonds. The second bullet says bonds w/ par value of $500,000 and premium of $75,000 were redeemed. We also see above, in the trial balance, that a gain on extinguishment of bonds is (90,000). To calculate you take the par 500,000 plus the premium 75,000 minus the gain 90,000. So, 500,000 + 75,000 – 90,000 = 485,000 which was the actual amount of cash outflow for redeeming the bonds.

FAR: 74, 83
REG: 76
BEC: 77
AUD: 89

[LKD CPA]

For the payment of dividends, the last bullet says “There were no changes to retained earnings other than dividends declared.” So we know for sure they declare the dividends, but did they really pay them? That is the most important questions since this is for the SCF's. Up in the trial balance we see Dividends payable increased by $15,000. So we now that $15,000 worth of declared dividends was not paid.

Going back to the retained earnings we see a change of 80,000 (which we already know was from dividends declared). Now take the 80,000 declared minus the amount remaining payable of 15,000 and you have the actual cash paid for dividends. 80,000 – 15,000 = 65,000

FAR: 74, 83
REG: 76
BEC: 77
AUD: 89

[Iggy1985]

ohhh, I see – I wasn't checking the change in the account, just the payable of 25,000.. must practice SCFs

FAR - 89 (8/19/14) Wiley TB, Wiley Book, Books from School, Ninja Audio/Notes
AUD - 92 (10/14/14) Wiley TB, Wiley Book, Ninja Audio
BEC - 82 (5/8/15) Mostly Ninja MCQ, sprinkles of Becker lectures and Ninja Audio
REG - (8/14/15)

[LKD CPA]

@Iggy – SCF's are the devil. I have been spending a LOT of time studying them. There are so many little pieces that affect the cash flows. It's like trying to put together a puzzle without having a picture of the puzzle to go from!

FAR: 74, 83
REG: 76
BEC: 77
AUD: 89

[Anonymous]

You guys rule. I spent so much time with all the numbers mentioned and couldn't figure that out. I really appreciate the help.

[Author]

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