Question

all of 17.7 please

E17.7 (LO 2) The following three accounts appear in the general ledger of Herrick Corp. during 2020. Prepare partial statement of cash flows-indirect method. Credit Date Jan. 1 July 31 Balance 160,000 230,000 Equipment Debit Balance Purchase 70,000 of equipment Cost of 53,000 equipment constructed Cost of equipment sold Sept. 2 283,000 Nov. 10 49,000 234,000 Accumulated Depreciation-Equipment

Answer 1

A Cash flow statement provides the following information:
1) Information about company's cash receipt and cash payment during an accounting period.
2) Information about company's operating, investing and financing activities.
3) Information access the company's liquidity, solvency and financing flexibility.
Under the indirect method, net income is converted operating cash flow by making adjustments for the transaction that effect net income but are non cash transactions. The adjustment includes eliminating non cash expenses, non operating items and the changes in the balance sheet account on account of accrual accounting events.
> Cash flow from operating activities (CFO), consists of the inflows and outflows of cash resulting from revenue and expense transactions that affect a firm's net income.
> Cash flow from investing activities (CFI) consists of the inflow and outflows of cash resulting from the acquisition of long term assets and investment.
> Cash Flow from financing activities (CFF) consists of the inflow and outflows of cash resulting from transactions affecting a firm's capital structure.

Herrick Corp Statement of Cash Flows For year ended December 31, 2020 Particulars Amount Amount Cash Flow from Operating Activity Net Income Adjustment reconcile net income net cash flow from operating activities Add: Depreciation Expense Add: Loss on Sale of Equipment $77,000 $28,000 $7,000 $35,000 Net Cash Flow from Operating Activity $1,12,000 Cash Flow from (used for) Investing Activity Purchase of Equipment Cost of equipment constructed Sale of Equipment Net Cash Flow used in Investing Activity ($70,000) ($53,000) $12,000 ($1,11,000) Cash Flow from (used for) Financing Activity Dividend paid ($14,000) Net Cash Flow from Financing Activity ($14,000) Net Decrease in Cash and Cash Equivalents ($13,000) Working $49,000 1 Cost of Equipment Sold ($30,000) Less: Accumulated Depreciation $19,000 Carrying Value of Equipment ($7,000) Less: Loss on sale of Equipment Cash received from sale of equipment $12,000