December 31, 2019 Sources (Inflows) of Cash Net Source from Operations Net income $47,800 Add: Cash receipt from sale of land 6,500 Inflow from issuing 10% bonds payable 25,000 Depreciation expense 13,200 Reduction in inventory 1,900 Less: Outflow to buy equipment (16,400) Increase in prepaid expenses (700) Cash (principal) paid on long-term note (9,500) Ordinary gain (2,000) Total source from operations $65,800 Other Sources (Inflows) of Cash Loss on sale of land $2,300 Increase in accounts payable 1,000 Cash from issuing preferred stock 38,700 Patent amortization expense 2,100 Total other sources of cash 44,100 Sources (Financing) Not Affecting Cash Issuance of common stock for patent 11,000 Total inflows of cash $120,900 Uses (Outflows) of Cash To purchase building $(62,000) Increase in accounts receivable (7,800) For acquiring marketable securities (7,100) Decrease in income taxes payable (1,400) Total uses of cash (78,300) Uses (Investing) Not Affecting Cash Acquisition of patent by issuing common stock (11,000) Net inflow before dividends $ 31,600 Less: Cash dividends (24,000) Net increase in cash $7,600 Cash, January 1, 2019 15,300 Cash, December 31, 2019 $22,900

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 32BE

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Question

Ryan Company's bookkeeper prepared the following 2019 statement of cash flows:

Flows of Cash Statement December 31, 2019
Sources (Inflows) of Cash
Net Source from Operations
Net income	$47,800
Add: Cash receipt from sale of land	6,500
Inflow from issuing 10% bonds payable	25,000
Depreciation expense	13,200
Reduction in inventory	1,900
Less: Outflow to buy equipment	(16,400)
Increase in prepaid expenses	(700)
Cash (principal) paid on long-term note	(9,500)
Ordinary gain	(2,000)
Total source from operations		$65,800
Other Sources (Inflows) of Cash
Loss on sale of land	$2,300
Increase in accounts payable	1,000
Cash from issuing preferred stock	38,700
Patent amortization expense	2,100
Total other sources of cash		44,100
Sources (Financing) Not Affecting Cash
Issuance of common stock for patent		11,000
Total inflows of cash		$120,900
Uses (Outflows) of Cash
To purchase building	$(62,000)
Increase in accounts receivable	(7,800)
For acquiring marketable securities	(7,100)
Decrease in income taxes payable	(1,400)
Total uses of cash		(78,300)
Uses (Investing) Not Affecting Cash
Acquisition of patent by issuing common stock		(11,000)
Net inflow before dividends		$ 31,600
Less: Cash dividends		(24,000)
Net increase in cash		$7,600
Cash, January 1, 2019		15,300
Cash, December 31, 2019		$22,900

After a thorough investigation, you have determined that the amounts of the items listed on the statement are correct. However, you notice several items that are incorrectly classified and reported.

Required

Next Level Prepare a corrected 2019 statement of cash flows for the Ryan. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.

RYAN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2019

Required: adjustment for noncash income items (2) adjustment affecting working capital (3)operating activities net cash. (4) investing activities

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