Effect of transactions on cash flows
State the effect (cash receipt or payment and amount) of each of the following transaction, considered individually, on cash flows:-
a. Sold equipment with a book value of $65,000 for $83,000.
b. Sold a new issue of $400,000 of bonds at 98.
c. Retired $550,000 of bonds, on which there was $5,000 of unamortized discount for $560,000.
d. Purchased 2,000 shares of $25 par common stock as treasury stock at $50 per share.
|
End of Year
|
Beginning of Year
|
|
Cash
|
$100,800
|
$107,100
|
|
Accounts receivable (net)
|
127,800
|
132,120
|
|
Inventories
|
252,000
|
227,700
|
|
Prepaid expenses
|
14,040
|
15,120
|
|
Accounts payable (merchandise creditors)
|
112,680
|
119,520
|
|
Salaries payable
|
16,200
|
14,850
|
e. Prepare the cash flows from operating Activities section of the statement of cash flows, using the indirect method.
If the direct method had been used, would the net cash flow from operating activities have been same? Explain.