Purpose: (L.O. 5) This exercise will prepare you to use a worksheet in helping you prepare the data for the statement of cash flows.
- New plant assets costing $92,000 were purchased for cash during the year.
- Investments were sold at cost.
- Plant assets costing $47,000 were sold for $15,550 and resulted in a gain of $8,750.
- A cash dividend of $88,400 was declared and paid during the year.
Prepare a worksheet for a statement of cash flows. Enter the reconciling items directly in the work sheet columns, identifying the debit and credit amounts alphabetically.
- a. Increase in receivables reduces cash inflow-credit.
- b. Increase in inventories increases cash outflow-credit.
- c. Increase in accounts payable reduces cash outflow-debit.
- d. Decrease in accrued expenses payable increases cash outflow-credit.
- e. Sale of investments increases cash inflow-debit.
- f. Purchase of plant assets increases cash outflow-credit
- g. Depreciation expense is a noncash charge to income-debit.
- h. Sale of plant assets increases cash inflow-debit.
- i. Issue of bonds increases cash inflow-debit.
- j. Issue of common stock increases cash inflow-debit.
- k. Net income increases cash inflow-debit.
- l. Payment of dividends increases cash outflow-credit.
- r. Increase ...