Exercise 23-8

Cheyenne Co. reported $149,400 of net income for 2017. The accountant, in preparing the statement of cash flows, noted the following items occurring during 2017 that might affect cash flows from operating activities.

1.		Cheyenne purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share.
2.		Cheyenne sold 100 shares of IBM common at $180 per share. The acquisition cost of these shares was $130 per share. There were no unrealized gains or losses recorded on this investment in 2017.
3.		Cheyenne revised its estimate for bad debts. Before 2017, Cheyennes bad debt expense was 1% of its net sales. In 2017, this percentage was increased to 2%. Net sales for 2017 were $464,800, and net accounts receivable decreased by $13,200 during 2017.
4.		Cheyenne issued 500 shares of its $10 par common stock for a patent. The market price of the shares on the date of the transaction was $23 per share.
5.		Depreciation expense is $39,800.
6.		Cheyenne Co. holds 40% of the Nirvana Companys common stock as a long-term investment. Nirvana Company reported $26,800 of net income for 2017.
7.		Nirvana Company paid a total of $1,900 of cash dividends to all investees in 2017.
8.		Cheyenne declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of issuance was $20 per share.

Prepare a schedule that shows the net cash flow from operating activities using the indirect method. Assume no items other than those listed above affected the computation of 2017 net cash flow from operating activities.

Cheyenne Co. Statement of Cash Flows (Partial) For the Year Ended December 31, 2017 Cash Flows from Operating Activities 149,400 Net Income Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation expense 13,200 Dividends from Equity Method Investment 39,800 Gain on Sale of Investment 1,000 Loss on Sale of Investment Income from Equity Method Investment 35,800 185,200 Net Cash Provided by Operating Activities