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Chapter 14: Q14-11RQ (page 769)
Question: What accounts on the balance sheet must be evaluated when completing the investing activities section of the statement of cash flows?
Answer
Investing activity records transactions related to long-term assets and long-term note receivables.
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Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plansto purchase a truck for \(23,000 and a forklift for \)125,000 next year. In addition, itplans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019,what would be the amount of free cash flow?
Preparing the statement of cash flows—indirect method with non-cash transactions the 2018 income statement and comparative balance sheet of Sweet Valley, Inc. follow:
Additionally, Sweet Valley purchased land of \(20,900 by financing it 100% with long-term notes payable during 2018. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for \)0. The cost and the accumulated depreciation of the disposed asset were $13,240. Plant asset was acquired for cash.
Requirements
1. Prepare the 2018 statement of cash flows, formatting operating activities by the indirect method.
2. How will what you learned in this problem help you evaluate an investment?
Preparing operating activities using the direct method Amy’s Learning Center has assembled the following data for the year ended June 30, 2018:
Payments to suppliers $ 115,000
Cash payment for purchase of equipment 39,000
Payments to employees 66,000
Payment of notes payable 34,000
Payment of dividends 7,500
Cash receipt from issuance of stock 22,000
Collections from customers 188,000
Cash receipt from sale of land 58,000
Cash balance, June 30, 2017 41,000 Prepare the operating activities section of the business’s statement of cash flows for the year ended June 30, 2018, using the direct method.
Question: Computing investing and financing cash flows Preston Media Corporation had the following income statement and balance sheet for 2018:
PRESTON MEDIA CORPORATION
Income Statement
Year Ended December 31, 2018
Sales Revenue \(80,000
Depreciation Expense––Plant Assets \)11,000
Other Expenses \(50,000
Net Income \)19,000
Requirements
1. Compute the acquisition of plant assets for Preston Media Corporation during 2018. The business sold no plant assets during the year. Assume the company paid cash for the acquisition of plant assets.
2. Compute the payment of a long-term note payable. During the year, the business issued a $4,400 note payable.
Preparing the direct method statement of cash flows Use the data in Short Exercise S14A-12 and your results. Prepare the business’s complete statement of cash flows for the year ended June 30, 2018, using the direct method for operating activities
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