MODULE 4 EXAM LK 2014 11 8
#6 Text box would not allow typing.
On the basis of the following data for Seller Co. for 2008 and the preceding year ended December 31, 2007, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.
Year
Year
2008 2007
Cash
$100,000
$ 78,000
Accounts receivable (net)
78,000
85,000
Inventories
101,500
90,000
Equipment
410,000
370,000
Accumulated depreciation
(150,000)
(158,000)
$539,500
$465,000
Accounts payable (merchandise creditors)
$ 58,500
$ 55,000
Cash dividends payable
5,000
4,000
Common stock, $10 par
200,000
170,000
Paid-in capital in excess of par--
common stock
62,000
60,000
Retained earnings 214,000 176,000
$539,500
$465,000
Teller Co.
Statement of Cash Flows
For Year Ended December 31, 2008
Cash flows from operating activities:
Net income, per income statement
$ 51,000 Add: Depreciation
$57,000
Decrease in accounts receivable
7,000
Loss on sale of equipment 5,000 69,000
$120,000 Deduct: Increase in inventories
11,500
Decrease in accounts payable 2,500 14,000 Net cash flow from operating activities
$106,000
Cash flows from investing activities:
Cash from sale of equipment
$ 15,000
Less: Cash paid for purchase of equipment 125,000
Net cash flow used for investing activities
(110,000)
Cash flows from financing activities:
Cash received from sale of common stock
$32,000
Less: Cash paid for dividends
($13,000 + $4,000 - $5,000 = $12,000) 12,000*
Net cash flow provided by financing activities
20,000
Increase in cash
$ 22,000
On the basis of the following data for Seller Co. for 2008 and the preceding year ended December 31, 2007, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.
Year
Year
2008 2007
Cash
$100,000
$ 78,000
Accounts receivable (net)
78,000
85,000
Inventories
101,500
90,000
Equipment
410,000
370,000
Accumulated depreciation
(150,000)
(158,000)
$539,500
$465,000
Accounts payable (merchandise creditors)
$ 58,500
$ 55,000
Cash dividends payable
5,000
4,000
Common stock, $10 par
200,000
170,000
Paid-in capital in excess of par--
common stock
62,000
60,000
Retained earnings 214,000 176,000
$539,500
$465,000
Teller Co.
Statement of Cash Flows
For Year Ended December 31, 2008
Cash flows from operating activities:
Net income, per income statement
$ 51,000 Add: Depreciation
$57,000
Decrease in accounts receivable
7,000
Loss on sale of equipment 5,000 69,000
$120,000 Deduct: Increase in inventories
11,500
Decrease in accounts payable 2,500 14,000 Net cash flow from operating activities
$106,000
Cash flows from investing activities:
Cash from sale of equipment
$ 15,000
Less: Cash paid for purchase of equipment 125,000
Net cash flow used for investing activities
(110,000)
Cash flows from financing activities:
Cash received from sale of common stock
$32,000
Less: Cash paid for dividends
($13,000 + $4,000 - $5,000 = $12,000) 12,000*
Net cash flow provided by financing activities
20,000
Increase in cash
$ 22,000