Note that X in the following statement of cash flows identifies a dollar amount and the letters
Question:
Note that X in the following statement of cash flows identifies a dollar amount and the letters (A) through (F) identify specific items which appear in the major sections of the statement prepared using the indirect method.
Statement of Cash Flows
Cash flows from operating activities
Net incomeX
Adjustments to reconcile net income to net cash provided by operating activities:
Add+X(A)
Deduct–X(B)
Net cash provided by operating activities X
Cash flows from investing activities
Inflows+X(C)
Outflows–X(D)
Net cash provided (used) by investing activitiesX
Cash flows from financing activities
Inflows+X (E)
Outflows–X(F)
Net cash provided (used) by financing activities X
Net increase (decrease) in cashX
Instructions
For each of the following items, indicate by letter in the blank spaces below, the section or sections where the effect would be reported. Use the code (A through F) from above. If the item is not required to be reported on the statement of cash flows, write the word "none" in the blank. Assume that generally accepted accounting principles have been followed in determining net income and that there are no short-term securities which are considered cash equivalents.
1. After the retirement of an officer, the insurance policy was canceled, and a cash settlement was received by the firm. These proceeds were in excess of the book value of the policy.
2. Sales discounts lapsed and not taken by customers. (Sales recorded at net originally.)
3. Accrued estimated income taxes for the period. These taxes will be paid next year.
4. Amortization of premium on bonds payable.
5. Premium amortized on investment in bonds.
6. The book value of trading securities was reduced to fair value.
7. Purchase of available-for-sale securities.
8. Declaration of stock dividends (not yet issued).
9. Issued preferred stock in exchange for equipment.
10. Bad debts (under allowance method) estimated and recorded for the period (receivables classified as current).
11. Gain on disposal of old machinery.
12. Payment of cash dividends (previously declared in a prior period).
13. Trading securities are sold at a loss.
14. Two-year notes issued at discount for a patent.
15. Amortization of Discount on Notes Receivable (long-term).
16. Decrease in Retained Earnings Appropriated for Self-insurance.
Step by Step Answer:
1 After the retirement of an officer the insurance policy was canceled and a cash settlement was B a...View the full answer
