The Turtle Corporation prepared the following comparative balance sheets at Dece

Question

The Turtle Corporation prepared the following comparative balance sheets at December 31, 2014 and 2013:

Additional information for the year ended December 31, 2014:

(1.) Sold available-for-sale securities costing $69,500 for $74,000.

(2.) Equipment costing $20,000, with a book value of $5,000, was sold for $6,000.

(3.) Issued 6% bonds payable at par.

(4.) Repaid a portion of a long term bank loan.

(5.) Purchased new equipment for $145,000 cash.

(6.) Paid cash dividends of $20,000.

(7.) Net income for 2014 was $50,000.

(8.) Turtle prepares its cash flows statement under the indirect method.

1.Net cash flows from operating activities on the cash flows statement for 2014 are?

A) Negative $17,670. B) Positive $35,330. C) Positive $39,830. D) Negative $70,670.

2. Net cash flows from investing activities on the cash flows statement for 2014 are?

A) Negative $225,000. B) Negative $65,000. C) Negative $70,500. D) Negative $145,000.

3.Net cash flows from financing activities on the cash flows statement for 2014 are?

A) Negative $130,000. B) Positive $150,000. C) Positive $130,000. D) Negative $70,000.

12/31/14 12/31/13 Cash $77,375 (22,955) Marketable Securities 15,500 85,000 Accounts Recievable 80,000 68,250 Inventory 165,000 145,000 Prepaid insurance 1,500 2,000 Land, Buildings, and Equipment 1,250,000 1,250,000 Accumulated depreciation (61,000) (572,000) Total Assets $979,375 $830,295 Accounts Payable $76,340 $102,760 Salaries Payable 20,000 24,500 Notes Payable 25,000 75,000 Bonds Payable 200,000 0 Common Stock 300,000 300,000 Retained Earnings 358,035 328,035 Total Liabilities and Shareholders Equity $979,375 $830,295

Explanation / Answer

Cash flow from operations:

Net Income: 50,000

Gain from sale of available-for-sale securities: (4500)

Gain from sale of Equipment- (1000)

Depreciation: 38000

Add: decrease in current assets and increase in current liability

Less: increase in current assets and decrease in current liability

Marketable securities: 69,500

Accounts receivable: (11750)

Inventory: (20,000)

Prepaid insurance: 500

Accounts payables: (26420)

Salaries payable: (4500)

Notes payable: (50000)

So net cash flow from operating activities = $39,830 c is answer

Cash flow from investing activities:

Purchased new equipment for $145,000 cash.

Therefore (145,000) D is nswer

Cash flow from financing:

Notes payable: -(50,000)

Issue of bonds – 200,000

Dividends paid: -(20,000)

Net cash flow from financing:- 1,30,000 c is answer

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