Question

The following statement of cash flows is incorrectly presented. Analyze this statement and explain the problems you found. Do not prepare a new statement.
ILCISIN COMPANY
Statement of Cash Flows
As of December 31, 2010
Sources (inflows) of cash:
Net income ....................... $ 88,000
Add (deduct) items to convert from the accrual to cash basis:
Depreciation ....................... 15,800
Inventory increase ................... 10,000
Prepaid expense increase ................. (4,000)
Extraordinary gain on land ............... (36,000)
Extraordinary loss on bonds ............... (2,000)
Accounts receivable increase ................ (60,000)
Accounts payable increase ................ 30,000
Amortization of bond discount ................. 200
Wages payable decrease ................... 3,000
Cash inflows from operations .............. $ 45,000
Sales of land ...................... 106,000
Issuance of bonds ..................... 10,000
Total sources of cash .................. $ 171,000
Uses (outflows) of cash: Cash dividends ......... $ 30,000
Machinery purchased ................... 20,000
Common stock issued to retire bonds ............ 42,000
Preferred stock issued to purchase building ......... 20,000
Purchase of trading securities ................ 10,000
Total uses of cash .................... 122,000
Increase in cash .................... $ 39,000


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  • CreatedMarch 25, 2015
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