Each of the following items must be considered in preparinga statement of cash flows. Indicate where each item isto be reported in the statement, if at all. Assume that netincome is reported as $90,000.(a) Accounts receivable increased from $34,000 to $39,000from the beginning to the end of the year.(b) During the year, 10,000 shares of preferred stock witha par value of $100 per share were issued at $115 pershare.(c) Depreciation expense amounted to $14,000, and bondpremium amortization amounted to $5,000.(d) Land increased from $10,000 to $30,000.

Question
Asked Jan 8, 2020
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Each of the following items must be considered in preparing
a statement of cash flows. Indicate where each item is
to be reported in the statement, if at all. Assume that net
income is reported as $90,000.
(a) Accounts receivable increased from $34,000 to $39,000
from the beginning to the end of the year.
(b) During the year, 10,000 shares of preferred stock with
a par value of $100 per share were issued at $115 per
share.
(c) Depreciation expense amounted to $14,000, and bond
premium amortization amounted to $5,000.
(d) Land increased from $10,000 to $30,000.

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Expert Answer

Step 1

a.

An increase in the account receivable from $34,000 to $39,000 must be recorded by adjusting the net income with a deduction of $5,000 under operating activities section of the cash flow statement. The cash flow from operating activities must be must be reported at ($90,000-$5,000) $85,000.

Step 2

b. 

The preferred stock being issued comes under financing activity. Hence, under the heading "cash flows from financing activities" issuance of preferred stock has to be recorded with a value (10,000x$115) $1,150,000.

Step 3

c.

The following is the adjust...

Accounting homework question answer, step 3, image 1
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