The net income for Jeff Co. for 2014 was $280,250. For 2014, depreciation on pla

Question

The net income for Jeff Co. for 2014 was $280,250. For 2014, depreciation on plant assets was $66,840, and the company incurred a loss on disposal of plant assets of $10,850. Compute net cash provided by operating activities using the indirect method.

An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Wellman Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate how each item should be classified in the statement of cash flows using these four major classifications: .operating activity (indirect method), investing activity, financing activity, and significant noncash investing and financing activity.

a. Payment of interest on notes payable.

b. Exchange of land for patent

c. Sale of building at book value.

d. Payment of dividends,

e. Depreciation.

f. Receipt of dividends on investment in stock.

g. Receipt of interest on notes receivable.

h. Issuance of capital stock.

i. Amortization of patent.

j. Issuance of bonds for land.

k. Purchase of land.

l. conversion of bonds into common stock.

m. Loss on sale of land.

n. Retirement of bonds.

Explanation / Answer

Net Income 280250 Add : Depriciation on plant assets 66840 Loss on disposal of plant asset 10850 77690 Net cash from operating activities 357940 a. Payment of interest on notes payable. operating activity (indirect method) b. Exchange of land for patent significant noncash investing activity c. Sale of building at book value. investing activity d. Payment of dividends, financing activity, e. Depreciation. operating activity (indirect method) f. Receipt of dividends on investment in stock. investing activity g. Receipt of interest on notes receivable. investing activity h. Issuance of capital stock. financing activity, i. Amortization of patent. significant noncash investing activity j. Issuance of bonds for land. significant noncash investing activity k. Purchase of land. investing activity l. conversion of bonds into common stock. significant noncash financing activity m. Loss on sale of land. operating activity (indirect method) n. Retirement of bonds. investing activity

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