(5) The following entry was made to record an exchange of an old machine for a new Machinery.. Accumulated Depreciation--Machinery 80,000 20,000 Machinery.. Cash.. 30,000 70,000 (6) A fully depreciated copier machine classified as office equipment (O salvage value,) which cost $14,000 was written off. (7) The company sold 6,000 shares of its common stock ($10 par) on June 15, 2019 for $25 a (8) Bonds were sold at 104 on December 31, 2019. (9) Land that was condemned had a book value of $120,000. Cash value received for land was share. There were 43,800 shares outstanding on December 31, 2019. $54,000. Instructions: Prepare a statement of cash flows (indirect method). Ignore tax effects. Show all work.
Homework Answers
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| Cash flow statement (Inirect Method) | |||
| Particulars | Amount | Amount | Calculations |
| Net income | 136,000.00 | Profit before extraordinary item is taken | |
| Adjustments for non operating items | |||
| Add: Depreciation | 140,000.00 | (102000+8000+30000) | |
| Loss on sale of investment | 2,000.00 | 72000-70000 | |
| Less: Gain on sale of investment | (50,000.00) | 200000-150000 | |
| 228,000.00 | |||
| Changes in working capital | |||
| Accounts Receivable | 32,000.00 | given | |
| Accrued liabilities | 36,000.00 | given | |
| Inventory | (108,600.00) | given | |
| Allowance for Doubtful Accounts | 7,000.00 | given | |
| Accounts Payable | (91,600.00) | given | |
| Prepaid expenses | (10,000.00) | given | |
| (135,200.00) | |||
| Cash flow from operating activities | 92,800.00 | ||
| Cash flow from investing activities | |||
| Sale of investment | 70,000.00 | Point No 3 in question | |
| Purchase of land | (280,000.00) | (150000+120000+10000) | |
| Purchase of Building | (530,000.00) | (230000+300000) | |
| Purchase of Machinery | (70,000.00) | Point No 5 in question | |
| Sale of land & building | 200,000.00 | Point No 4 in question | |
| Sale of land | 54,000.00 | Point No 9 in question | |
| Cash flow from investing activities | (556,000.00) | ||
| Cash flow from financing activities | |||
| Bond payable | 416,000.00 | Point No 8 in question | |
| Common stock | 150,000.00 | Point No 7 in question | |
| 566,000.00 | |||
| Net increse in cash and cash equivalents | 102,800.00 | ||
| Opening cash & cash equivalents | - | ||
| Closing cash & cash equivalents | - | ||
Notes for your information
| accumulated dep building | |||
| Building | 90,000.00 | 102,000.00 | |
| Difference given | 12,000.00 | ||
| 102,000.00 | |||
| accumulated dep Equipment | |||
| written off | 14,000.00 | Difference given | 6,000.00 |
| Depreciation | 8,000.00 | ||
| accumulated dep machinery | |||
| Machinery | 20,000.00 | Depreciation | 30,000.00 |
| Difference given | 10,000.00 | ||
| 30,000.00 | |||
| Purchase of land | |
| Increase in land | 150000 |
| Condemned land | 120000 |
| Sale of land(point No 4) | 10000 |
| Total increase(purchase) | 280000 |
| Purchase of Building | |
| Increase in Building | 300000 |
| Sale of land(point No 4) | 230000 |
| Total increase(purchase) | 530000 |
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