Exercise 12-6 The following three accounts appear in the general ledger of Prong

Question

Exercise 12-6 The following three accounts appear in the general ledger of Pronghorn Corp during 2017 an. July Purchasc of Sept. Cost of equipment Nov. Cost of equipment Debit Credit Balance 398,560 572,930 704,953 122,059 582,894 174,370 132.023 10 old Debit Credit Balance en. Balance 176,861 Nov. 10 39,856 137,005 depreciation on equipment sold Dec Depreciation for year 69,748 206,753 Retained Earnings Debit Credit Balance 261,555 226,681 79,352 406,033 Date an. Balance 23 ividends (cash) Dec. 34,874 Net income From the postings in the accounts, indicate how the information is eported on a statement o cash flows using the indirect method. The loss on disposal of plant assets was $19,928. decrease in cash of $132,023.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Hint: ost of eq pment constructed is reported n the n esting activities section as a

Explanation / Answer

Partial statement of cash flows For the year ended December 31,2017 Cash Flow s from Operating Activities: Net Income 179352 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense 69748 Loss on Disposal of Plant Assets 19928 89676 Net Cash Provided by Operating Activities 269028 Cash Flow s from Investing Activities Purchase of Equipment -174370 Construction of Equipment -132023 Sale of Plant Assets 62275 Net Cash Used by Investing Activities -244118 Cash Flow s from Financing Activities Payment of Cash Dividends -34874 Workings: Sale of Plant Assets=(122059-39856)-19928=$62275

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