Asked by Louisa Hadad on Jun 29, 2024
Verified
On the basis of the following data for Branch Co. for the current and preceding years ended December 31, prepare a statement of cash flows using the indirect method. Assume that equipment costing $125,000 was purchased for cash and the land was sold for $15,000. The stock was issued for cash and the only entries in the retained earnings account were for net income of $56,000 and cash dividends declared and paid of $18,000.
Statement of Cash Flows
A financial report that summarizes the amount of cash and cash equivalents entering and leaving a company.
Operating Activities
Activities directly related to the primary business operations, including revenue generation and expenses directly tied to the core business functions.
Indirect Method
A way of calculating cash flows from operating activities by adjusting net income for changes in non-cash accounts.
- Construct the statement of cash flows utilizing the indirect technique.
- Transform net profit figures by integrating modifications in operational assets and liabilities, facilitating the estimation of operating activities' cash flows.
- Ascertain the impact of property, plant, and equipment transactions on the statement of cash flows.
Verified Answer
Learning Objectives
- Construct the statement of cash flows utilizing the indirect technique.
- Transform net profit figures by integrating modifications in operational assets and liabilities, facilitating the estimation of operating activities' cash flows.
- Ascertain the impact of property, plant, and equipment transactions on the statement of cash flows.
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