Concept explainers
Partial Statement of
Service Company had net income during the current year of $65,800. The following information was obtained from Service’s balance sheet:
Inventory 32,180 increase
Accounts payable 9,300 decrease
Interest payable 2,120 increase
Accumulated depreciation (Equipment) 32,350 increase
Additional Information:
1. Equipment with accumulated depreciation of $18,000 was sold during the year.
2. Cash dividends of $29,625 were paid during the year.
Required:
1. Prepare the net cash flows from operating activities using the indirect method.
2. CONCEPTUAL CONNECTION How would the cash proceeds from the sale of equipment he reported on the statement of cash flows?
3. CONCEPTUAL CONNECTION How would the cash dividends be reported on the statement of cash flows?
4. CONCEPTUAL CONNECTION What could the difference between net income and cash flow from operating activities signal to financial statement users?
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Cornerstones of Financial Accounting
- Statement of Cash Flows The following are Mueller Companys cash flow activities: a. Net income, 68,000 b. Increase in accounts receivable, 4,400 c. Receipt from sale of common stock, 12,300 d. Depreciation expense, 11,300 e. Dividends paid, 24,500 f. Payment for purchase of building, 65,000 g. Bond discount amortization, 2,700 h. Receipt from sale of long-term investments at cost, 10,600 i. Payment for purchase of equipment, 8,000 j. Receipt from sale of preferred stock, 20,000 k. Increase in income taxes payable, 3,500 l. Payment for purchase of land, 9,700 m. Decrease in accounts payable, 2,900 n. Increase in inventories, 10,300 o. Beginning cash balance, 18,000 Required: Prepare Mueller Company's statement of cash flows.arrow_forwardReporting changes in equipment on statement of cash flows An analysis of the general ledger accounts indicates that delivery equipment, which cost 75,000 and on which accumulated depreciation totaled 58,000 on the date of sale, was sold for 20,200 during the year. Using this information, indicate the items to be reported on the statement of cash flows.arrow_forwardIn the current year, Harrisburg Corporation had net income of 35,000, a 9,000 decrease in accounts receivable, a 7,000 increase in inventory, an 8,000 increase in salaries payable, a 13,000 decrease in accounts payable, and 10,000 in depreciation expense. Using the indirect method, prepare the operating activities section of its statement of cash flows based on this information.arrow_forward
- Net Cash Flow from Operating Activities The following are accounting items taken from Tyrone Shoelaces Required: a. Net income, 22,900 b. Payment for purchase of land, 4,000 c. Payment for retirement of bonds, 6,000 d. Depreciation expense, 7,800 e. Receipt from issuance of common stock, 7,000 f. Patent amortization expense, 2,700 g. Increase in accounts receivable, 3,400 h. Payment of dividends, 5,000 i. Decrease in accounts payable, 2,600 Required: Prepare the operating activities section of Tyrones statement of cash flows using the indirect method.arrow_forwardStatement of Cash Flows A list of Fischer Companys cash flow activities is presented here: a. Patent amortization expense, 3,500 b. Machinery was purchased for 39,500 c. At year-end, bonds payable with a face value of 20,000 were issued for 17,000 d. Net income, 47,200 k. Inventories increased by 15,400 e. Dividends paid, 16,000 f. Depreciation expense, 12,900 g. Preferred stock was issued for 13,600 h. Investments were acquired for 21,000 i. Accounts receivable increased by 4,300 j. Land was sold at cost, 11,000 k. Inventories increased by 15,400 l. Accounts payable increased by 2,700 m. Beginning cash balance, 19,400 Required: Prepare Fischers statement of cash flows.arrow_forward
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