Item21

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Item 21

Problem 14-16A (Algo) Determining cash flows from financing activities LO 14-4

The following information was drawn from the year-end balance sheets of Walton River, Inc.

Account Title	Year 2			Year 1
Bonds payable	$	645,000		$	955,000
Common stock		197,000			121,000
Treasury stock		28,500			13,000
Retained earnings		87,700			68,800

Additional information regarding transactions occurring during Year 2:

1. Walton River, Inc. issued $45,700 of bonds during Year 2. The bonds were issued at face value. All bonds retired were retired at face value.

2. Common stock did not have a par value.

3. Walton River, Inc. uses the cost method to account for treasury stock.

4. The amount of net income shown on the Year 2 income statement was $33,500.

Required

1. Determine the amount of cash flow for the retirement of bonds that should appear on the Year 2 statement of cash flows.

2. Determine the amount of cash flow from the issue of common stock that should appear on the Year 2 statement of cash flows.

3. Determine the amount of cash flow for the purchase of treasury stock that should appear on the Year 2 statement of cash flows.

4. Determine the amount of cash flow for the payment of dividends that should appear on the Year 2 statement of cash flows.

5. Prepare the financing activities section of the Year 2 statement of cash flows.

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