1. Effects of transactions on statement of cash flows Indicate for each of the f
ID: 2519241 • Letter: 1
Question
1. Effects of transactions on statement of cash flows Indicate for each of the following what should be disclosed on a statement of cash flows (indirect method). If not disclosed, write "Not shown There may be more than one answer for somie items. For an item that is added to net income, write Add," and for an item that is deducted from net income, write "Deduct. Show financing and investing outflows in parentheses. For example, an answer mighit be: Deduct $4,700 or Investing (S31,000). If the item is a noncash transaction that should be disclosed separately, wrie "Noncash." (a) The deferred tax liability increased $10,000. (b) The balance in Investment in Hoyt Co. Stock increased S12?? as a resultof aine the equity method. (c) Issuance of a stock dividend increased common stock $40,000 and paid-in capital $16,000. (d) Amortization of bond discount, $1,600. (e) Machinery that cost $100,000 and had acumulated depreciation of s48,00 was sold for $54,000. (f) Issued 9,000 shares of common stock (S10 par) with a market price of S15 per share for machinery. (Show the amount, too.) (g) Amortization of patents, $3,000. (h) Cash dividends paid, $60,000. ? . Page 3 Student NameExplanation / Answer
A. An increase in deferred tax liability- "Add" $10,000 to net income.
B. Purchase of long term investments- "Deduct" $12,000 from Investing Activities.
C. Increase in common stock- "Add" $40,000 to Financing Activities.
Increase in paid in capital- "Add" $16,000 to Financing Activities.
D. Amortization of Bond Discount- "Deduct" $1,600 from Financing Activities.
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