Question

In the space provided, using the letters (a-e), indicate in which category of the statement of cash flows the preceding items would. After each item, indicate with a plus sign ( ) or a minus sign (-) whether the item would be reported as an increase / inflow or a decrease/ outflow.

The following information relates to the Marshall Company for 2010:
Gain on sale of land $ 800
Bond premium amortization (by the issuer) 300
Decrease in accounts payable 700
Increase in prepaid expenses 100
Net income 9,000
Purchased equipment 10,000
Increase in salaries payable 400
Proceeds from sale of land 5,000
Decrease in inventories 1,100
Payment of dividends 600
Depreciation expense 1,000
Required:Compute net cash provided by operating activities for the Marshall Company for 2010.

Answer 1

Particulars Amount

Cash Flows from Operating Activities

Net Income $9,000

Adjustments to reconcile net income to

Net Cash flows from Operating Activities

Depreciation Expense $1000

Gain On Sale of land ($800)

Decrease in accounts payable ($700)

Increase in prepaid expenses ($100)

Increase in salaries payable $400

Decrease in Inventories $1100

Amortization of bond premium ($300) $600

Net Cash flows from operating activities $9,600