from operating activities. 1. ABC purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share. 2. ABC sold 100 shares of IBM common at $200 per share. The acquisition cost of these shares was $145 per share. There were no unrealized galns or losses recorded on this Investment In 2020. 3. ABC revised Its estimate for bad debts. Before 2020, ABC's bad debt expense was 1% of Its receivables. In 2020, this percentage was Increased to 2%. Net accounts receivable decreased by $12,000 during 2020. 4. ABC Issued 500 shares of Its $10 par common stock for a patent. The market price of the shares on the date of the transaction was $23 per share. 5. Depreciation expense Is $39,000. 6. ABC Co. holds 40% of the XYZ Company's common stock as a long-term Investment. XYZ Company reported $27,000 of net Income for 2020. 7.XYZ Company paid a total of $2,000 of cash dividends to all Investees In 2020. 8. ABC declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of Issuance was $20 per share. Requirement: Prepare a schedule that shows the net cash flow from operating activities using the Indirect method. Assume no Items other than those listed above affected the computation of 2020 net cash flow from operating activities.
from operating activities. 1. ABC purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then resold at $25 per share. 2. ABC sold 100 shares of IBM common at $200 per share. The acquisition cost of these shares was $145 per share. There were no unrealized galns or losses recorded on this Investment In 2020. 3. ABC revised Its estimate for bad debts. Before 2020, ABC's bad debt expense was 1% of Its receivables. In 2020, this percentage was Increased to 2%. Net accounts receivable decreased by $12,000 during 2020. 4. ABC Issued 500 shares of Its $10 par common stock for a patent. The market price of the shares on the date of the transaction was $23 per share. 5. Depreciation expense Is $39,000. 6. ABC Co. holds 40% of the XYZ Company's common stock as a long-term Investment. XYZ Company reported $27,000 of net Income for 2020. 7.XYZ Company paid a total of $2,000 of cash dividends to all Investees In 2020. 8. ABC declared a 10% stock dividend. One thousand shares of $10 par common stock were distributed. The market price at date of Issuance was $20 per share. Requirement: Prepare a schedule that shows the net cash flow from operating activities using the Indirect method. Assume no Items other than those listed above affected the computation of 2020 net cash flow from operating activities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. ABC Co. reported $145,000 of net Income for 2020. The accountant, In preparing the statement
of cash flows, noted the following Items occurring during 2020 that might affect cash flows
from operating activities.
1. ABC purchased 100 shares of treasury stock at a cost of $20 per share. These shares were then
resold at $25 per share.
2. ABC sold 100 shares of IBM common at $200 per share. The acquisition cost of these shares
was $145 per share. There were no unrealized galns or losses recorded on this Investment in
2020.
P
3. ABC revised Its estimate for bad debts. Before 2020, ABC's bad debt expense was 1% of its
receivables. In 2020, this percentage was Increased to 2%. Net accounts receivable decreased
by $12,000 during 2020.
4. ABC Issued 500 shares of Its $10 par common stock for a patent. The market price of the shares
on the date of the transaction was $23 per share.
5. Depreciation expense Is $39,000.
6. ABC Co. holds 40% of the XYZ Company's common stock as a long-term Investment. XYZ
Company reported $27,000 of net Income for 2020.
7. XYZ Company paid a total of $2,000 of cash dividends to all Investees In 2020.
8. ABC declared a 10% stock dividend. One thousand shares of $10 par common stock were
distributed. The market price at date of Issuance was $20 per share.
Requirement:
Prepare a schedule that shows the net cash flow from operating activities using the Indirect
method. Assume no Items other than those listed above affected the computation of 2020 net
cash flow from operating activities.
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