Question : 163. On the basis of the following data for Branch Co. : 1239363

 

163. On the basis of the following data for Branch Co. for the year ended December 31, 2011 and the preceding year, prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities.  Assume that equipment costing $125,000 was purchased for cash and the land was sold for $15,000. The stock was issued for cash and the only entries in the retained earnings account were net income of $56,000 and cash dividends declared and paid of $18,000. 

 

Year

Year

 

   2011 

   2010 

Cash

$65,000 

$  54,000 

Accounts receivable (net)

78,000 

85,000 

Inventories

106,500 

90,000 

Land

—

20,000

Equipment

495,000 

370,000 

Accumulated depreciation

(215,000)

(158,000)

 

$529,500 

$461,000 

 

 

 

Accounts payable (merchandise creditors)

$  53,500 

$  55,000 

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 

 

$529,500 

$461,000 

 

 

 

 

 

 

 

 

 

164. On the basis of the following data for Breach Co. for the year ended December 31, 2011 and the preceding year, prepare a statement of cash flows using the indirect method of reporting cash flows from operating activities.  Assume that equipment costing $25,000 was purchased for cash and no long term assets were sold during the period.  Stock was issued for cash – 3,200 shares at par.Net income for 2010 was $76,000.Cash dividends declared and paid were $13,000. 

 

Year

Year

 

   2011 

   2010 

Cash

$170,000 

$  74,000 

Accounts receivable (net)

78,000 

85,000 

Inventories

106,500 

90,000 

Equipment

395,000 

370,000 

Accumulated depreciation

(195,000)

(158,000)

 

$554,500 

$461,000 

 

 

 

Accounts payable (merchandise creditors)

$  51,000 

$  50,000 

Taxes payable

2,500

5,000

Common stock, $10 par

262,000 

230,000 

Retained earnings

  239,000 

  176,000 

 

$554,500 

$461,000 

 

 

 

 

 

 

 

 

 

165. Complete each of the columns on the table below, indicating in which section each item would be reported on the statement of cash flow (Operating, Investing, or Financing), the amount that would be reported, and whether the item would create an increase or decrease in cash. For item that affect more than one section of the statement, indicate all affected.  Assume the indirect method of reporting cash flows operating activities.  The first item has been completed as an example. 

Item

Statement Section

Amount to Report

+/- Effect on Cash

Depreciation of $20,000 for the period

Operating

$20,000

Increase

Issuance of common stock for $30,000

 

 

 

Increase in Accounts Payable of $7,000

 

 

 

Retirement of $100,000 Bonds Payable at 97.

 

 

 

Purchase of long term investments for $76,500

 

 

 

Dividends declared and paid of $8,300

 

 

 

Increase in Prepaid Rent of $4,500

 

 

 

Decrease in Inventory of $5,300

 

 

 

Purchase of equipment for $17,600 cash.

 

 

 

Sale of land originally costing $60,000 for $66,000

 

 

 

Decrease in Taxes Payable for $2,100