Question

Reporting Land Transactions on Statement of Cash Flows On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cash flows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Credit Jan. 1 Mar. 12 Oct. 4 Balance Purchased for cash Sold for $204,000 Debit 1,131,000 1,504,000 1,329,000 373,000 175,000 Section of Statement of Cash Flows Item Added or Deducted Amount Mar. 12: Purchase of fixed asset Investing activities section Deducted ✓ x Oct. 4: Sale of fixed asset Investing activities section Added ✓ Gain on sale of fixed asset (assume the indirect method) Operating activities section Deducted ✓

Answer 1

Solution 1:

Item	Section of statement of cash flows	Added or deducted	Amount
Mar 12" Purchase of Fixed asset	Investing Activities section	Deducted	373000
Oct 4: Sale of Fixed asset	Investing Activities section	Added	204000
Gain on sale of fixed assets (204000-175000)	Operating Activities section	Deducted	29000

Solution 2:

Cash payment to stockholders = 59600+212700 - 53600 = $218,700

Solution 3:

Item	Section of statement of cash flows	Added or deducted	Amount
Purchase of Land for Cash	Investing Activities section	Deducted	397900
Purchase of Land for issuing Lonf term Mortgage note payable	Separate Schedule	report only	534400

Solution 4:

Item	Section of statement of cash flows	Added or deducted	Amount
Retire Bonds (92000-7360)	Financing Activities section	deducted	84640
Issue Bonds (276000-18500)	Financing Activities section	added	257500
Amortization of Discount	Operating Activities section	added	1590