Question

For each of the below, indicate where each item should be presented in the statement of cash flows (using the indirect method) using the legend below. Also, indicate how cash flows are affected. Legend for BLANK 1: A - operating activities B - investing activities C - financing activities D - significant noncash investing and financing activities Legend for BLANK 2: I - Increase D - Decrease N - No effect

Answer 1

Answer:

                                                                                        Blank 1      Blank 2

i. Depreciation expense                                                       A               I

ii. Purchase of office equipment                                          B               D

iii. Decrease in accounts receivable                                    A                I

iv. Payment of cash dividends                                              C               D

v. Conversion of bonds into common stock                        D               N

vi. Sold land and warehouse used in the corp.                    B                I

vii. Gain on sale of land and warehouse in part vi.              A               D

viii. Issued common stock for cash                                       C               I

ix. Decrease in accounts payable                                         A               D

x. Increase in inventory                                                          A               D

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached pdf for the complete question.

How each of the item will appear in the  the statement of cash flows (using the indirect method) is also provided below:

XYZ Company

Statement of Cash Flows (Indirect Method Format)

For the year...

Details                                                                                   $                 $  

Operating activities:

Net profit                                                                             xxx

Adjustment to reconcile net income:

i. Depreciation expense                                                     xx

iii. Decrease in accounts receivable                                  xx

vii. Gain on sale of land and warehouse in part vi.          (xx)

ix. Decrease in accounts payable                                      (xx)

x. Increase in inventory                                                      (xx)    

Net cash flows from operating activities                                             xxx

Investing activities:

ii. Purchase of office equipment                                          (xx)

vi. Sold land and warehouse used in the corporation        xx  

Net cash flows from investing activities                                               xxx

Financing activities:

iv. Payment of cash dividends                                              (xx)

viii. Issued common stock for cash                                       xx  

Net cash flows from investing activities                                                 xxx  

Net cash flow for the year                                                                       xxx

Beginning cash balance                                                                          xxx  

Ending cash balance                                                                                xxx  

Note: The does not affect the cash flows statement:

v. Conversion of bonds into common stock

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