During 2017, Damon Company had the following transactions:
Purchased 10-year bonds issued by Gallant, Inc. 200,000$
Purchased common stock in Morceau Company as a
a long-term investment 60,000
Acquired land in exchange for one of Damon’s warehouses 200,000
Sold equipment for cash 35,000
Original cost of equipment sold 70,000
Accumulated depreciation on equipment sold 40,000
Purchase price of new equipment 60,000
Required
Prepare the investing section of the statement of cash flows.
Investing Activities
Exercise 13-6 Cash Flow from Investing Activities
During 2017, Damon Company had the following transactions:
Purchased 10-year bonds issued by Gallant, Inc. 200,000$
Purchased common stock in Morceau Company as a
a long-term investment 60,000
Acquired land in exchange for one of Damon’s warehouses 200,000
Sold equipment for cash 35,000
Original cost of equipment sold 70,000
Accumulated depreciation on equipment sold 40,000
Purchase price of new equipment 60,000
Required
Prepare the investing section of the statement of cash flows.
Investing Activities
Solution: Exercise 13-6 Cash Flow from Investing Activities
Molten Company experienced the following during 2018:
1. Issued preferred stock 125,000$
2. Repurchased its own stock 70,000
3. Borrows from a bank issuing a five-year note 150,000
4. Retired bonds by paying cash 45,000
5. Declared dividends payable on March 1, 2018 135,000
Required
Prepare the investing section of the statement of cash flows.
Financing Activities
What-if?
Consider the following after you have completed the requirements of E6-8.
Exercise 13-7 Cash Flows from Financing Activities
Molten Company experienced the following during 2018:
1. Issued preferred stock 125,000$
2. Repurchased its own stock 70,000
3. Borrows from a bank issuing a five-year note 150,000
4. Retired bonds by paying cash 45,000
5. Declared dividends payable on March 1, 2018 135,000
Required
Prepare the investing section of the statement of cash flows.
Financing Activities
Solution: Exercise 13-7 Cash Flows from Financing Activities
The income statement for Weinbery Chemical Supply is as follows:
Sales 1,025,000$
Less:
Cost of goods sold (620,000)
Depreciation expense (65,000)
Amortization of patent (6,500)
Wages expense (61,000)
Insurance expense (12,000)
Income before taxes 260,500
Less income taxes (91,175)
Net income 169,325$
Other information for the year follows is as follows:
Accounts receivable decrease 13,000$
Accounts payable increase 6,500
Wages payable balance, beginning of year –
Wages payable balance, end of year 4,300
Increase in prepaid insurance during the year 7,500
Required
Prepare a schedule that shows the operating cash flows for the year, using the indirect method.
Net cash provided by operating activities
What-if?
Consider the following after you have completed the requirements of E13-11.
Sale of old equipment:
Proceeds from sale 7,100$
Accumulated depreciation of equipment sold 21,400
A review of the operating activities section of the statement of cash flows statement by the
accountant revealed the omission of the following items that had been overlooked. They are:
Exercise 13-11 Operating Cash Flows
Weinberg Chemical Supply
Income Statement
For the Year Ended December 31, 2017
Original cost of equipment sold 26,000
Gain on sale of old equipment 2,500
Sale of land:
Loss on sale of land 3,100
Original cost of land 75,600
Add/remove non-cash expenses:
Change in current accounts:
Net cash provided by operating activities
Create a schedule showing the correct operating activities section of the statement of cash
flows, using the indirect method.
The income statement for Weinbery Chemical Supply is as follows:
Sales 1,025,000$
Less:
Cost of goods sold (620,000)
Depreciation expense (65,000)
Amortization of patent (6,500)
Wages expense (61,000)
Insurance expense (12,000)
Income before taxes 260,500
Less income taxes (91,175)
Net income 169,325$
Other information for the year follows is as follows:
Accounts receivable decrease 13,000$
Accounts payable increase 6,500
Wages payable balance, beginning of year –
Wages payable balance, end of year 4,300
Increase in prepaid insurance during the year 7,500
Required
Prepare a schedule that shows the operating cash flows for the year, using the indirect method.
Solution: Exercise 13-11 Operating Cash Flows
Weinberg Chemical Supply
Income Statement
For the Year Ended December 31, 2017
What-if?
Problem data are:
Sale of old equipment:
Proceeds from sale 7,100$
Accumulated depreciation of equipment sold 21,400
Original cost of equipment sold 26,000
Gain on sale of old equipment 2,500
Sale of land:
Loss on sale of land 3,100
Original cost of land 75,600
Create a schedule showing the correct operating activities section of the statement of cash
flows, using the indirect method.