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Chapter 14: Q14-12RQ (page 769)
Question: What accounts on the balance sheet must be evaluated when completing the financing activities section of the statement of cash flows?
Answer
Financing activity records transactions related to long-term liabilities and equity.
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Classifying transactions on the statement of cash flows—indirect method Consider the following transactions:
Identify the category of the statement of cash flows, indirect method, in which each transaction would be reported.
Question: Computing cash flows from investing and financing activities Use the data in Short Exercise S14-5 to complete this exercise. Prepare Winding Road Cellular’s statement of cash flows using the indirect method for the year ended April 30, 2018. Assume beginning and ending Cash are \(48,000 and \)52,200, respectively.
Preparing the statement of cash flows—indirect method with non-cash transactions the 2018 income statement and comparative balance sheet of Rolling Hills, Inc. follow:
Additionally, Rolling Hills purchased land of \(21,100 by financing it 100% with long-term notes payable during 2018. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for \)0. The cost and the accumulated depreciation of the disposed asset was $13,410. The plant acquisition was 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?
Question: What should the net change in cash section of the statement of cash flows always reconcile with?
Question: Computing cash flows from operating activities—indirect method
Winding Road Cellular accountants have assembled the following data for the year ended April 30, 2018:
Cash receipt from sale of land \( 27,000
Net income \) 55,000
Depreciation expense 2,000
Cash purchase of equipment 44,000
Cash payment of dividends 5,800
Decrease in current liabilities 20,000
Cash receipt from issuance of common stock 17,000
Increase in current assets other than cash 27,000
Prepare the operating activities section using the indirect method for Winding Road Cellular’s statement of cash flows for the year ended April 30, 2018.
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