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Chapter 5: Q14BE. (page 239)

Martinez Corporation engaged in the following cash transactions during 2017.

Sale of land and building $191,000

Purchase of treasury stock 40,000

Purchase of land 37,000

Payment of cash dividend 95,000

Purchase of equipment 53,000

Issuance of common stock 147,000

Retirement of bonds 100,000

Compute the net cash provided (used) by investing activities.

Short Answer

Expert verified

The cash flow from investing activities is equal to $101,000.

Step by step solution

01

Definition of Investing activities

The cash flow statement reports all those activities as investing activities that include cash disbursement for purchase of a capital asset and cash receipt for sale of a capital asset.

02

Cash from investing activities

Particular

Amount $

Sale of land and building

$191,000

Purchase of land

(37,000)

Purchase of equipment

(53,000)

Cash from investing activities

$101,000

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Most popular questions from this chapter

5. A company has purchased a tract of land and expects to build a production plant on the land in approximately five years. During the 5 years before construction, the land will be idle. Under IFRS, the land should be reported as:

(a) land expense.

(b) property, plant, and equipment.

(c) an intangible asset.

(d) a long-term investment.

What are some of the techniques of disclosure for the balance sheet?

The comparative balance sheets of Constantine Cavamanlis Inc. at the beginning and the end of the year 2017 are as follows.

CONSTANTINE CAVAMALIS INC

BALANCE SHEETS

Assets

Dec 31, 2017

Jan 1, 2017

Inc./Dec.

Cash

\(45,000

\)13,000

\(32,000 Inc.

Accounts receivable

91,000

88,000

3,000 Inc.

Equipment

39,000

22,000

17,000 Inc.

Less: Accumulated depreciation 鈥� Equipment

(17,000)

(11,000)

6,000 Inc.

Total

158,000

\)112,000

Liabilities and Stockholder鈥檚 equity

Account payable

\(20,000

\)15,000

5,000 Inc.

Common stock

100,000

80,000

20,000 Inc

Retained earnings

38,000

17,000

21,000 Inc.

Total

\(158,000

\)112,000

Net income of \(44,000 was reported, and dividends of \)23,000 were paid in 2017. New equipment was purchased and none was sold.

Instructions

Prepare a statement of cash flows for the year 2017.

What is the relationship between current assets and current liabilities?

Grant Wood Corporation鈥檚 balance sheet at the end of 2016 included the following items.

Current assets (\(Cash 82,000)

\)235,000

Current liabilities

\(150,000

Land

30,000

Bond payable

100,000

Building

120,000

Common stock

180,000

Equipment

90,000

Retained earnings

44,000

Accumulated depreciation 鈥� Building

(30,000)

Accumulated depreciation 鈥� Equipment

(11,000)

Patents

40,000

Total

\)474,000

Total

\(474,000

The following information is available for 2017.

1. Net income was \)55,000.

2. Equipment (cost \(20,000 and accumulated depreciation \)8,000) was sold for \(10,000.

3. Depreciation expense was \)4,000 on the building and \(9,000 on equipment.

4. Patent amortization was \)2,500.

5. Current assets other than cash increased by \(29,000. Current liabilities increased by \)13,000.

6. An addition to the building was completed at a cost of \(27,000.

7. A long-term investment in stock was purchased for \)16,000.

8. Bonds payable of \(50,000 were issued.

9. Cash dividends of \)30,000 were declared and paid.

10. Treasury stock was purchased at a cost of $11,000.

Instructions

(Show only totals for current assets and current liabilities.)

(a) Prepare a statement of cash flows for 2017.

(b) Prepare a balance sheet at December 31, 2017.
See all solutions

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