Each of the following items must be considered in preparing a statement of cash flows. Indicate where each item is to be reported in the statement, if at all. Assume that net income is reported as \(90,000.

(a) Accounts receivable increased from \)34,000 to \(39,000 from the beginning to the end of the year.

(b) During the year, 10,000 shares of preferred stock with a par value of \)100 per share were issued at \(115 per share.

(c) Depreciation expense amounted to \)14,000, and bond premium amortization amounted to \(5,000.

(d) Land increased from \)10,000 to $30,000.

A type of stock issued by the business entity that is provided priority on the payment of dividends and liquidation is known as preferred stock.Such stock does not give voting rights.

1. An increase in accounts receivables will be reported in the cash flow from operating activities. It will be deducted from the net income of the business entity.
2. Issue of preferred stock shares will be added in the cash flow section from financing activities as it creates an inflow of cash.
3. Depreciation and amortization expenses are non-cash expenses. Therefore, they will be reported in the cash flow from operation and added to the net income.
4. An increase in the land will be deducted in the investing activity section because it will lead to an outflow of cash.