Indirect calculation of operating cash flows Video Corporation’s balance sheet revealed the following account balance information:
Indirect calculation of operating cash flows
Video Corporation’s balance sheet revealed the following account balance information:
| Account | Dec. 31, 20X6 | Dec. 31, 20X5 |
| Accounts receivable | $52,000 | $57,000 |
| Merchandise inventory | 75,000 | 68,000 |
| Accounts payable | 23,000 | 19,500 |
The accrual-basis net income was $111,000. In computing net income, the company recorded $15,000 of depreciation expense; there were no gains or losses from investing and financing activities.
On the basis of the preceding information, calculate Video’s cash flows from operating activities by using the indirect method.
Indirect calculation of operating cash flows
Specialty Services Inc. reported a net income of $114,000 for the year just ended, which includes an $18,000 gain on the sale of long-term investments. The following data were obtained from comparative balance sheets:
| Oct. 31, 20X2 | Oct. 31, 20X1 | |
| Trade accounts receivable | $248,000 | $203,000 |
| Merchandise inventory | 232,000 | 308,000 |
| Accumulated depreciation: equipment | 122,000 | 65,000 |
| Accounts payable | 193,000 | 124,000 |
| Accrued liabilities | 40,000 | 73,000 |
There were no purchases or disposals of equipment during the year. The long-term investment had a carrying (book) value of $77,000 and was sold for cash on June 15.
On the basis of the preceding information, determine the cash provided by operating activities from November 1, 20X1 through October 31, 20X2. The firm uses the indirect method of statement preparation.
Equipment transaction and cash flow reporting
The property, plant, and equipment section of ProComp Inc.’s comparative balance sheet follows:
| Dec. 31, 20X4 | Dec. 31, 20X3 | |
| Property, plant, & equipment | ||
| Land | $ 94,000 | $ 94,000 |
| Equipment | 652,000 | 527,000 |
| Less: Accumulated depreciation | (316,000) | (341,000) |
New equipment purchased during 20X4 totaled $295,000. The 20X4 income statement disclosed equipment depreciation expense of $43,000 and a $9,000 loss on the sale of equipment.
- Determine the cost and accumulated depreciation of the equipment sold during 20X4.
- Determine the selling price of the equipment sold.
- Show how the sale of equipment would appear on a statement of cash flows prepared by using the indirect method.
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