a.
Calculate the
a.
Explanation of Solution
Beginning balance in bonds payable account = $600,000
Ending balance in bonds payable account = $400,000
Amount of bonds issued during the year = $90,000
Therefore, the cash flow for the retirement of bond is $290,000.
b.
Calculate the cash flow from the issuance of common stock.
b.
Explanation of Solution
Beginning balance in common stock account = $150,000
Ending balance in common stock account = $190,000
Therefore, the cash flow from the issuance of common stock is $40,000.
c.
Calculate the cash flow from the issuance of
c.
Explanation of Solution
Beginning balance in treasury stock account = $15,000
Ending balance in treasury stock account = $20,000
Therefore, the cash flow from the issuance of treasury stock is $5,000.
d.
Calculate the cash flow for the payment of dividends.
d.
Explanation of Solution
Beginning balance in
Ending balance in retained earnings account = $96,000
Amount of net income during the year = $49,000
Therefore, the cash flow for the payment of dividends is $33,000.
e.
Prepare the financing activities section of the statement of cash flows for 2017.
e.
Explanation of Solution
Statement of cash flows: Statement of cash flows reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.
Cash flows from financing activities: Cash provided by or used in financing activities is a section of statement of cash flows. It includes raising cash from long-term debt or payment of long-term debt, which is used for business operations.
Cash flows from financing activities |
Add: Issuance of common stock |
Proceeds from borrowings |
Proceeds from sale of treasury stock |
Proceeds from issuance of debt |
Deduct: Payment of dividend |
Repayment of debt |
Interest paid |
Redemption of debt |
Purchase of treasury stock |
Net cash provided from or used by financing activities |
Table (1)
The financing activities section of the statement of cash flows:
L Company | ||
Statement of Cash Flows (Partial) | ||
For the Year 2017 | ||
Details |
Amount ($) |
Amount ($) |
Financing activities: | ||
Amount received from issuance of bond liabilities | 90,000 | |
Amount received from issuance of common stock (Refer point b.) | 40,000 | |
Less: Amount paid for the bond liabilities (Refer point a.) | (290,000) | |
Amount paid for purchase of treasury stock (Refer point c.) | (5,000) | |
Dividend paid (Refer point d.) | (33,000) | |
Net cash used for financing activities | $(198,000) |
Table (2)
Want to see more full solutions like this?
Chapter 12 Solutions
Fundamental Financial Accounting Concepts, 9th Edition
- Financial Accounting Questionarrow_forwardCompute the total cost of the warehouse on these financial accounting questionarrow_forwardDirect Labor Variance Karina will make 5,000 jackets with standard quantity of leather per jacket of 120.03 square inches of material @ $0.25/square inch. The actual quantity of leather per jacket for those 5,000 jackets produced was 122.53 square inches of material @ $0.24/square inch. The standard labor to produce each jacket is one hour for each jacket with a cost of $16.50/hour. The actual labor used to produce each jacket was 1.06 hours at $16/hour. Actual Hours (AH) Actual Rate (AR) Actual Cost (AH * AR) Total Direct = Labor Variance Actual Cost Actual Hours @ Actual Rate Labor Rate Variance Actual Hours @Standard Rate Actual Hours (AH) Standard Rate (SP) Actual Hours @ Standard Rate (AH * SP) Labor Efficiency Variance Standard Cost Standard Hours @ Standard Rate Standard Hours (SQ) Standard Rate (SP) Standard Cost (SQ * SP)arrow_forward
- PLEASE HELP ME WITH THISarrow_forwardThis is an individual assignment. You are required to create a formal topic-to-sentence outline and a full five-paragraph essay [containing an introductory paragraph, 3 body paragraphs and a concluding paragraph], followed by an appropriate Works Cited list, and an annotated bibliography of one source used in the essay. Your essay must be based on ONE of the following prompts. EITHER A. What are the qualities of a socially responsible individual? OR B. Discuss three main groupings of life skills required by Twenty-first Century employers. Additionally, you will state which one of the expository methods [Analysis by Division OR Classification] you chose to guide development of your response to the question selected, and then provide a two or three sentence justification of that chosen method. Your essay SHOULD NOT BE LESS THAN 500 words and SHOULD NOT EXCEED 700 words. You are required to use three or four scholarly / reliable sources of evidence to support the claims made in your…arrow_forwardWhat is the gross profit rate on these general accounting question?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education