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Cash Flows / Gain or Loss

The net income reported on the income statement for the current year was \$275,000. Depreciation recorded on fixed assets and amortization of patents for the year were \$40,000 and \$9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:
End Beginning
Cash \$ 50,000 \$ 60,000
Accounts receivable 112,000 108,000
Inventories 105,000 93,000
Prepaid expenses 4,500 6,500
Accounts payable (merchandise creditors)75,000 89,000

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

\$198,000
\$324,000
\$352,000
\$296,000

Bonds Payable has a balance of \$900,000 and Premium on Bonds Payable has a balance of \$10,000. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption?

\$1,100 loss
\$1,100 gain
\$8,000 loss
\$8,000 gain

Solution Preview

1. Cash flow from operations is calculated as
Net Income 275,000