E13-4 Gutierrez Company reported net income of $225,000 for 2017. Gutierrez also reported depreciation expense of $45,000 and a loss of $5,000 on the disposal of equipment. The comparative balance sheet shows a decrease in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 decrease in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method.
Prepare the operating activities section-indirect method.
E13-6 The three accounts shown below appear in the general ledger of Herrick Corp. during 2017.
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Equipment
|
|
Date
|
|
|
Debit
|
Credit
|
Balance
|
|
Jan.
|
1
|
Balance
|
|
|
160,000
|
|
July
|
31
|
Purchase of equipment
|
70,000
|
|
230,000
|
|
Sept.
|
2
|
Cost of equipment constructed
|
53,000
|
|
283,000
|
|
Nov.
|
10
|
Cost of equipment sold
|
|
49,000
|
234,000
|
|
Accumulated Depreciation-Equipment
|
|
Date
|
|
|
Debit
|
Credit
|
Balance
|
|
Jan.
|
1
|
Balance
|
|
|
71,000
|
|
Nov.
|
10
|
Accumulated depreciation on equipment sold
|
30,000
|
|
41,000
|
|
Dec.
|
31
|
Depreciation for year
|
|
28,000
|
69,000
|
|
Retained Earnings
|
|
Date
|
|
|
Debit
|
Credit
|
Balance
|
|
Jan.
|
1
|
Balance
|
|
|
105,000
|
|
Aug.
|
23
|
Dividends (cash)
|
14,000
|
|
91,000
|
|
Dec.
|
31
|
Net income
|
|
77,000
|
168,000
|
Instructions
From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of equipment was $7,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)
Prepare statement of cash flows and compute free cash flow.
E13-7 Rojas Corporation's comparative balance sheets are presented below.
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ROJAS CORPORATION
Comparative Balance Sheets
December 31
|
|
|
2017
|
2016
|
|
Cash
|
$ 14,300
|
$ 10,700
|
|
Accounts receivable
|
21,200
|
23,400
|
|
Land
|
20,000
|
26,000
|
|
Buildings
|
70,000
|
70,000
|
|
Accumulated depreciation-buildings
|
(15,000)
|
(10,000)
|
|
Total
|
$110,500
|
$120,100
|
|
Accounts payable
|
$ 12,370
|
$ 31,100
|
|
Common stock
|
75,000
|
69,000
|
|
Retained earnings
|
23,130
|
20,000
|
|
Total
|
$110,500
|
$120,100
|
Additional information:
1. Net income was $22,630. Dividends declared and paid were $19,500.
2. No noncash investing and financing activities occurred during 2017.
3. The land was sold for cash of $4,900.
Instructions
1. Prepare a statement of cash flows for 2017 using the indirect method.
2. Compute free cash flow.
Prepare a statement of cash flows-indirect method.
P13-1A You are provided with the following transactions that took place during a recent fiscal year.
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Transaction
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Statement of Cash Flow Activity Affected
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Cash Inflow, Outflow, or No Effect?
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(a)
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Recorded depreciation expense on the plant assets.
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|
|
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(b)
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Recorded and paid interest expense.
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|
|
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(c)
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Recorded cash proceeds from a disposal of plant assets.
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|
|
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(d)
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Acquired land by issuing common stock.
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|
|
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(e)
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Paid a cash dividend to preferred stockholders.
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|
|
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(f)
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Paid a cash dividend to common stockholders.
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|
|
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(g)
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Recorded cash sales.
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|
|
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(h)
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Recorded sales on account.
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|
|
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(i)
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Purchased inventory for cash.
|
|
|
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(j)
|
Purchased inventory on account.
|
|
|
Instructions
Complete the table indicating whether each item (1) affects operating (O) activities, investing (I) activities, financing (F) activities, or is a noncash (NC) transaction reported in a separate schedule, and (2) represents a cash inflow or cash outflow or has no cash flow effect. Assume use of the indirect approach.
Determine cash flow effects of changes in equity accounts.