Question

Flint Co. reported $149,900 of net income for 2017. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2017 that might affect cash flows from operating activities 1. Flint purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share. 2. Flint sold 100 shares of IBM common at $190 per share. The acquisition cost of these shares was $130 per share. There were no unrealized gains or losses recorded on this investment in 2017. 3. Flint revised its estimate for bad debts. Before 2017, Flint's bad debt expense was 1% of its net sales. In 2017, this percentage was increased to 2%. Net sales for 2017 were $468,000, and net accounts receivable decreased by $10,800 during 2017. 4. Flint issued 500 shares of its $10 par common stock for a patent. The market price of the shares on the date of the transaction was $23 per share. 5. Depreciation expense is $36,500. 6. Flint Co. holds 40% of the Nirvana Company's common stock as a long-term investment. Nirvana Company reported $25,400 of net income for 2017. 7. Nirvana Company paid a total of $2,200 of cash dividends to all investees in 2017. 8. Flint declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of issuance was $20 per share. Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume no items other than those listed above affected the computation of 2017 net cash flow from operating activities. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

A C Flint Co. Statement of Cash flows (Partial) 2 For the Year Ended December 31, 2017 3 4 Cash flow from operating activities $149,900 5 Net income 6 Adjustment to reconcile net income to 7 net cash provided by operating activities: 8 Depreciation expense $36,500 $ 10,800 9 Decrease in accounts receivable 10 Income from equity method investment $-10,160 $ -6,000 880 $32,020 11 Gain on sale of investment 12 Dividend from equity method investment $ $181,920 13 Net cash provided by operating activities

A C Flint Co. 1 Statement of Cash flows (Partial) 2 For the Year Ended December 31, 2017 3 4 Cash flow from operating activities 5 Net income 149900 6 Adjustment to reconcile net income to 7 net cash provided by operating activities: 8 Depreciation expense 36500 9 Decrease in accounts receivable 10800 -25400*40% 10 Income from equity method investment -100* (190-130) 11 Gain on sale of investment =SUM(B8:B12) -2200*40% 12 Dividend from equity method investment +C5+C12 13 Net cash provided by operating activities