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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Statement of Cash Flows The following is a list of the items for Lombardo Company’s 2019 statement of cash flows:

  1. a. depreciation expense, $4,200
  2. b. proceeds from sale of land, $5,600
  3. c. payment of dividends, $5,000
  4. d. net income, $7,900
  5. e. conversion of bonds to common stock, $7,000
  6. f. increase in accounts payable, $3,100
  7. g. proceeds from issuance of note, $6,200
  8. h. gain on sale of land, $1,800
  9. i. payment for purchase of building, $13,000
  10. j. increase in accounts receivable, $2,700
  11. k. ending cash balance, $13,900

Required:

Prepare the statement of cash flows.

To determine

Prepare the statement of cash flows for L Company for the year 2019.

Explanation

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.

Operating activities: Operating activities include cash inflows and outflows from business operations.

Investing activities: Investing activities include cash inflows and cash outflows from purchase and sale of land or equipment, or investments.

Financing activities: Financing activities includes cash inflows and outflows from issuance of common stock and debt, payment of debt and dividends.

Prepare the statement of cash flows:

...
L Company
Statement of cash flows for the year 2019
ParticularsAmount($)Amount($)
Operating Activities:  
Net income7,900 
Adjustment for non-cash income items:  
Add: Depreciation expenses4,200 
Less: Gain on sale of equipment (1,800) 
Adjustments for cash flow effects from working capital items:  
Increase in accounts receivable(2,700) 
Increase  in accounts payable3,100

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