Use the following information for First Corp. complete the statement of Cash Flo
ID: 2348068 • Letter: U
Question
Use the following information for First Corp. complete the statement of Cash Flows (indirect method) for the year ended December 31, 2009. Clearly label each item as cash inflow or (cash outflow).Cash at 1/1/09: $ 14,000
Net Income: $35,000
Dividends Paid: $11,000
Purchase of land: $100,000
Decrease in accounts payable: $12,000
Issuance of common stock: $60,000
Decrease in accounts receivable: $7,000
Proceeds from sale of investments: $27,000
Increase in inventory $5,000
Loss on sale of investments: $3,000
Increase in salaries payable: $6,000
Depreciation expense: $10,000
Redemption of bonds payable: $24,000
Collection of long-term note receivable: $22,000
Purchase land by issuing common stock: $40,000
Explanation / Answer
Cash flow from operating activities:
Net Income $35,000
Add : Depreciation $10,000
Add : Decrease in A/R $7,000
Add : Increase in salaries payable $6,000
Add : Loss on sale of investments $3,000
Less : Decrease in A/P ($12,000)
Less : Increase in Inventory ($5,000) $9,000
Net cash provided by operating activities $44,000
Cash flow from investing activities:
Proceeds from sale of invest. $27,000
Purchase of land ($100,000)
Net cash used in investing activities ($73,000)
Cash flows from financing activities:
Issuance of common stock $60,000
Redemption of bonds payable ($24,000)
Collection of long-term note $22,000
Dividends Paid ($11,000)
Net cash provided by financing activities $47,000
Net increase in cash and cash equivalents $18,000
Cash and cash equivalents,begin.of the year $14,000
Cash and cash equivalents,end of the year $32,000
Investing activities not affecting cash
Purchase land by issuing common stock $40,000
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