Intermediate Accounting: Reporting...

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



Intermediate Accounting: Reporting...

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

Statement of Cash Flows The following are Mueller Company’s cash flow activities:

  1. a. Net income, $68,000
  2. b. Increase in accounts receivable, $4,400
  3. c. Receipt from sale of common stock, $12,300
  4. d. Depreciation expense, $11,300
  5. e. Dividends paid, $24,500
  6. f. Payment for purchase of building, $65,000
  7. g. Bond discount amortization, $2,700
  8. h. Receipt from sale of long-term invest­ments at cost, $10,600
  9. i. Payment for purchase of equipment, $8,000
  10. j. Receipt from sale of preferred stock, $20,000
  11. k. Increase in income taxes payable, $3,500
  12. l. Payment for purchase of land, $9,700
  13. m. Decrease in accounts payable, $2,900
  14. n. Increase in inventories, $10,300
  15. o. Beginning cash balance, $18,000


Prepare Mueller Company's statement of cash flows.

To determine

Prepare a statement of cash of cash flow of Company M.


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 include cash inflows and outflows from business operations. Investing activities includes cash inflows and cash outflows from purchase and sale of land or equipment, or investments. Financing activities includes cash inflows and outflows from issuance of common stock and debt, payment of debt and dividends.

Prepare a statement of cash flow of Company M as follows:

Company S
Statement of Cash Flows
For Year Ended December 31, 2018
Operating Activities:  
Net income$68,000 
Adjustments for noncash income items:  
Add: Depreciation expense 11,300 
Bond discount amortization 2,700 
Adjustments for cash flow effects from working capital items:  
Add: Increase in income taxes payable3,500 

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