(SCF-Indirect Method and Balance Sheet) Ochoa Inc., had the following condensed
ID: 2468612 • Letter: #
Question
(SCF-Indirect Method and Balance Sheet) Ochoa Inc., had the following condensed balance sheet at the end of operations for 2011. During 2012, the following occurred. A tract of land was purchased for $11,000. Bonds payable in the amount of $20,000 were retired at par. An additional $10,000 in common stock was issued at par. Dividends totaling $9,375 were paid to stockholders. Net income was $30,250 after deducting depreciation of $13,500. Land was purchased through the issuance of $22,500 in bonds. Ochoa Inc. sold part of its investment portfolio for $12,875. This transaction resulted in a gain of $2,000 for the company. The company classifies the investments as available-for-sale. Both current assets (other than cash) and current liabilities remained at the same amount. Instructions Prepare a statement of cash flows for 2012 using the indirect method. Prepare the condensed balance sheet for Ochoa Inc. as it would appear at December 31, 2012.Explanation / Answer
a. Statement of Cash Flows for 2012: Indirect Method
b. Balance Sheet as of December 31 2012:
$ $ Cash flows from operating activities Net income 30,250 Adjustments for non cash and non operating items Depreciation expense 13,500 Gain on sale of investments (2,000) 11,500 Net cash flows from operating activities 41,750 Cash flows from investing activities Sales of investments 12,875 Purchase of land (11,000) Net cash flows from investing activities 1,875 Cash flows from financing activities Issuance of common stock 10,000 Issuance of bonds 22,500 Retirement of bonds (20,000) Dividends paid (9,375) Net cash flows from financing activities 3,125 Increase in cash 46,750 Cash, December 31, 2011 8,500 Cash, December 31, 2012 55,250Related Questions
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