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P17-2. Cash flow statement under indirect method
17-1
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
P17-3. Determining amounts reported on statement of cash flows
(AICPA adapted)
Requirement 1:
Cash collections from customers can be determined by examining the
Cash collections from customers would appear in cash flows from operating
activities as $145,000.
Requirement 2:
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Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Cash payments for purchase of property, plant, and equipment are calculated
as follows:
Property, Plant, & Equipment
Beginning balance $247,000 $40,000 Sale of equipment
Acquired in exchange
Requirement 3:
Proceeds from sale of equipment can be found by first looking at the
accumulated depreciation account:
Accumulated Depreciation
$167,000 Beginning balance
33,000 Depreciation expense
Accumulated depreciation on
equipment sold X
$178,000 Ending balance
Cost of equipment $40,000
Accumulated depreciation on equipment (22 ,000)
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Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Proceeds from sale of equipment $31 ,000
This amount would be classified as cash flows from investing activities.
Requirement 4:
To find dividends paid, we need to first determine dividends declared by
analyzing retained earnings:
Retained Earnings
$91,000 Beginning balance
28,000 Net income
Dividends declared X
$104,000 Ending balance
activity.
Requirement 5:
Redemption of bonds payable can be found by using the bonds payable
T-account:
Bonds Payable
$46,000 Beginning balance
$46,000 + $20,000 - X = $49,000; X = $17,000.
