Question

Accounts payable increase $9,000

Accounts receivable increase 4,000
Salaries payable decrease 3,000
Amortization expense 6,000
Cash balance, January 1 22.000
Cash balance, December 31 15,000
Cash paid as dividends 29,000
Cash paid to purchase land 90,000
Cash paid to retire bonds payable at par 60,000
Cash received from issuance of common stock 35,000
Cash received from sale of equipment 17,000
Depreciation expense 29,000
Gain on sale of equipment 4,000
Inventory decrease 13,000
Net income 76,000
Prepaid expenses increase 2,000
Cash Flow statement - indirect method
Cash Flow
Net Income 76,000.00
Gain on Sale of Equipment $(4,000.00)
Depreciation 29,000.00
Amortization Expense 6,000.00 $31,000.00
Adjustments
Decrease in inventory $13,000.00
Gain On sale of equipment (4,000.00)
Decrease In accrued Liability (3,000.00)
Increase in prepaid expenses (2.000.00)
Increase in Accounts Payable 9,000.00 13,000.00
120,000.00
Determine which of the above affects the Investing Activities (IA) and which affects the Financing Activities (FA). Note: Insert IA or FA next to the information above, or fill in the information below.

Answer 1

a. The items that affect Investing Activities (IA) are as follows:

Cash paid to purchase land 90,000

Cash received from sale of equipment 17,000

b. The items that affect Financing Activities (FA) are as follows:

Cash paid as dividends 29,000

Cash paid to retire bonds payable at par 60,000

Cash received from issuance of common stock 35,000

Step-by-step explanation:

Using the items that affect the Investing Activities (IA) and the Financing Activities (FA) in the answer above, the indirect cash flow statements can be completed as follows:

Cash Flow statement - indirect method

For the Year Ended December 31, ...

Details $ $

Net Income 76,000.00

Gain on Sale of Equipment (4,000.00)

Depreciation 29,000.00

Amortization Expense 6,000.00

Adjustments

Decrease in inventory 13,000.00

Gain On sale of equipment (4,000.00)

Decrease In accrued Liability (3,000.00)

Increase in prepaid expenses (2.000.00)

Increase in Accounts Payable 9,000.00

Cash flows from operating activities 120,000.00

Investing Activities (IA)

Cash paid to purchase land (90,000.00)

Cash received from sale of equipment 17,000.00

Cash flows from investing activities 73,000.00

Financing Activities (FA)

Cash paid as dividends (29,000.00)

Cash paid to retire bonds payable at par (60,000.00)

Cash from common stock issued 35,000.00

Cash flows from financing activities 54,000.00

Net cash outflows for the year (7,000.00)

Cash balance, January 1 22,000.00

Cash balance, December 31 15,000.00