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Chapter 23: Question 1Q (page 1371)
What is the purpose of the statement of cash flows? What
information does it provide?
It helps indicate the changes in cash inflows and outflows for a company during a specific period.
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In 2017, Leppard Inc. issued 1,000 shares of \(10 par value common stock for land worth \)40,000.
(a) Prepare Leppard’s journal entry to record the transaction.
(b) Indicate the effect the transaction has on cash.
(c) Indicate how the transaction is reported on the statement of cash flows.
Unlike the other major financial statements, the statement of cash flows is not prepared from the adjusted trial balance. From what sources does the information to prepare this statement come, and what information does each source provide?
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.
Question: The board of directors of Tirico Corp. declared cash dividends of \(260,000 during the current year. If dividends payable was \)85,000 at the beginning of the year and $90,000 at the end of the year, how much cash was paid in dividends during the year?
Question:The comparative balance sheets for Hinckley Corporation show the following information.
| December 31 | ||
2017 | 2016 | |
Cash | \(33,500 | \)13,000 |
Accounts receivable | 12,250 | 10,000 |
Inventory | 12,000 | 9,000 |
Available-for-sale debt investment | 0 | 3,000 |
Building | 0 | 29,750 |
Equipment | 45,000 | 20,000 |
Patents | 5,000 | 6,250 |
\(107,750 | \)91,000 | |
Allowance for doubtful accounts | \(3,000 | \)4,500 |
Accumulated depreciation – equipment | 2,000 | 4,500 |
Accumulated depreciation – building | 0 | 6,000 |
Accounts payable | 5,000 | 3,000 |
Dividend payable | 0 | 5,000 |
Notes payable, short-term (non-trade) | 3,000 | 4,000 |
Long-term note payable | 31,000 | 25,000 |
Common stock | 43,000 | 33,000 |
Retained earnings | 20,750 | 6,000 |
\(107,750 | \)91,000 | |
Additional data related to 2017 are as follows.
1. Equipment that had cost \(11,000 and was 40% depreciated at time of disposal was sold for \)2,500.
2. \(10,000 of the long-term note payable was paid by issuing common stock.
3. Cash dividends paid were \)5,000.
4. On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were \(30,000 (net of \)2,000 taxes).
5. Investments (available-for-sale) were sold at \(1,700 above their cost. The company has made similar sales and investments in the past.
6. Cash was paid for the acquisition of equipment.
7. A long-term note for \)16,000 was issued for the acquisition of equipment.
8. Interest of \(2,000 and income taxes of \)6,500 were paid in cash.
Instructions
Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country
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