Chapter 11, Problem 11.24AE

(Learning Objective 4: Prepare the statement of cash flows–direct method) The income statement and additional data of Hapland Light, Inc., follow:

Additional data:

1. a. Collections from customers are $1 5,500 less than sales.
2. b. Payments to suppliers are $1,500 more than the sum of cost of goods sold plus advertising expense.
3. c. Payments to employees are $2,400 more than salary expense.
4. d. Dividend revenue, interest expense, and income tax expense equal their cash amounts.
5. e. Acquisition of plant assets is $156,000. Of this amount, $108,000 is paid in cash and $48,000 is financed by signing a long-term note payable.
6. f. Proceeds from the sale of land totaled $26,000.
7. g. Proceeds from the issuance of common stock totaled $86,000.
8. h. Payment of a long-term note payable is $29,000.
9. i. Payment of dividends is $9,000.
10. j. Cash balance, June 30, 2017, was $38,000.

Requirements

1. 1. Prepare Hapland Light’s statement of cash flows and accompanying schedule of noncash investing and financing activities. Report operating activities using the direct method.
2. 2. Evaluate the company’s cash flows for the year. In your evaluation, mention all three categories of cash flows and give the rationale for your evaluation.