Question

The three accounts shown below appear in the general ledger of Herrick Corp. during 2017.

From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of equipment was $4,100. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $52,300.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

please include all calculations and answers. thank you

Answer 1

Solution:

Herrick Corp
Partial Statement of Cash flows
For the year ended 2017
Particulars		Amount
Cash flow from operating activities:
Net Income		$65,100.00
Adjustment to reconcile net income to net cash from operating activities:
Depreciation	$24,700.00
Loss on disposal of equipment	$4,100.00
		$28,800.00
Net Cash provided by operating activities		$93,900.00
Cash flow from Investing activities:
Purchase of equipment	-$71,800.00
Cost of equipment constructed	-$52,300.00
Proceed from sale of equipment ($51,000 - $30,800 - $4,100)	$16,100.00
Net Cash used in Investing activities		-$108,000.00
Cash flow from Financing activities:
Dividend paid		-$17,300.00