Questions/Problems - Depreciation and Statement of Cash Flows
Write your answers in the space provided for each of the questions below:
Part 1: Answer the following depreciation problems:
1. A home healthcare care company purchases a van for home visits for $60,000. The van depreciates $15,000 a year. What will the book value of the van be in 1 year? In 2 years? How many years will it be until it's worth $0?
2. How does allowing depreciation help companies?
Part 2: For each of the transactions below, assign the appropriate cash-related activity (A-D):
A. Cash flows from operating activities
B. Cash flows from investing activities
C. Cash flows from financing activities
D. Net increase (or decrease) in cash and cash equivalents
3. $50,000 repayment of long-term loan.
4. $7,000 proceed from the sale of a used x-ray machine.
5. $40,000 worth of services rendered.
6. $15,000 in payments from patients.
7. $1,000,000 purchase of new office space for expanding services.
8. $10,250 net cash and cash equivalents at the end of the year.
9. $500,000 received by the issuance of a long-term bond.
10. $100,000 proceeds from an investment in a 10-year bond.