BE 160
At January 1, 2014, Bergman Enterprises reported a balance in the Equipment account of $45,000. During the year the company purchased equipment with a cost of $60,000 and sold equipment with a book value of $30,000. The company reported a loss on the disposal of equipment of $6,000. Assume the indirect method is used.
Instructions
Determine what amount will be reported in (a) the operating activities section and (b) the investing activities section with regard to the purchase and sale of equipment.
BE 161
Assume the indirect method is used to compute cash flows from operations. For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.
Code
Cash Flows From Operating Activities
Add to Net IncomeA
Deduct from Net IncomeD
1. Increase in accounts receivable
2. Increase in inventory
3. Decrease in prepaid expenses
4. Decrease in accounts payable
5. Increase in accrued liabilities
6. Increase in income taxes payable
7. Depreciation expense
8. Loss on disposal of investment
9. Gain on disposal of equipment
10. Amortization expense
BE 162
Dutton Company prepared the tabulation below at December 31, 2014.
Net Income.........................................................$255,000
Depreciation expense, $25,000
Decrease in accounts receivable, $40,000
Increase in inventory, $12,000
Decrease in accounts payable, $8,600
Increase in income taxes payable, $1,500
Loss on disposal of land, $5,000
Net cash provided by operating activities
BE 162(Cont.)
Instructions
Show how each item should be reported in the statement of cash flows. Use parentheses for deductions.