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The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below. Service revenue Operating expenses Incone before income taxes Income tax expense Net Incone $ 900,000 700,000 200,000 50,000 $150,000 The following balance sheet information also is available: Cash Accounts receivable Accrued Liabilities (for operating expenses) Incone taxes payable in addition, the following transactions took place during the year 1. Common stock was issued for $100,000 in cash. 2. Long-term investments were sold for $50,000 in cash. The original cost of the investments also was $50,000 3. $80,000 in cash dividends was paid to shareholders 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $30,000 in depreciation expense. DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows Required: 1. Prepare a statement of cash flows for 2024 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. 2. Prepare the cash flows from operating activities section of Diversited's 2024 statement of cash flows using the indirect method. For the Year Ended December 31, 2024 Cash flows from operating activities: 12/31/2024 12/31/2023 $ 305,000 120,000 70,000 10,000 Cash received from customers Cash paid for operating expenses Cash paid for income taxes Net cash flows from operating activities Cash flows from investing activities: Sale of investments Net cash flows from investing activities Cash flows from financing activities: Dividends paid to shareholders Issuance of common stock $70,000 100,000 Net cash flows from financing activities Increase in cash 60,000 15,000 Cash and cash equivalents, January 1 Cash and cash equivalents, December 31 $ $ 0 0 0

The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below. Service revenue Operating expenses Incone before income taxes Income tax expense Net Incone $ 900,000 700,000 200,000 50,000 $150,000 The following balance sheet information also is available: Cash Accounts receivable Accrued Liabilities (for operating expenses) Incone taxes payable in addition, the following transactions took place during the year 1. Common stock was issued for $100,000 in cash. 2. Long-term investments were sold for $50,000 in cash. The original cost of the investments also was $50,000 3. $80,000 in cash dividends was paid to shareholders 4. The company has no outstanding debt, other than those payables listed above. 5. Operating expenses include $30,000 in depreciation expense. DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows Required: 1. Prepare a statement of cash flows for 2024 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. 2. Prepare the cash flows from operating activities section of Diversited's 2024 statement of cash flows using the indirect method. For the Year Ended December 31, 2024 Cash flows from operating activities: 12/31/2024 12/31/2023 $ 305,000 120,000 70,000 10,000 Cash received from customers Cash paid for operating expenses Cash paid for income taxes Net cash flows from operating activities Cash flows from investing activities: Sale of investments Net cash flows from investing activities Cash flows from financing activities: Dividends paid to shareholders Issuance of common stock $70,000 100,000 Net cash flows from financing activities Increase in cash 60,000 15,000 Cash and cash equivalents, January 1 Cash and cash equivalents, December 31 $ $ 0 0 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below: Service revenue Operating expenses Income before income taxes Income tax expense Net Incone The following balance sheet information also is available: $ 900,000 700,000 200,000 50,000 $150,000 Cash Accounts receivable Accrued Liabilities (for operating expenses) Income taxes payable in addition, the following transactions took place during the year. 1. Common stock was issued for $100,000 in cash. 2. Long-term investments were sold for $50,000 in cash. The original cost of the investments also was $50,000 3. $80,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5: Operating expenses include $30,000 in depreciation expense. DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows Required. 1. Prepare a statement of cash flows for 2024 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities 2. Prepare the cash flows from operating activities section of Diversified's 2024 statement of cash flows using the indirect method. For the Year Ended December 31, 2024 Cash flows from operating activities: Cash received from customers Cash paid for operating expenses Cash paid for income taxes 12/31/2024 12/31/2023 $ 305,000 120,000 70,000 10,000 Net cash flows from operating activities Cash flows from investing activities: Sale of investments Net cash flows from investing activities $70,000 100,000 Cash flows from financing activities: Dividends paid to shareholders Issuance of common stock 60,000 15,000 Net cash flows from financing activities Increase in cash Cash and cash equivalents, January 1 Cash and cash equivalents, December 31 $ $ 0 0 0 0 0
Transcribed Image Text:The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2024, appears below: Service revenue Operating expenses Income before income taxes Income tax expense Net Incone The following balance sheet information also is available: $ 900,000 700,000 200,000 50,000 $150,000 Cash Accounts receivable Accrued Liabilities (for operating expenses) Income taxes payable in addition, the following transactions took place during the year. 1. Common stock was issued for $100,000 in cash. 2. Long-term investments were sold for $50,000 in cash. The original cost of the investments also was $50,000 3. $80,000 in cash dividends was paid to shareholders. 4. The company has no outstanding debt, other than those payables listed above. 5: Operating expenses include $30,000 in depreciation expense. DIVERSIFIED PORTFOLIO CORPORATION Statement of Cash Flows Required. 1. Prepare a statement of cash flows for 2024 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities 2. Prepare the cash flows from operating activities section of Diversified's 2024 statement of cash flows using the indirect method. For the Year Ended December 31, 2024 Cash flows from operating activities: Cash received from customers Cash paid for operating expenses Cash paid for income taxes 12/31/2024 12/31/2023 $ 305,000 120,000 70,000 10,000 Net cash flows from operating activities Cash flows from investing activities: Sale of investments Net cash flows from investing activities $70,000 100,000 Cash flows from financing activities: Dividends paid to shareholders Issuance of common stock 60,000 15,000 Net cash flows from financing activities Increase in cash Cash and cash equivalents, January 1 Cash and cash equivalents, December 31 $ $ 0 0 0 0 0
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