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25 August, 15:29

Gain on sale of investments 80

Income before tax 1,270

Income tax expense 550

Net income 720

Cash dividends 260

Income retained in business $460

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets.

No plant assets were sold in 2017.

Prepare a statement of cash flows using the indirect method.

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Answers (1)
  1. 25 August, 15:47
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    See the explanation section

    Explanation:

    Bonita Company

    Statement of cash flow

    For the year ended, December 31, 2017

    (Indirect Method)

    Net Income $720

    Cash flow from operating activities

    Depreciation $120

    Gain on sale of investment (80)

    Increase in Accounts receivable (460)

    Decrease in Inventory 270

    Increase in Accounts Payable 260

    Decrease in accrued liabilities (60)

    50

    net cash provided by operating activities $770

    Cash flows from investing activities

    Purchase of plant asset (170)

    Sale of Held-to-Maturity Investments 230

    Net Cash Provided by Investing Activities 60

    Cash Flows from Financing Activities

    Payment of cash dividends (260)

    Redemption of Bonds Payable (180)

    Issuance of capital stock 190

    Net cash used by financing activities (250)

    Net increase in cash 580

    Cash at the beginning period 1,180

    Cash at the end of period 1,760
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