Save Exit Submit MC Qu. 12-184 A company bought... A company bought $550,000 of equipment with an expected life of 16 years and no residual value. After 12 years the company sold the equipment for $104,500. If the company uses straight-line depreciation and the indirect method is used to determine cash flows from operating activities, which of the following reflects how the sale of the equipment would be reported in the statement of cash flows? Multiple Choice $104.500 is recorded as a cash inflow from operating activities 5 $104.500 is recorded as a cash intow from investing activities and 533,000 is added to convert net income to net cash flow provided by operating activities $104,500 is recorded as a cash flow from investing activities and no omer sections of the statement are affected $104,500 is recorded as a cash innow from investing activities and $23.000 is subtracted to convert net income to net cash flow provided by operating activities Selected Balance Sheet Accounts Prior Year Current Tear Accounts Receivable $ 24, 100 $16,500 Inventories 33.000 36,300 Prepaid Rent 2,300 0 Accounts Payable 18,800 24,400 Salaries and Wages Payable 4,600 6,900 $495,000 Income Statement Sales Revenue Expenses: Cost of Goods Sold Depreciation Expense Salaries Expense Rent Expense Insurance Expense Interest Expense Utilities Expense Net Income 284,000 33,000 49,500 19,800 19,800 18, 150 16,500 $ 54,250 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. (Enter any deductions and cash outflows as a negative value.) Ploneer Industries Cash Flows from Operating Activities Adjustments to reconcile net income to net cash provided by operating activities: Changes in current assets and current liabilities: Help Problem 12-199 (LO 12-2, LO 12-3, LO 12-4, LO 12-5) Sav The management team of Wickersham Brothers Inc. is preparing its annual financial statements. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statements are summarized Current Year Prior Year $129,300 156,000 117.000 224,000 {65,360) $560,940 $146,100 136,500 126.750 117,000 134,000) $492,350 Balance Sheet Assets Cash Accounts receivable Merchandise inventory Property and equipment Leasi Accumulated depreciation Total assets Liabilities: Accounts payable Salaries and Wages Payable Notes payable, long-term Stockholders' Equity Common stock Retained earnings Total liabilities and stockholdersequity Income Statement Sales Cost of goods sold Depreciation expense other expenses Net Income $ 19,500 3.900 97,500 $ 23, 400 1,950 117,000 176,000 264,040 $560,940 156,000 194,000 $492,350 $580,000 300,000 31,360 145,000 $103,640 Other information from the company's records includes the following: Bought equipment for cash, $107.000 Paid $19,500 on long-term note payable. Issued new shares of common stock for $20,000 cash. Cash dividends of $33,600 were declared and paid to stockholders. Accounts Payable arose from inventory purchases on credit. Income tax expense ($25.910) and interest expense ($5,850) were paid in full at the end of both years and are included in Other Expenses . Other information from the company's records includes the following: Bought equipment for cash, $107.000 Paid $19,500 on long-term note payable. Issued new shares of common stock for $20,000 cash. Cash dividends of $33.600 were declared and paid to stockholders. Accounts Payable arose from inventory purchases on credit. Income tax expense ($25,910) and interest expense ($5,850) were paid in full at the end of both years and are included in Other Expenses - Required: a. Prepare the statement of cash flows using the Indirect method. Include any supplemental disclosures. (Enter any deductions and cash outflows as a negative value.) WICKERSHAM BROTHERS Inc. Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Adjustments to reconcile net income to net cash provided by operating activities: Changes in current assets and current abilities: Cash Flows from investing Activities PA12-2 Computing Cash Flows from Operating Activities (Indirect Method) [LO 12-2) The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below Income Statement Sales Revenue 558,600 Expenses Cost of Goods Sold 26,000 Depreciation Expense 3.000 Salaries and ages Expense 10,000 Rent Expense 5.500 Insurance Expense 2,400 Interest Expense 2,300 Utilities Expense 1.900 $ 7,500 Net Income Selected Balance Sheet Accounts Accounts Receivable Inventory Accounts Payable Prepaid Rent Prepaid tosurance salaries and Wages Payable Utilities Payable Ending Balances $ 585 090 445 35 30 30 30 Beginning Balance $ 630 720 510 25 50 20 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) DIRECT PRODUCTS COMPANY Statement of Cash Flows (Partian For the Year Ended December 31 Cash Flows from Operating Activities: Adjustments to Reconcile Net Income to Net Cash es Payable 30 20 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. ( deducted should be indicated with a minus sign.) DIRECT PRODUCTS COMPANY Statement of Cash Flows (Partial) For the Year Ended December 31 Cash Flows from Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Total Adjustments PA12-4 Preparing and Interpreting a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12. 4, LO 12-5) Heads Up Company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement follow, along with additional information, Current Year Previous Year Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation Equipment Total Assets Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense Income Tax Expense Net Income $ 6.200 850 4,950 (1.400) $10,600 $ SSO 550 1,700 4,500 3,300 $10,600 $ 3,800 1.650 4,500 (1,200 $ 3.750 $ 1,000 750 S00 4.500 2,000 $ 8,750 $40, 500 38,000 200 1,000 $ 1,300 Additional Data: a. Bought new hockey equipment for cash. $450. b. Borrowed $1,200 cash from the bank during the year. c. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) HEADS UP COMPANY Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) HEADS UP COMPANY Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Cash Flows from Investing Activities: Cash Flows from Financing Activities