G Your enswer is partially correct. Try egain You are provided with the followin

Question

G Your enswer is partially correct. Try egain You are provided with the following information regarding events that occurred at Moore Corporation during 2017 or changes in account balances as of December 31, 2017 Moore prepaes its statement or cash nons using the indiract approach Complete the first column of the table, indicating whether each item afects the operating activities section that is, the itom woul be listed among the adjustments to net income to detemine net cash provided by operating octivities under the indirect approach), investing activities section, financing activities section, or is a noncash transaction reported in a separate schedule. For those items classified as operating activities, indicate whether the item is added or subtracted from net income to detarmine net cash provided by operating activitics of Cash Flow Section Affected If Operating, Did it Increas or Decrease Reported Cash from rating Activities? Operating Activity (a) Depreciation expense was $80,000 (b)Interest Payable account inkreased $5,000 Operating Activity Added (c) Received $26,000 from sale ofplant assets. nancing Activity Operating Acti (a) Acquired land by issuing common stock to s ler e) Paid $17,000 cesh dividend to preferred stockholders. Financing Activity Added (f) Paid S4,000 cash dividend Financing Activity to common stockholders. g) Accounts Receivable count decreased $10,000. Added (h) Inventory increased $2,000 (i) Received $100,000 from issuing bends payable (j) Acoured equipment for $16,000 cash. Investing Activity dded Question Attempts: 3 of 5 used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Statement of Cash flow section affected

If operating did it increase or decrease reported cash from Operating Activities

a. Depreciation expense was $80,000

Operating Activity

Added

b. Interest payable account increased

Operating Activity

Added

c. Received $26,000 from sale of plant assets

Investing Activities

Added

d. Non-cash item

e.Paid $17,000 cash dividend to preferred stockholders

Financing Activities

Subtracted

f. Paid $4,000 cash dividend to common stockholders

Financing Activities

Subtracted

g. Accounts receivable account decreased $10,000

Operating activity

Added

h. Inventory increased $2,000

Operating activity

Subtracted

i. Received $100,000 from issuing bonds payable

Financing Activities

Added

j. Acquired equipment for $16,000 cash

Investing Activity

Subtracted

Notes:

Item d., ‘acquired land by issuing common stock to seller’ is a non-cash transaction. As the consideration for the acquisition of land is common shares and not cash. Hence, this transaction does not affect the cash flow statement.

Depreciation expense is a non-cash expense, where some portion of the asset value is written down in each accounting year. Hence the expense is added back.

Interest payable account increased by $5,000 – the transaction records the current period’s liability but no actual cash transaction takes place.

In the transaction concerning sale of plant assets, the asset is sold for a cash consideration. Hence, asset goes out and cash comes in. The transaction is an investing activity and cash is added.

Cash dividends paid towards preference stockholders and common stockholders’ is a cash transaction, forms part of financing activity and to be subtracted.

Decrease in accounts receivable indicates an increased cash flow. The item belongs to the operating activities section and is to be added.

Increase in inventory – when inventory increases, cash used to buy the inventory is locked in the inventory balance and hence cash decreases. – Operating activity - subtracted

Issue of bonds payable – is a financing activity - bonds payable issued indicates inflow of cash and the amount is to be added.

Acquired equipment for cash - in this transaction, asset comes in and cash goes out. The transaction is a cash transaction.

Statement of Cash flow section affected

If operating did it increase or decrease reported cash from Operating Activities

a. Depreciation expense was $80,000

Operating Activity

Added

b. Interest payable account increased

Operating Activity

Added

c. Received $26,000 from sale of plant assets

Investing Activities

Added

d. Non-cash item

e.Paid $17,000 cash dividend to preferred stockholders

Financing Activities

Subtracted

f. Paid $4,000 cash dividend to common stockholders

Financing Activities

Subtracted

g. Accounts receivable account decreased $10,000

Operating activity

Added

h. Inventory increased $2,000

Operating activity

Subtracted

i. Received $100,000 from issuing bonds payable

Financing Activities

Added

j. Acquired equipment for $16,000 cash

Investing Activity

Subtracted

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.