Print by: Kyle Kassa W18 ACC3020 S5 MW@10:W18 ACC3020 S5 MW@10Chapter 12 Homewor

Question

Print by: Kyle Kassa W18 ACC3020 S5 MW@10:W18 ACC3020 S5 MW@10Chapter 12 Homework Exercise 12-6 The following three accounts appear in the general ledger of Teal Mountain Inc. during 2017 Equipment Date Jan. 1 July 31 Sept. 2 Nov. 10 Debit Balance Purchase of equipment Cost of equipment constructed Cost of equipment sold Credit Balance 343,200 493,350 607,035 105,105 501,930 150,150 113,685 Accumulated Depreciation-Equipment Date Jan. 1 Nov. 10 Dec. 31 Credit Balance 152,295 117,975 60,060 178,035 Debit Balance Accumulated depreciation on equipment sold Depreciation for year 34,320 Retained Earnings Date Jan. 1 Aug. 23 Dec. 31 Balance Dividends (cash) Net income Debit Credit Balance 225,225 195,195 154,440 349,635 30,030 From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of plant assets was $17,160. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $113,685.) (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis e.g. (15,000).) Teal Mountain Inc.

Explanation / Answer

Teal Mountain Inc. Partial Statement of Cash Flows for the year ended 2017 A Cash Flow From Operating Activities: Net Income as per P&L account 154440 Add: Non cash/trade expenses: Depreciation expenses 60060 Loss on disposal of plant 17160 77220 Net cash flow from operating activities 231660 B Cash Flow From Investing Activities: Sale of Plant 53625 Construction of Equipment -113685 Purchase of Equipment -150150 Net cash used from investing activities -210210 C Cash Flow From Financing Activities: Dividend Paid -30030 Net Cash used from Financing Activities -30030 *Calculation of sale of plant: Cost of equipment sold - Accumulated dep. On equipment sold - Loss on disposal of plant assets 105105 - 34320 - 17160 53625

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