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AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

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Chapter 21, Problem 4P
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Intermediate Accounting: Reporting...

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

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Chapter
Section
Problem 1GI
Problem 2GI
Problem 3GI
Problem 4GI
Problem 5GI
Problem 6GI
Problem 7GI
Problem 8GI
Problem 9GI
Problem 10GI
Problem 11GI
Problem 12GI
Problem 13GI
Problem 14GI
Problem 15GI
Problem 16GI
Problem 17GI
Problem 18GI
Problem 19GI
Problem 1MC
Problem 2MC
Problem 3MC
Problem 4MC
Problem 5MC
Problem 6MC
Problem 7MC
Problem 8MC
Problem 9MC
Problem 10MC
Problem 1RE
Problem 2RE
Problem 3RE
Problem 4RE
Problem 5RE
Problem 6RE
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Problem 9RE
Problem 10RE
Problem 11RE
Problem 12RE
Problem 13RE
Problem 14RE
Problem 1E
Problem 2E
Problem 3E
Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 16E
Problem 17E
Problem 18E
Problem 19E
Problem 20E
Problem 21E
Problem 22E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 12P
Problem 13P
Problem 14P
Problem 15P
Problem 16P
Problem 17P
Problem 18P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
Problem 7C
Problem 8C
Problem 10C
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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 to be included in the preparation of Trone Company’s 2019 statement of cash flows:

  1. a. ordinary gain, $9,200
  2. b. proceeds from issuance of note, $25,000
  3. c. decrease in accounts receivable, $5,000
  4. d. payment for purchase of patent, $19,800
  5. e. increase in inventory, $6,700
  6. f. payment of dividends, $30,000
  7. g. decrease in accounts payable, $4,000
  8. h. proceeds from sale of investments, $8,500
  9. i. amortization of premium on bonds payable, $2,100
  10. j. net income, $49,200
  11. k. common stock exchanged for land, $14,000
  12. l. payment for purchase of equipment, $39,400
  13. m. loss on sale of investments, $4,800
  14. n. decrease in deferred taxes payable, $3,600
  15. o. proceeds from issuance of preferred stock, $52,800
  16. p. payment to retire bonds, $37,800
  17. q. depreciation expense, $10,700
  18. r. ending cash balance, $22,100

Required:

  1. 1. Prepare the statement of cash flows.
  2. 2. Next Level What would have happened if the company had not issued the note during 2019? How did the issuance of the note affect the company’s debt ratio (discussed in Chapter 6) at the end of 2019?

1.

To determine

Prepare the statement of cash flow for the year ended December 31, 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.

Provide the statement of cash flow for the year ended December 31, 2019:

T Company
Statement of cash flow for the year ended December 31, 2019
ParticularsAmount($)Amount($)
Operating Activities:  
Net income49,200 
Adjustment for non-cash income items:  
Add: Depreciation expenses10,700 
Loss on sale of investment4,800 
Less: Ordinary gain9,200 
Amortization of premium on bonds payable(2,100) 
Decrease in deferred taxes payable(3,600) 
Adjustments for cash flow effects from working capital items:  
Decrease in accounts receivable5,000 
Increase in inventory(6,700) 
Decrease in accounts payable(4,000) 
Net cash provided by operating activities 44,100
Investing Activities:  
Payment for purchase of plant(19,800) 
Payment for purchase of equipment(39,400) 
Proceeds from sale of investment

2.

To determine

Explain the effect on company’s debt ratio by not issuing the note.

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Ch-21 P-1GICh-21 P-2GICh-21 P-3GICh-21 P-4GICh-21 P-5GICh-21 P-6GICh-21 P-7GICh-21 P-8GICh-21 P-9GICh-21 P-10GI
Ch-21 P-11GICh-21 P-12GICh-21 P-13GICh-21 P-14GICh-21 P-15GICh-21 P-16GICh-21 P-17GICh-21 P-18GICh-21 P-19GICh-21 P-1MCCh-21 P-2MCCh-21 P-3MCCh-21 P-4MCCh-21 P-5MCCh-21 P-6MCCh-21 P-7MCCh-21 P-8MCCh-21 P-9MCCh-21 P-10MCCh-21 P-1RECh-21 P-2RECh-21 P-3RECh-21 P-4RECh-21 P-5RECh-21 P-6RECh-21 P-7RECh-21 P-8RECh-21 P-9RECh-21 P-10RECh-21 P-11RECh-21 P-12RECh-21 P-13RECh-21 P-14RECh-21 P-1ECh-21 P-2ECh-21 P-3ECh-21 P-4ECh-21 P-5ECh-21 P-6ECh-21 P-7ECh-21 P-8ECh-21 P-9ECh-21 P-10ECh-21 P-11ECh-21 P-12ECh-21 P-13ECh-21 P-14ECh-21 P-15ECh-21 P-16ECh-21 P-17ECh-21 P-18ECh-21 P-19ECh-21 P-20ECh-21 P-21ECh-21 P-22ECh-21 P-1PCh-21 P-2PCh-21 P-3PCh-21 P-4PCh-21 P-5PCh-21 P-6PCh-21 P-7PCh-21 P-8PCh-21 P-9PCh-21 P-10PCh-21 P-11PCh-21 P-12PCh-21 P-13PCh-21 P-14PCh-21 P-15PCh-21 P-16PCh-21 P-17PCh-21 P-18PCh-21 P-1CCh-21 P-2CCh-21 P-3CCh-21 P-4CCh-21 P-5CCh-21 P-6CCh-21 P-7CCh-21 P-8CCh-21 P-10C

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