Exam 23: Statement of Cash Flows

Use the following information for questions 85 through 87. The balance sheet data of Kohler Company at the end of 2015 and 2014 follow: 2015 2014 Cash \ 100,000 \ 140,000 Accounts receivable (net) 240,000 180,000 Inventory 280,000 180,000 Prepaid expenses 40,000 100,000 Buildings and equipment 360,000 300,000 Accumulated depreciation\_buildings and equipment (72,000) (32,000) Land 360,000 160,000 Totals \1 ,308,000 \1 ,028,000 Accounts payable \ 272,000 \ 220,000 Accrued expenses 48,000 72,000 Notes payable-bank, long-term 160,000 Mortgage payable 120,000 Common stock, \ 10 par 836,000 636,000 Retained earnings (deficit) 32,000 (60,000) \1 ,308,000 \1 ,028,000 Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2015, for Naley Company: -The net cash provided (used) by investing activities was

Any given transaction may affect a statement of cash flows (using the indirect method) in one or more of the following ways: Cash flows from operating activities a. Net income will be increased or adjusted upward. b. Net income will be decreased or adjusted downward. Cash flows from investing activities c. Increase as a result of cash inflows. d. Decrease as a result of cash outflows. Cash flows from financing activities e. Increase as a result of cash inflows. f. Decrease as a result of cash outflows. The statement of cash flows is not affected g. Not required to be reported in the body of the statement. For each transaction listed below, list the letter or letters from above that describe(s) the effect of the transaction on a statement of cash flows for the year ending December 31, 2015. (Ignore any income tax effects.) 1. Preferred stock with a carrying value of $44,000 was redeemed for $50,000 on January 1, 2015. 2. Uncollectible accounts receivable of $3,000 were written off against the allowance for doubtful accounts balance of $12,200 on December 31, 2015. 3. Machinery which originally cost $3,000 and has a book value of $1,800 is sold for $1,400 on December 31, 2015. 4. Land is acquired through the issuance of bonds payable on July 1, 2015. 5. 1,000 shares of stock, stated value $10 per share, are issued for $25 per share in 2015. 6. An appropriation of retained earnings for treasury stock of $35,000 is established in 2015. 7. A cash dividend of $8,000 is paid on December 31, 2015. 8. The portfolio of long-term investments (available-for-sale) is at an aggregate market value higher than aggregate cost at December 31, 2015.

Cash receipts from customers are computed by adding a decrease in accounts receivable to revenue from sales.