1.Classifying Cash Flows

Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows:

a.Purchase of investments

b.Purchase of equipment

c.Payment for selling expenses

d.Collection of accounts receivable

e.Cash received from customers

f.Issuance of bonds payable

2.Adjustments to net incomeindirect method

Ripley Corporation's accumulated depreciationfurniture account increased by $6,750, while $2,660 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a loss of $4,390 from the sale of land.

Reconcile a net income of $106,850 to net cash flow from operating activities. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Amount Descriptions

Amortization of patents

Decrease in accounts receivable

Depreciation

Gain from sale of land

Increase in accounts receivable

Loss from sale of land

Net cash flow from operating activities

3.Changes in current operating assets and liabilitiesindirect method

Zwilling Corporation's comparative balance sheet for current assets and liabilities was as follows:

Dec. 31, Year 2

Dec. 31, Year 1

Accounts receivable$35,000$39,500

Inventory22,500 18,450

Accounts payable18,500 16,300

Dividends payable43,200 53,100

Adjust net income of $320,000 for changes in operating assets and liabilities to arrive at net cash flow from operating activities. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Amount Descriptions

Cash paid for dividends

Decrease in accounts payable

Decrease in accounts receivable

Decrease in dividends payable

Decrease in inventory

Increase in accounts payable

Increase in accounts receivable

Increase in dividends payable

Increase in inventory

Net cash flow from operating activities

4.Changes in current operating assets and liabilitiesindirect method

Zwilling Corporation's comparative balance sheet for current assets and liabilities was as follows:

Dec. 31, Year 2

Dec. 31, Year 1

Accounts receivable$26,140$31,790

Inventory17,310 15,380

Accounts payable16,750 14,210

Dividends payable47,070 51,830

Adjust net income of $201,050 for changes in operating assets and liabilities to arrive at net cash flow from operating activities. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.

Amount Descriptions

Cash paid for dividends

Decrease in accounts payable

Decrease in accounts receivable

Decrease in dividends payable

Decrease in inventory

Increase in accounts payable

Increase in accounts receivable

Increase in dividends payable

Increase in inventory

Net cash flow from operating activities

5.Cash Flows from Operating ActivitiesIndirect Method

Staley Inc. reported the following data:

Net income $363,500

Depreciation expense 60,900

Loss on disposal of equipment 20,100

Increase in accounts receivable 21,900

Increase in accounts payable 10,500

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Staley Inc.

Statement of Cash Flows (partial)

Cash flows from operating activities:

Adjustments to reconcile net income to net cash flow from operating activities:

Changes in current operating assets and liabilities:

Net cash flow from operating activities

6.Cash Flows from Operating ActivitiesIndirect Method

Staley Inc. reported the following data:

Net income $280,000

Depreciation expense 48,000

Loss on disposal of equipment 19,520

Increase in accounts receivable 17,280

Increase in accounts payable 8,960

Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Staley Inc.

Statement of Cash Flows (partial)

Cash flows from operating activities:

Adjustments to reconcile net income to net cash flow from operating activities:

Changes in current operating assets and liabilities:

Net cash flow from operating activities