Additional Information 1. Except as noted in 4, payments and proceeds relating to investing transactions were made in cash. 2. The marketable securities are not cash equivalents. 3. All notes receivable relate to cash loans made to borrowers, not to receivables from customers. 4. Purchases of new equipment during the year ($196,000) were financed by paying $60,000 in cash and issuing a long-term note payable for $136,000. 5. Reductions in the accumulated depreciation accounts (debits) are made when depreciable plant assets are retired. The book value of plant assets retired during the year was $45,000 ($120,000 – $75,000). Instructions a. Prepare the investing activities section of a statement of cash flows. Show supporting computations for the amounts of (1) proceeds from sales of marketable securities and (2) proceeds from sales of plant assets. Place brackets around numbers representing cash outflows. b. Prepare the supporting schedule that should accompany the statement of cash flows in order to disclose the noncash aspects of the company's investing and financing activities. c. Assume that Hampton's management expects approximately the same amount of cash to be used for investing activities next year. In general terms, explain how the company might generate cash for this purpose.
Additional Information 1. Except as noted in 4, payments and proceeds relating to investing transactions were made in cash. 2. The marketable securities are not cash equivalents. 3. All notes receivable relate to cash loans made to borrowers, not to receivables from customers. 4. Purchases of new equipment during the year ($196,000) were financed by paying $60,000 in cash and issuing a long-term note payable for $136,000. 5. Reductions in the accumulated depreciation accounts (debits) are made when depreciable plant assets are retired. The book value of plant assets retired during the year was $45,000 ($120,000 – $75,000). Instructions a. Prepare the investing activities section of a statement of cash flows. Show supporting computations for the amounts of (1) proceeds from sales of marketable securities and (2) proceeds from sales of plant assets. Place brackets around numbers representing cash outflows. b. Prepare the supporting schedule that should accompany the statement of cash flows in order to disclose the noncash aspects of the company's investing and financing activities. c. Assume that Hampton's management expects approximately the same amount of cash to be used for investing activities next year. In general terms, explain how the company might generate cash for this purpose.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Additional Information
1. Except as noted in 4, payments and proceeds relating to investing transactions were made in cash.
2. The marketable securities are not cash equivalents.
3. All notes receivable relate to cash loans made to borrowers, not to receivables from customers.
4. Purchases of new equipment during the year ($196,000) were financed by paying $60,000 in cash and issuing a long-term note payable
for $136,000.
5. Reductions in the accumulated depreciation accounts (debits) are made when depreciable plant assets are retired. The book value of
plant assets retired during the year was $45,000 ($120,000 – $75,000).
Instructions
a. Prepare the investing activities section of a statement of cash flows. Show supporting computations for the amounts of (1) proceeds from
sales of marketable securities and (2) proceeds from sales of plant assets. Place brackets around numbers representing cash outflows.
b. Prepare the supporting schedule that should accompany the statement of cash flows in order to disclose the noncash aspects of the
company's investing and financing activities.
c. Assume that Hampton's management expects approximately the same amount of cash to be used for investing activities next year. In
general terms, explain how the company might generate cash for this purpose.
Transcribed Image Text:PROBLEM 13.2A Reporting Investing Activities L LO13-4
An analysis of the income statement and the balance sheet accounts of Hampton, Inc., at December 31 of the current year, provides the
following information.
Page 611
Income statement items:
Gain on Sale of Marketable Securities
$ 42,000
Loss on Sales of Plant Assets
33,000
Analysis of balance sheet accounts:
Marketable Securities account:
Debit entries
$ 75,000
Credit entries
90,000
Notes Receivable account:
Debit entries
210,000
Credit entries
162,000
Plant and Equipment accounts:
Debit entries to plant asset accounts
196,000
Credit entries to plant asset accounts
120,000
Debit entries to accumulated depreciation accounts
75,000
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