Problem 17-3 Determining amounts reported on statement of cash flows (LO 17-1, L
ID: 2589271 • Letter: P
Question
Problem 17-3 Determining amounts reported on statement of cash flows (LO 17-1, LO 17-2, LO 17-4)
The following are selected balance sheet accounts of Zach Corporation at December 31, 2017 and 2016, as well as the increases or decreases in each account from 2016 to 2017. Also presented is selected income statement information for the year ended December 31, 2017, as well as additional information.
Additional Information:
Accounts receivable relate to sales of merchandise.
During 2017, equipment that cost $40,000 was sold for cash.
During 2017, $20,000 of bonds payable were issued in exchange for property, plant, and equipment. There was no amortization of bond discount or premium.
Required:
Items 1 through 5, which follow, represent activities that will be reported in Zach’s statement of cash flows for the year ended December 31, 2017. For each item, determine both the amount that should be reported in Zach’s 2017 statement of cash flows and the section (operating, investing, or financing) in which the item should appear. (Enter all answers as positive values.)
1. Cash collections from customers (direct method). What is the amount and section?
2. Payments for the purchse of plant, property and equipment. What is the amount and section?
3. Proceeds from the sale of equipment. What is the amount and section?
4. Redemption of bonds payable. What is the amount and section?
5. Cash dividends paid. What is the amount and section?
Selected Balance Sheet Accounts 2017 2016 Increase (Decrease) Assets Accounts receivable $ 34,000 $ 24,000 $ 10,000 Property, plant, and equipment 277,000 247,000 30,000 Accumulated depreciation (178,000 ) (167,000 ) 11,000 Liabilities and stockholders’ equity Bonds payable 49,000 46,000 3,000 Dividends payable 8,000 5,000 3,000 Common stock, $1 par 22,000 19,000 3,000 Additional paid-in capital 9,000 3,000 6,000 Retained earnings 104,000 91,000 13,000Explanation / Answer
Amount Section Cash collections from customers $155,000 - $10,000 = $145,000 Operating activities Payments for the purchse of plant, property and equipment. $30,000+$40,000 = -$70,000 Investing activities Proceeds from the sale of equipment $40,000 - ($33,000-$11,000)+$13,000 = $31,000 Investing activities Redemption of bonds payable $ -20,000 Non cash investing and financing Cash dividends paid. $13,000-$28,000 = -$15,000 Financing activities