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Effects of Transactions on Statement of Cash Flows

Indicate for each of the following what should be disclosed on a statement of a cash flows (indirect method).If not disclosed , write "not shown". There may be more than one answer for some items. For an item that is added to net income , write "ADD", and for an item that is detucted from net income, write "deduct". show financing and investing outflows in paretheses. For example, an answer might be : detuct $4700 or investing (31000). If the item is a noncash transaction that should be disclosed seperately, write "noncash".

a - The deferred tax liability increased 10,000
b - The balance in investment in Hoyt Co. stock increased 12,000 as a result of using the equity method
c - Issuance of a stock dividend increased common stock 40,000 and paid in capital 160000
d - Amortization of bond discount 1,600
e - Machinery that cost 100,000 and had accumulated depretiattion 48000 was sold for 55000
f - Issued 6,000 shares of common stock ($10par) with a market value of 15$ per share for machinery (show amount)
g - Amortization of patents $3,000
h - Cash dividends paid, $60,000

Solution Preview

a - The deferred tax liability increased 10,000:
ADD to Net Income
Expense that is not paid so lowers Net Income but not operating cash flows

b - The balance in investment in Hoyt Co. stock increased 12,000 as a result of using the equity method:
DEDUCT from Net Income
Remove non-cash gain from ...

Solution Summary

Your tutorial includes the ADD DEDUCT remarks and instructional tips to help you know WHY.

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