Problem 4: (6 points)

Following are selected balance sheet accounts of Midwest Corp. at December 31, 2015 and 2014. Also presented is selected income statement information for the year ended December 31, 2015, and additional information.

Selected Balance Sheet Accounts 2015 2014___

Assets

Accounts Receivable 34,000 24,000

Property, Plant, and Equipment 277,000 247,000

Accumulated Depreciation (178,000) (167,000)

Liabilities and Stockholders Equity

Bonds Payable 49,000 46,000

Dividends Payable 8,000 5,000

Common Stock 22,000 19,000

Additional Paid-in Capital 9,000 3,000

Retained Earnings 104,000 91,000

Selected Income Statement Information for the Year Ended December 31, 2015

Sales $155,000

Depreciation Expense 33,000

Gain on sale of Equipment 13,000

Net Income $28,000

Additional information:

Accounts receivable relate to sales of merchandise.

During 2015, equipment costing $40,000 was sold for cash with gain $13,000.

During 2015, $20,000 of bonds payable were issued in exchange for property, plant, and equipment.

Required:

Item 1 through 3 represent activities that will be reported in Midwests statement of cash flows for the year ended December 31, 2015. The following two responses are required for each item:

Determine the amount that should be reported in Midwests 2015 statement of cash flows.

Using the list below, determine the category in which the amount should be reported in the statement of cash flows.

O: Operating activity

I: Investing activity

F: Financing activity

Amount Category

Cash collections from customers (direct method).

Payments for purchase of property, plant and equipment.

Proceeds from sale of equipment.