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Weygandt, Accounting Principles, 12e
Chapter Seventeen
Solutions to Challenge Exercises
Challenge Exercise 17-1 – Solution
(a) Payment of interest on notes payable. (6) not separately reported in the statement
of cash flows.
(b) Exchange of land for patent. (5) significant noncash investing and
financing activity.
(g) Sales. (6) not separately reported in the statement
of cash flows.
(h) Issuance of capital stock. (4) financing activity.
(i) Amortization of patent. (1) operating activity (added to net income).
(j) Issuance of bonds for land. (5) significant noncash investing and
financing activity.
(n) Retirement of bonds. (4) financing activity.
(o) Cost of goods sold. (6) not separately reported in the statement
of cash flows.
(p) Purchase of treasury stock. (4) financing activity.
Challenge Exercise 17-2 – Solution
MIGITSU COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income ...................................................................... $100,000 )
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation expense ............................................ $ 54,000 )
Cash flows from investing activities
Sale of land ..................................................................... 28,000 )
Sale of equipment ........................................................... 36,000
Cash flows from financing activities
Issuance of common stock .............................................. 42,000 )
Payment of cash dividends .............................................. (33,000 )
Redemption of bonds ...................................................... (60,000 )
Net cash used by financing
