P3-7 (Algo) Recording Journal Entries and Identifying Cash Flow Effects LO3-4, 3-7
[The following information applies to the questions
displayed below.]
Pine Fair, L.P. (Limited Partnership), is one of the largest
regional amusement park operators in the world, owning 11 amusement
parks, two water parks, and four hotels. The parks include Pine
Point in Ohio; Valleyfair near Minneapolis/St. Paul; Dorney Park
and Wildwater Kingdom near Allentown, Pennsylvania; Worlds of Fun
in Kansas City; Great America in Santa Clara, California; and
Canada’s Wonderland near Toronto, Canada, among several others. The
following are summarized transactions similar to those that
occurred in a recent year. Dollars are in thousands.
P3-7 Part 2
2. For the transactions below, indicate how the transactions will affect the statement of cash flows. Cash outflows should be entered as negative amounts. The first transaction is provided as an example. (If there is no effect on the statement of cash flows, select "No effect". Enter your answers in thousands, not in dollars. Cash outflows should be indicated with a minus sign.)
Whenever we debit our accounts it states the inflow of cash and when we credit it shows an outflow, this is the principle rule for the accounting of cash transactions.
There may be circumstances that we have some outstanding liabilities or receivables during the year, these are basically treated as operating activities because they are part of current assets and liabilities and thus contributes for the working capital.
When we recognises the cost of goods sold basically we debit the cost and credit the purchase and inventory but in the given question inventory is not available so we have used the purchase/inventory for our journal entry.
For recognition of cash inflow, outflow and no effect there is a
table at the bottom of the journals stating the amounts which
effect the flow of cash during the year. There is also a
bifurcation of operating, investing and financing activities.
As stated amounts are to be taken in thousands. All the figures are
divided with 1,000 in the statement of effect on cashflow.
Herein, first all the journal entries are passed for clear understanding of transactions.
| Journal | |||
| S.no | Account Title and Explanations | Amount ($) | |
| Debit | Credit | ||
| 1 | Cash | 616,042.00 | |
| To revenue from Park | 616,042.00 | ||
| (Being Cash received from guest for park admissions) | |||
| 2 | Wages | 449,416.00 | |
| To Cash | 417,630.00 | ||
| To Wages Payable | 31,786.00 | ||
| (Being wages paid and outstanding) | |||
| 3 | Long Term Notes Payable | 48,300.00 | |
| To Cash | 48,300.00 | ||
| (Being liability paid) | |||
| 4 | Cash | 381,693.00 | |
| To Revenue from sell of merchandise | 381,693.00 | ||
| (Being Cash received from sale of merchandise) | |||
| 4 | COGS | 96,057.00 | |
| To Purchase/Inventory | 96,057.00 | ||
| (Being expense recorded) | |||
| 5 | Rides & Equipment | 93,790.00 | |
| To Cash | 93,790.00 | ||
| (Being rides and equipment purchased) | |||
| 6 | Cash | 84,855.00 | |
| Revenue Receivale | 1,339.00 | ||
| To Revenue from Guest Accmodation | 86,194.00 | ||
| (Being Cash received from guest accomodation) | |||
| 7 | Interest on Long Term Debt | 161,326.00 | |
| To Cash | 161,326.00 | ||
| (Being interest paid) | |||
| 8 | Purchase (Mercandise) | 153,531.00 | |
| To Cash | 124,231.00 | ||
| To Accounts Payable (Merchandise) | 29,300.00 | ||
| (Being inventory purchased) | |||
| 9 | Advertisement | 146,426.00 | |
| To Cash | 138,444.00 | ||
| To Accounts Payable (Advertisement) | 7,982.00 | ||
| (Being expense incurred) | |||
| 10 | Accounts Payable | 12,400.00 | |
| To Cash | 12,400.00 | ||
| (Being amount paid during the year) | |||
| Total | 2,245,175.00 | 2,245,175.00 |
Statement of effect on cash flow -