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.
c. Sales revenue of $88,000 is an operating activity.
e. Depreciation expense of $6,800 is an operating activity.
b. Treasury stock sold for $16,500 is an investing activity.
d. Land purchased for cash $103,000 is an investing activity.
h. Equipment sold for $9,600 is an investing activity.
k. Loss of $1,800 on disposal of equipment is an investing activity.
a. Issuance of common stock for cash of $72,000 is a financing activity.
f. Cash paid for dividends is a financing activity.
i. Bonds payable of $51,000 is a financing activity
g. Land in exchange of notes payable is a non-cash activity.
j. Building in exchange of notes payable is a non-cash activity.
Moss Exports is having a bad year. Net income is only $60,000. Also, two important overseas customers are falling behind in their payments to Moss, and Moss’s accounts receivable are ballooning. The company desperately needs a loan. The Moss Exports Board of Directors is considering ways to put the best face on the company’s financial statements. Moss’s bank closely examines cash flow from operating activities. Daniel Peavey, Moss’s controller, suggests reclassifying the receivables from the slow-paying clients as long-term. He explains to the board that removing the $80,000 increase in accounts receivable from current assets will increase net cash provided by operations. This approach may help Moss get the loan.
Question: Kalapono Company expects the following for 2018:
• Net cash provided by operating activities of $100,000.
• Net cash provided by financing activities of $10,000.
• Net cash used for investing activities of $20,000 (no sales of long-term assets).
• Cash dividends paid to stockholders was $2,000.
How much free cash flow does Kalapono expect for 2018?
Question: Owl, Inc.’s accountants have assembled the following data for the year ended December 31, 2018: Cash receipt from sale of equipment $ 20,000
Depreciation expense 12,000
Cash payment of dividends 4,000
Cash receipt from issuance of common stock 12,000
Net income 30,000
Cash purchase of land 25,000
Increase in current liabilities 10,000
Decrease in current assets other than cash 8,000
Prepare Owl’s statement of cash flows using the indirect method for the year ended December 31, 2018. Assume beginning and ending Cash are $12,000 and $75,000 respectively
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