Hint:

When land was purchased through issuance of common stock, the company had a non-cash transaction. You should not include $15,000 cash outflows in the investing activities nor $15,000 cash inflows in financing activities. However, you need to add a note at the end of the statement of cash flows as follows: Noncash investing and financing activities Purchase of land through issuance of common stock $15,000. See p. 1360 of your textbook for additional explanations.

Comparative balance sheet accounts of Jensen Company are presented below Jensen Company Comparative Balance Sheet Accounts As of December 31 $80,000 145,000 75,000 55,000 70,000 145,000 40,000 $610,000 S51,000 130,000 61,000 85,000 48,000 145,000 25,000 545,000 Cash Accounts Receivable Merchandise Inventory Investments (Available-for-sale) pment Buildings Land Totals Allowance for Doubtful Accounts Accumulated Depreciation-Equipment Accumulated Depreciation--Building Accounts Payable Income Taxes Payable Long-Term Notes Payable Common Stock Retained Earnings $10,000 21,000 37,000 70,000 12,000 62,000 310,000 88,000 $610,000 S 8,000 14,000 28,000 60,000 10,000 70,000 260,000 95,000 $545,000 Totals Additional data: 2. 3. 4. 5. Equipment that cost $10,000 and was 40% depreciated was sold in 2017 Cash dividends were declared and paid during the year Common stock was issued in exchange for land. Investments that cost $35,000 were sold during the year There were no write-offs of uncollectible accounts during the year Jensen's 2017 income statement is as follows. Sales Less: Cost of goods sold Gross profit Less: Operating expenses (includes dep. exp. and bad debt exp.) Income from operations Other revenues and expenses S950,000 600,000 350,000 250,000 100,000 Gain on sale of investments S15,000 Loss on sale of equipment Income before taxes Income taxes Net income (3,000)-12,000 112,000 45,000 S67,000 Required: (1) Prepare a statement of cash flows using the indirect method. (2) Prepare the operating activity section of the statement of cash flows using direct method