4. The following information is available from s available from the current peri
ID: 2587519 • Letter: 4
Question
4. The following information is available from s available from the current period f $175,000 28,000 Net income Depreciation expense Increase in accounts receivable 1 Decrease in accounts payable 21 The net cash flow from using the indirect method is a m operating activities using the indirect me a. $166,000 b. $184,000 c. $110,000 d. $240,000 a book value of $54,000 is sold for $63,000 cash. Using ase onbe shown on the statement of cash flows as the indirect 5. A building with value method, this transaction should income of $9,000000 from investing activities and a deduction from net c. an increase of $9,000 from investing activities on n increase of $54,000 from investing activities a. a .4,000 from investing activities and an addition to net income of $9,000 6. How is loss on sale of a fixed asset reported in the statement of cash flows? a. Added to b. Added to cash from financing activities section C. Subtracted from cash from financing activities section d. Subtracted from net income in the operating cash flows section the statement of cash flows, the cash flows from financing activities section would net income in the operating cash flows section include: a. receipts from the sale of investments b. payments for the acquisition of investments c. receipts from a note receivable d. receipts from the issuance of capital stock 8. If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is a. $44,000 b. $11,000 c. $55,000 d. $66,000 9.Bonds were issued for $200,000 cash; equity dividends were paid $6,000 cash. How much was net cash provided by financing activities as a result of these transactions? stocks were issued for 35,000 cash and a. $229,000 b. $235,000 c. $241,000 d. $(171,000)Explanation / Answer
Answer to Question No.4
Option a i.e. $166,000
Net Cash flow from Operating Activities = Net Income + Depreciation – Increase in Accounts Receivable – Decrease in Accounts Payable
Net Cash flow from Operating Activities = $175,000 + $28,000 - $16,000 - $21,000
Net Cash flow from Operating Activities = $166,000
Answer to Question No.5
Option b i.e. An increase of $63,000 from Investing Activities and a deduction from Net Income of $9,000.
Sale Proceeds from Building = $63,000
Book Value of Building = $54,000
Gain on Sale of Building = $63,000 - $54,000 = $9,000
Investing activities record the cash inflow or cash outflow due to Non-Current Assets. The Investing activities will record cash inflow of $63,000 due to Sale Value of Building.
Furthermore, the Operating Income will record the Gain on Sale of Building for $9,000 by deducting it from Net Income in Operating activities.
Answer to Question No.6
Option a i.e. Added to Net Income in Operating Cash Flow Section.
The Gain or Loss on Sale of Non-Current Assets are recorded under the Operating Activities section of Statement of Cash Flow.
The Loss on Sale of Fixed Assets is added to Net Income, whereas Gain on Sale of Fixed Assets is deducted from Net Income.
Answer to Question No.7
Option d i.e. Receipt from Issuance of Capital Stock.
The Financing activities section of Statement of Cash Flow records the Cash inflow or Cash Outflow in the organization due to the amount externally financed and there repayments. Such as Issuance of Common Stock, Bonds, Dividend Payment etc.
The Receipts from issuance of Capital Stock is added in Financing Activities section of Statement of Cash Flow.
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