Herman Corporation reported the following transactions for 2019: 1. Sold equipment for $28,000. The original cost...

Herman Corporation reported the following transactions for 2019:

1.	Sold equipment for $28,000. The original cost was $60,000; the book value is $24,000
2.	Issued 2,000 shares of $20 par value common stock for $48 per share
3.	Paid $12,000 for an Insurance policy which goes into effect in January 2020
4.	Recognized $8,000 in Interest expense on Dec 31, 2019 - to be paid on April 30, 2020
5.	Received $32,000 as collections from customers for 2018 sales, and $72,000 for 2019 sales
6.	Reacquired 300 shares of its own common stock at $80 per share
7.	Received $8,000 in dividends on stock held as available for sale
8.	Recorded depreciation expense for $20,000
9.	Paid $4,000 of dividends to common stockholders
10.	Purchased equipment costing $260,000, by making a cash down payment of $80,000 and signing a note for the remaining $180,000.
11.	Acquired a building with a market value of $1,000,000 by issuing 20,000 shares of common stock.
12.	Paid salaries of $72,000
13.	Cash received from sale of available for sale securities $24,000
14.	Repaid a loan, which included $20,000 of the principal and $4,000 in interest

Herman Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

1. The net cash flow from operating activities is

2. The net cash flow from investing activities is

3. The net cash flow from financing activities is

Solutions

Expert Solution


	Statement of Cash Flow statement for 2019

	Particulars		Amount in $
1.)	Cash flows from Operating activities
	Cash Collection
	Collection from Customers ( 32,000 + 72,000 )	104,000
	Collection of Dividend Revenue	8,000	112,000
	Less :Cash Payments
	Payments for Insurance Policy in Advance	-12,000
	Payment of Salaries	-72,000
	Payment of Interest	-4,000	-88,000

	Net Cash flow from operating activities		24,000

2.)	Cash flows from investing activities
	Sale of Equipment	28,000
	Sale of available for sale securities	24,000
	Purchase of Equipment by Cash payment	-80,000

	Net Cash flow from (used in ) Investing activities		-28,000

3.)	Cash flows from financing activities
	Proceeds from Issue of Common Stock ( 2,000 x 48 )	96,000
	Repayment of loan principal	-20,000
	Dividend Paid	-4,000
	Reacquired Common Stock ( 300 x 80 )	-24,000

	Net Cash flows from (used in )financing activities		48,000

ekkarill92 answered 1 year ago

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