Question

In: Accounting

1. Classifying Cash Flows Identify whether each of the following would be reported as an operating,...

1.

Classifying Cash Flows

Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows:

a. Retirement of bonds payable Financing
b. Purchase of inventory for cash
c. Cash sales
d. Repurchase of common stock
e. Payment of accounts payable
f. Disposal of equipment

2.

Adjustments to Net Income—Indirect Method

Omni Corporation's accumulated depreciation—equipment account increased by $9,600, while $6,200 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a loss of $7,300 from the sale of land.

Reconcile a net income of $109,600 to net cash flow from operating activities.

3.

Changes in Current Operating Assets and Liabilities—Indirect Method

Victor Corporation's comparative balance sheet for current assets and liabilities was as follows:

Dec. 31, Year 2 Dec. 31, Year 1
Accounts receivable $23,900 $20,100
Inventory 60,200 67,600
Accounts payable 13,500 16,700
Dividends payable 19,000 18,000

Adjust net income of $79,700 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
$

Solutions

Expert Solution

1.

a. Retirement of bonds payable Financing
b. Purchase of inventory for cash Operating
c. Cash sales Operating
d. Repurchase of common stock Financing
e. Payment of accounts payable Operating
f. Disposal of equipment Investing

2.

Statement of cash flows (partial)

Net income 109,600
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense 9,600
Amortization expense 6,200
loss on sale of land 7,300
Net cash provided by Operating Activities $132,700

3.

Statement of cash flows (PARTIAL)

                                              Particulars

     $

       $

Cash flow from Operating Activities

Net income

79,700

Changes in current operating assets and liabilities:

Accounts receivable increase

- 3,800

Inventory decrease

7,400

Accounts payable decrease

- 3,200

Net cash provided by Operating Activities

$80,100


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