Question

Each of the following items must be considered in preparing a statement of cash flows. Indicate where each item is to be reported in the statement, if at all. Assume that net income is reported as $90,000. Accounts receivable increased from $34,000 to $39,000 from the beginning to the end of the year. LINK TO TEXT During the year, 10,000 shares of preferred stock with a par value of $100 per share were issued at $115 per share. LINK TO TEXT Depreciation expense amounted to $14,000, and bond premium amortization amounted to $5,000. LINK TO TEXT Land increased from $10,000 to $30,000.

Answer 1

See explanation below.

Step-by-step explanation:

1. Net income will be adjusted downward by deducting $5,000 from $90,000 and then reporting cash from operating activities as $85,000.

2. The issuance of the preferred stock is a financing activity. The issuance is reported as:

i. cash flows from financing activities.

ii. Issuance of preferred stock $1,150,000

(c) Net income will be adjusted as:

I. Cash flows from operating activities.

ii. Net income $90,000.

Adjustments to reconcile net income to net cash provided by operating activities:

i. Depreciation expense $14,000

ii. Premium amortization $5,000

iii. Net cash provided by operating activities $99,000

(d) The $20,000 increment shows an investing activity. The increase in Land is reported as follows:

Cash flows from investing activities:

Investment in Land $20,000.

Answer 2

Answer 1 - increment in money due will go under working exercises and $4000 will be appeared in negative there since it will decrease the money balance

Answer 2 - issuance of preferred stock will go under financing exercises and since they are giving offers so income will increment by $115 × 10000 = $1150000

Answer - 3 For devaluation Because we start setting up the announcement of incomes utilizing the overall gain figure taken from the salary explanation, we have to alter the net gain figure with the goal that it isn't diminished by Depreciation Expense. To do this, we include back the measure of the Depreciation Expense. So we have to add $14000 to net gain of $90000

For bond premium amortization, its recorded in the working exercises area of the announcement of incomes. Under the roundabout strategy, the amortization of security premium is deducted from net gain since it decreases premium cost and, along these lines, expands net gain without a real money inflow.

Answer - 4 Acquisition of property will go under contributing activities so in the event that we purchase more place where there is $20000, at that point it will lessen the money by $20000