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Chapter 23: Q4E (page 1375)
Question:Data for the Vince Gill Company are presented in E23-3.
Instructions
Prepare the operating activities section of the statement of cash flows using the direct method.
Answer
The net cash provided by operating activities is computed as $1,225,000
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Question: The net income for Fallon Company for 2017 was \(320,000. During 2017, depreciation on plant assets was \)124,000, amortization of patent was \(40,000, and the company incurred a loss on sale of plant assets of \)21,000. Compute net cash flow from operating activities.
Springsteen Co. had the following activity in its most recent year of operations.
Instructions Classify the items as (1) operating—add to net income, (2) operating—deduct from net income, (3) investing, (4) financing, or (5) significant non-cash investing and financing activities. Use the indirect method.
Data for Brecker Inc. are presented in E23-13. Instructions Prepare a statement of cash flows using the indirect method.
Novak Corporation is preparing its 2017 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2017 statement of cash flows.
Code Letter Effect
A Added to net income in the operating section
D Deducted from net income in the operating section
R-I Cash receipt in investing section
P-I Cash payment in investing section
R-F Cash receipt in financing section
P-F Cash payment in financing section
N Noncash investing and financing activity
(a)Purchase of land and building
(b)Decrease in accounts receivable
(c)Issuance of stock.
(d)Depreciation expense.
(e)Sale of land at book value.
(f)Sale of land at a gain.
(g)Payment of dividends.
(h)Increase in accounts receivable.
(i)Purchase of available-for-sale debt investment
(j)Increase in accounts payable.
(k)Decrease in accounts payable.
(l)Loan from bank by signing note
(m)Purchase of equipment using a note
(n)Increase in inventory
(o)Issuance of bonds.
(p)Redemption of bonds payable.
(q)Sale of equipment at a loss.
(r)Purchase of treasury stock.
The following data are taken from the records of Alee Company
December 31, December 31,
2017 2016
Cash \( 15,000 \) 8,000
Current assets other than cash 85,000 60,000
Long-term debt investments 10,000 53,000
Plant assets 335,000 215,000
\(445,000 \)336,000
December 31, December 31,
2017 2016
Accumulated depreciation \( 20,000 \) 40,000
Current liabilities 40,000 22,000
Bonds payable 75,000 –0–
Common stock 254,000 254,000
Retained earnings 56,000 20,000
\(445,000 \)336,000
Additional information:
1. Held-to-maturity securities carried at a cost of \(43,000 on December 31, 2016, were sold in 2017 for \)34,000. The loss (not unusual) was incorrectly charged directly to Retained Earnings.
2. Plant assets that cost \(50,000 and were 80% depreciated were sold during 2017 for \)8,000. The loss was incorrectly charged directly to Retained Earnings.
3. Net income as reported on the income statement for the year was \(57,000.
4. Dividends paid amounted to \)10,000.
5. Depreciation charged for the year was $20,000.
Instructions
Prepare a statement of cash flows for the year 2017 using the indirect method
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