Question

1. Nadal Corporation’s accumulated depreciation—furniture account increased by $17,720, while $3,800 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 $5,200 from the sale of land.

Reconcile a net income of $343,700 to net cash flows from operating activities.

2. Eastlund Corporation's accumulated depreciation—equipment account increased by $6,320, while $2,450 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 gain of $13,510 from the sale of investments.

Reconcile a net income of $126,300 to net cash flows from operating activities.

3. Jasneet Corporation’s comparative balance sheet for current assets and liabilities was as follows:

	Dec. 31, Year 2		Dec. 31, Year 1
Accounts receivable	$20,200		$22,900
Inventory	13,000		10,700
Accounts payable	10,900		9,400
Dividends payable	25,100		30,700

Adjust net income of $185,000 for changes in operating assets and liabilities to arrive at net cash flows from operating activities.

4. Paneous Corporation's comparative balance sheet for current assets and liabilities was as follows:

	Dec. 31, Year 2		Dec. 31, Year 1
Accounts receivable	$39,490		$31,590
Inventory	76,340		65,150
Accounts payable	60,750		45,410
Dividends payable	18,000		24,000

Adjust net income of $351,000 for changes in operating assets and liabilities to arrive at net cash flows from operating activities.

5. PQR Corporation purchased land for $295,000. Later in the year, the company sold a different piece of land with a book value of $148,000 for $177,000.

How are the effects of these transactions reported on the statement of cash flows? Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank.

Transactions	Action	Amount
Gain on sale of land	Deducted from net income	$
Cash received from sale of land	Part of cash flows from investing activities	$
Cash paid for purchase of land	Part of cash flows used for investing activities	$

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Answer 1

Answer to Question 1:

Net cash flow from operating activities = Net income + Depreciation expenses + Amortization expense + loss from sale of investments
Net cash flow from operating activities = $343700 + $17720 + $3800 + $5200
Net cash flow from operating activities = $370420

Answer to Question 2:

Net cash flow from operating activities = Net income + Depreciation expenses + Amortization expense- gain from sale of investments
Net cash flow from operating activities = $126300 + $6320 + $2450 - $13510
Net cash flow from operating activities = $ 121560

Answer to Question 3:

Net cash flow from operating activities = Net income +decrease in accounts receivable - Increase in inventory + Increase in accounts payable
Net cash flow from operating activities = $185000 + $2700 - $2300 + $1500
Net cash flow from operating activities = $186900

concept = decrease in accounts receivable= means cash received from debtors so cash will increses so added.

Increase in inventory = means co purchase some inventory so inventry increses , its effect n cash is co. pay money to purchase inventory so cash decreses so dedect .

Increase in accounts payable = means co not paid money to accounts payable , so they increses , its effect on cash is that - if co. not paid so money is not decreses means money increses so added .

Answer to Question 4:

Net cash flow from operating activities = Net income - increase in accounts receivable - Increase in inventory + Increase in accounts payable
Net cash flow from operating activities = $351000 - $7900 - $11190 + $15340
Net cash flow from operating activities = $347250

concept = increase in accounts receivable= means co. sold goods on credit so they increses it means co. not received cash yet , so cash will not increses its decreses so we deduct .

Increase in inventory = means co purchase some inventory so inventry increses , its effect n cash is co. pay money to purchase inventory so cash decreses so dedect .

Increase in accounts payable = means co not paid money to accounts payable , so they increses , its effect on cash is that - if co. not paid so money is not decreses means money increses so added .

Answer to Question 5:

Cash from operating activity
Net income	---
less - Gain on sale of land (177000-148000)	(29000)
cash fro investing activities
Cash paid for purchase of land	(295000)
Cash received from sale of land	177000