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Chapter 23: Q15Q (page 1372)

Question: The net income for Fallon Company for 2017 was \(320,000. During 2017, depreciation on plant assets was \)124,000, amortization of patent was \(40,000, and the company incurred a loss on sale of plant assets of \)21,000. Compute net cash flow from operating activities.

Short Answer

Expert verified

Answer

The business entity generates$505,000as net cash flow from operation.

Step by step solution

01

Definition of Operating Activities

All the activities that are concerned with daily business operations are known as operating activities. It includes activities such as sales, production, and purchases.

02

Calculation of net cash flow from operating activities

Particular

Amount

Net income

$320,000

Add: Depreciation on plant assets

$124,000

Add: Loss on sale of plant assets

$21,000

Add: Amortization of patent

$40,000

Net cash flow from operating activities

$505,000

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Most popular questions from this chapter

Moxley Corporation had January 1 and December 31 balances as follows.

1/1/17 12/31/17

Inventory \(95,000 \)113,000

Accounts payable 61,000 69,000

For 2017, cost of goods sold was $500,000. Compute Moxley鈥檚 2017 cash payments to suppliers.

In 2017, Leppard Inc. issued 1,000 shares of \(10 par value common stock for land worth \)40,000.

(a) Prepare Leppard鈥檚 journal entry to record the transaction.

(b) Indicate the effect the transaction has on cash.

(c) Indicate how the transaction is reported on the statement of cash flows.

Use the information from BE23-4 for Bloom Corporation. Prepare the cash flows from operating activities section of Bloom鈥檚 2017 statement of cash flows using the indirect method.

Question: (SCF鈥擠irect Method) Los Lobos Corp. uses the direct method to prepare its statement of cash flows. Los Lobos鈥檚 trial balances at December 31, 2017 and 2016, are as follows.

Debits
December 31

2017
2016

Cash

\(35,000

\)32,000

Accounts receivables

33,000

30,000

Inventory

31,000

47,000

Property, plant and equipment

100,000

95,000

Unamortized bond discount

4,500

5,000

Cost of goods sold

250,000

380,000

Selling expenses

141,500

172,000

General and administration expenses

137,000

151,300

Interest expenses

4,300

2,600

Income tax expenses

20,400

61,200

\(756,700

\)976,100

Credits
December 31

2017
2016

Allowance for doubtful accounts

\(1,300

\)1,100

Accumulated depreciation 鈥� Plant assets

16,500

15,000

Account payable

25,000

15,500

Income tax payable

21,000

29,100

Deferred tax liability

5,300

4,600

8% callable bonds payable

45,000

20,000

Common stock

50,000

40,000

Paid-in-capital in excess of par

9,100

7,500

Retained earnings

44,700

64,600

Sales revenue

538,800

778,700

\(756,700

\)976,100

Additional information:

1. Los Lobos purchased \(5,000 in equipment during 2017.

2. Los Lobos allocated one-third of its depreciation expense to selling expenses and the remainder to general and administrative expenses.

3. Bad debt expense for 2017 was \)5,000, and write-offs of uncollectible accounts totalled $4,800.

Instructions

Determine what amounts Los Lobos should report in its statement of cash flows for the year ended December 31, 2017, for the following items.

(a) Cash collected from customer

(d) Cash paid for income tax

(b) Cash paid to suppliers

(e) Cash paid for selling expenses

(c) Cash paid for interest

Question: Stan Conner and Mark Stein were discussing the presentation format of the statement of cash flows of Bombeck Co. At the bottom of Bombeck鈥檚 statement of cash flows was a separate section entitled 鈥淣oncash investing and financing activities.鈥� Give three examples of significant noncash transactions that would be reported in this section.
See all solutions

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