Question

In preparing its cash flow statement for the year ended December 31, Jeff Co. collected the following data:

Gain on the sale of equipment	$ 6,000
Proceeds from the sale of equipment	10,000
Purchase of A.S., Inc. bonds as a debt Investment(par value $200,000)	180,000
Amortization of bond discounts	2,000
Dividends declared	45,000
Dividends paid	38,000
Proceeds from the sale of treasury stock (carrying amount $65,000)	75,000
Copyright Amortization	4,500
Issued Common Stock	47,000
Depreciation Expense	33,000
Redeemed bonds (par value of $500,000)	537,000
Loss on Bond Redemption	34,000
Purchased Land with a Promissory Note	145,000
Proceeds from sale of Equity Investments	25,000

1. Compute the amount should Reve report as cash flow from Investing Activities? Show Work.

1. Compute the amount should Reve report as cash flow from Financing Activities? Show Work

Answer 1

Dear Student please find cash flow investing and financing activites under direct method as below

Cash flow from Investing actiivities
Inflows :
Proceeds from sale of equipment	$10,000.00
Proceeds from sale of treasury stock	$75,000.00
Proceeds from sale of equity investments	$25,000.00
Total Inflows	$1,10,000.00
Outflows :
Purchase of A.S Inc bonds as debt	$1,80,000.00
Total outflows	$1,80,000.00
Net cash flow from Investing activities	-$70,000.00

Cash flow from financing actiivities
Inflows :
Issued common stock	$47,000.00
Total Inflows	$47,000.00
Outflows :
Dividends paid	$38,000.00
Redemption of bonds	$5,37,000.00
Total outflows	$5,75,000.00
Net cash flow from financing activities	-$5,28,000.00

Please note the only transctions with actual cash flow would be consider for cash flow statement under direct method