Statement of Cash Flows The following is a list of the items to be included in t

Question

Statement of Cash Flows

The following is a list of the items to be included in the preparation of Trone Company's 2016 statement of cash flows:

Ordinary gain, $9,200

Proceeds from issuance of note, $25,000

Decrease in accounts receivable, $5,000

Payment for purchase of patent, $19,800

Increase in inventory, $6,700

Payment of dividends, $30,000

Decrease in accounts payable, $4,000

Proceeds from sale of investments, $8,500

Amortization of premium on bonds payable, $2,100

Net income, $49,200

Common stock exchanged for land, $14,000

Payment for purchase of equipment, $39,400

Loss on sale of investments, $4,800

Decrease in deferred taxes payable, $3,600

Proceeds from issuance of preferred stock, $52,800

Payment to retire bonds, $37,800

Depreciation expense, $10,700

Ending cash balance, $22,100

Required

1. Prepare the statement of cash flows. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments

Explanation / Answer

Indirect Method Statement of Cash Flows For the Year Ended December 31, 2018 Amount $ Operating Activities Net Profit 49,200 Adjustments: Non-Cash adjustment: Depreciation 10,700 Loss on Sale of Investment 4,800 Premium Bonds Amortized           2,100 Due to changes in Working capital: Due to changes in accounts receivable 5,000 Due to changes in Inventories         -6,700 Due to changes in accounts payable         -4,000 Due to changes in Deferred Tax         -3,600 Net Cash provided (used) by operating activities        57,500 Investing Activities Receipt from Sale of Investment           8,500 Purchase of Patent       -19,800 Purchase of Equipment       -39,400 Net cash provided (used) by investing activities       -50,700 Financing Activities Payment to retire Bonds       -37,800 Notes Issued        25,000 Preferred Stock Issued        52,800 Payment of common dividends       -30,000 Net cash provided (used) by investing activities)        10,000 Net increase/decrease in cash        16,800 Add: Cash balance at the begining of the year (Assumed)           5,300 Cash balance at the end of the year        22,100

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