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    Tovar Corporation: Cash Flow Statement

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    Please note that values are different here than on the attachment problem 14-4B.

    Prepare the net cash provided by operating activities section of the company's statement of cash
    flows for the year ended December 31, 2008, using the indirect method.

    The three accounts shown below appear in the general ledger of Tovar Corp.during 2008.

    Equipment
    Date Debit Credit Balance
    Jan. 1 Balance 160,000
    July 31 Purchase of equipment 70,000 230,000
    Sept. 2 Cost of equipment constructed 53,000 283,000
    Nov. 10 Cost of equipment sold 49,000 234,000

    Accumulated Depreciation?Equipment
    Date Debit Credit Balance
    Jan. 1 Balance 71,000
    Nov. 10 Accumulated depreciation on
    equipment sold 30,000 41,000
    Dec. 31 Depreciation for year 28,000 69,000
    Prepare partial statement of
    cash flows?indirect method.

    Retained Earnings
    Date Debit Credit Balance
    Jan. 1 Balance 105,000
    Aug. 23 Dividends (cash) 14,000 91,000
    Dec. 31 Net income 67,000 158,000

    Instructions
    From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method.The loss on sale of equipment was $5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)

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    Solution Preview

    E14-4B The three accounts shown below appear in the general ledger of Tovar Corp. during 2008.

    Equipment
    Date Debit Credit Balance
    Jan. 1 Balance 160,000
    July 31 Purchase of equipment 70,000 230,000
    Sept. 2 Cost of equipment constructed 53,000 283,000
    Nov. 10 Cost of equipment sold 49,000 234,000

    Accumulated Depreciation?Equipment
    Date Debit Credit Balance
    Jan. 1 Balance 71,000 ...

    Solution Summary

    This solution is comprised of a detailed explanation to prepare the net cash provided by operating activities section of the company's statement of cash flows for the year ended December 31, 2008, using the indirect method.

    $2.19

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