132. For each of the following five transactions, indicate by letter whether the cash effect of
each transaction is reported in a statement of cash flows as an operating (O), investing (I),
financing (F), or noncash (NC) activity.
133. Electronic Wonders reports net income of $95,000. The accounting records reveal
Depreciation Expense of $50,000 as well as increases in Prepaid Rent, Accounts Payable, and
Income Tax Payable of $40,000, $23,000, and $20,000, respectively. Prepare the operating
activities section of Electronic Wonders’ statement of cash flows using the indirect method.
134. Micro Manufacturing reports net income of $850,000. Depreciation Expense is $60,000,
Accounts Receivable increases $30,000 and Accounts Payable decreases $10,000. Calculate
net cash flows from operating activities using the indirect method.
135. Fidelity Systems reports net income of $80 million. Included in that number is
depreciation expense of $8 million, and a gain on the sale of equipment of $1 million.
Records reveal increases in Accounts Receivable, Inventory, and Accounts Payable of $4
million, $3 million, and $2 million, respectively. Calculate Fidelity’s net cash flows from
operating activities.
136. Alpha Computers reports net income of $44 million. Included in that number are
depreciation expense of $7 million and a loss on the sale of land of $2 million. Records reveal
decreases in Accounts Receivable, Inventory, and Accounts Payable of $4 million, $3 million,
and $2 million, respectively. Calculate Alpha Computers’ net cash flows from operating
activities.
137. Portions of the financial statements for Horizon Telecom are provided below.
Prepare the operating activities section of the statement of cash flows for Horizon Telecom
using the indirect method.
138. Highland Park Homes reports net income of $300,000, and yet its net cash flow from
operating activities is a negative $200,000 during the same period. Is this possible? Explain.
139. Nathan Herrmann has completed the basic format to be used in preparing the statement
of cash flows (indirect method) for CEO Consultants.
Listed below in random order are line items to be included in the statement of cash flows.
Prepare the statement of cash flows for CEO Consultants using the indirect method.
140. Mobile Video Systems sold land, investments, and issued their own common stock for
$10 million, $15 million, and $20 million, respectively. Mobile Video also purchased treasury
stock, equipment, and a patent for $2 million, $4 million, and $6 million, respectively. What
amount should the company report as net cash flows from investing activities? What amount
should the company report as net cash flows from financing activities?
141. A $10,000 investment on the books of the company is sold for $11,000. How does this
transaction affect operating, investing, and financing activities under the indirect method?