ACC – Exercise 16-1, 16-2, 16-4 Rasheed, Roney Company’s

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Exercise 16-1 Cash flow from operations (indirect) L.O. P2
Rasheed Company reports net income of $540,000 for the year ended December 31, 2011. It also reports $97,200 depreciation expense and a $9,500 gain on the sale of machinery. Its comparative balance sheets reveal a $43,200 increase in accounts receivable, $22,140 increase in accounts payable, $11,880 decrease in prepaid expenses, and $16,740 decrease in wages payable.

Required:
Prepare only the operating activities section of the statement of cash flows for 2011 using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

Statement of Cash Flows
Cash flows from operating activities $
Adjustments to reconcile net income to operating cash flow $

Net cash from operating activities $

Exercise 16-2 Cash flow classification (indirect) L.O. C1
The following transactions and events occurred during the year. Assuming that this company uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an x in the appropriate column. (Leave no cells blank – If the item does not appear in the category, please select “NA”.)

Statement of Cash flows
Noncash Investing and Financing Activities Not Reported on Statement or in Notes
Operating Activities Investing Activities Financing Activities
a. Accounts receivable decreased in the year
b. Purchased land by issuing common stock
c. Paid cash to purchase inventory
d. Sold equipment for cash, yielding a loss
e. Accounts payable decreased in the year
f. Income taxes payable increased in the year
g. Declared and paid a cash dividend
h. Recorded depreciation expense
i. Paid cash to settle long-term note payable
j. Prepaid expenses increased in the year

Exercise 16-4 Cash flows from operating activities (indirect) L.O. P2
Roney Company’s calendar-year 2011 income statement shows the following: Net Income, $481,000; Depreciation Expense, $59,644; Amortization Expense, $12,025; Gain on Sale of Plant Assets, $9,100. An examination of the company’s current assets and current liabilities reveals the following changes (all from operating activities): Accounts Receivable decrease, $17,500; Merchandise Inventory decrease, $50,750; Prepaid Expenses increase, $1,700; Accounts Payable decrease, $4,250; Other Payables increase, $646.

Use the indirect method to compute cash flow from operating activities. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)

Statement of Cash Flows
Cash flows from operating activities $
Adjustments to reconcile net income to net cash provided by operating activities

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