Question

Cushenberry Corporation had the following transactions. 1. Sold land (cost $12,000) for $15,000 2. Issued common stock at par for $20,000. 3. Recorded depreciation on buildings for $17,000. 4. Paid salaries of $9,000 5. Issued 1,000 shares of $1 par value common stock for equipment worth $8,000 6. Sold equipment (cost $10,000, accumulated depreciation $7,000) for $1,200. (b) For each transaction above indicate how it would affect the statement of cash flows using the indirect method.

Answer 1

- D gain on sale $3000 will be included in Net income, so it should i be deducted and reported as investment activity - Decreases operating 1 cash flow assue of common stock - increases financing e O cash flow Depreciation should be added back to Net income E under operating activities increases operating cash flow 1 paid Salaries of $9000 - Already substracted in gname statement ( No impact]. 5) No impact - Became cash is not involved 6) loss on equipment Sale = $1800 (1200 – 3000] a) should be added back to net income under operating activities - Increases operating cash flows.