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    Financial Accounting: LeHigh Company method for the Statement of Cash Flows.

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    Using the above information, answer the following questions:

    A) Did LeHigh use the direct format or indirect format? How did you determine this?

    B) What amount of cash flowed into (or out of) the company this period as a result of depreciation?

    C) Did the following accounts increase or decrease during the year?
    1) Accounts receivable
    2) Accounts payable
    3) Inventory
    4) Prepaid Insurance
    5) Cash

    D) Fully explain how you determined your answer to part "c".
    See attached file #1

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    Solution Preview

    Please see the attached file.

    29) LeHigh Company
    Cash Flow Statement
    For 2000

    Operating Activities
    Net Income $149,000
    Reconciling items:
    Depreciation 10,000
    Accounts Receivable 24,000
    Inventory (45,000)
    Accounts Payable (15,000)
    Prepaid Insurance 2,000
    Cash provided by operating activities $125,000

    Investing Activities
    Purchase of machinery ($43,000)
    Purchase of land (80,000)
    Cash used for investing activities ($123,000)

    Financing Activities
    Issuance of Stock $20,000
    Repayment of loan (46,000)
    Dividends Paid (18,000)
    Cash used for financing activities ($44,000)

    Using the above information, answer the following questions:

    A) Did ...

    Solution Summary

    The solution is well done for explaining the component parts of the Statement of Cash Flows for LeHigh Company.