Question

Question 2 The following three accounts appear in the general ledger of Herrick Corp. during 2020. Equipment Debit Credit Date Jan. 1 July 31 Sept. 2 Nov. 10 Balance Purchase of equipment Cost of equipment constructed Cost of equipment sold 71,900 55,000 Balance 160,000 231,900 286,900 238,700 48,200 Credit Date Jan. 1 Nov. 10 Dec. 31 Accumulated Depreciation-Equipment Debit Balance Accumulated depreciation on equipment sold 30,700 Depreciation for year Balance 70,100 39,400 64,400 25,000 Retained Earnings Debit Credit Date Jan. 1 Aug. 23 Dec. 31 Balance Dividends (cash) Net income Balance 105,200 86,300 152,400 18,900 66,100 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 plant assets was $5,200. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $55,000.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

66,100 Herrick Corp. Partial Statement of Cash Flow for the year ended 2020 Net Income Adjustmet to reconcile net income to Operationg income before change in working capital Depreciation Loss on disposal Cash flow fron operating activities Equipment Cost Accum Dep WDV Loss Sale 25,000 5,200 48,200 (30,700) 17,500 (5,200) 12.300 30,200 96,300 Purchase of equipment Equipmet construcred Sale of equipment Cash flow fron investing activities (71,900) (55,000) 12,300 (114,600) (18,900) Dividend Cash flow fron financing activities (18,900)