Questions/Problems - Depreciation and Statement of Cash Flows

Write your answers in the space provided for each of the questions below:

Part 1: Answer the following depreciation problems:

1. A home healthcare care company purchases a van for home visits for $60,000. The van depreciates $15,000 a year. What will the book value of the van be in 1 year? In 2 years? How many years will it be until it's worth $0?

2. How does allowing depreciation help companies?

Part 2: For each of the transactions below, assign the appropriate cash-related activity (A-D):

A. Cash flows from operating activities

B. Cash flows from investing activities

C. Cash flows from financing activities

D. Net increase (or decrease) in cash and cash equivalents

3. $50,000 repayment of long-term loan.

4. $7,000 proceed from the sale of a used x-ray machine.

5. $40,000 worth of services rendered.

6. $15,000 in payments from patients.

7. $1,000,000 purchase of new office space for expanding services.

8. $10,250 net cash and cash equivalents at the end of the year.

9. $500,000 received by the issuance of a long-term bond.

10. $100,000 proceeds from an investment in a 10-year bond.