Quizzol

QUESTION:

The

2023

and

2022

balance sheets of

Wallace

Corporation follow. The

2023

income statement is also provided.

Wallace

had no noncash investing and financing transactions during

2023.

During the year, the company sold equipment for

$ 15 comma 800,

which had originally cost

$ 12 comma 700

and had a book value of

$ 11 comma 800.

The company did not issue any notes payable during the year but did issue common stock for

$ 31 comma 000.

The company purchased plant assets and long-term investments with cash.

ANSWER:

Requirement 1. Prepare the statement of cash flows for

Wallace

Corporation for

2023

using the indirect method.

Prepare the statement one section at a time. (Use parentheses or a minus sign for numbers to be subtracted or for a net cash outflow.)

Wallace Corporation
Statement of Cash Flows (Indirect Method)
For the Year Ended December 31, 2023
Operating Activities:
Net income		$189,800
Adjustments to reconcile net income to cash basis:
Depreciation expense	$4,400
Gain on sale of equipment	(4,000)
Increase in accounts receivable	(2,100)
Decrease in inventory	7,400
Increase in prepaid insurance	(500)
Decrease in accounts payable	(3,700)
Decrease in wages payable	(4,300)
Increase in interest payable	1,900
Increase in taxes payable	5,700
Decrease in other accrued expenses payable	(3,500)	1,300
Net cash provided by (used for) operating activities		191,100
Investing Activities:
Proceeds on sale of equipment	15,800
Purchase of equipment	(32,700)
Purchase of stock investments	(114,000)
Net cash provided by (used for) investing activities		(130,900)
Financing Activities:
Issuance of common stock	31,000
Repayment of long-term debt	(39,000)
Cash payments for dividends	(23,700)
Net cash provided by (used for) financing activities		(31,700)
Net increase (decrease) in cash		28,500
Cash, beginning of the year		22,500
Cash, end of the year		$51,000

Requirement 2. Evaluate the company's cash flows for the year. Discuss each of the categories of cash flows in your response.

Wallace Corporation's cash flows look		strong	. They had	$191,100	provided by operating activities. The investing activities
used	some cash. These activities included		purchasing a stock investment and equipment.

The financing activities

cash

and

The corporation also

Posted by Cleveland on September 5, 2024