Each of the following items must be considered in preparing a statement of cash flows (indirect method)

Question:

Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Grander son Inc. for the year ended December 31, 2010.

(a) Plant assets that had cost $25,000 6 years before and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold at the beginning of the year for $5,300.

(b) During the year, 10,000 shares of common stock with a stated value of $10 a share were issued for $33 a share.

(c) Uncollectible accounts receivable in the amount of $27,000 were written off against the Allowance for Doubtful Accounts.

(d) The company sustained a net loss for the year of $50,000. Depreciation amounted to $22,000, and a gain of $9,000 was realized on the sale of land for $39,000 cash.

(e) A 3-month U.S. Treasury bill was purchased for $100,000. The company uses a cash and cash equivalent basis for its cash flow statement.

(f) Patent amortization for the year was $20,000.

(g) The company exchanged common stock for a 70% interest in Plum lee Co. for $900,000.

(h) During the year, treasury stock costing $47,000 was purchased.

State where each item is to be shown in the statement of cash flows, if at all.

Depreciation
Depreciation is an important concept in accounting. By definition, depreciation is the wear and tear in the value of a noncurrent asset over its useful life. In simple words, depreciation is the cost of operating a noncurrent asset producing... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...