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Lamar Corporation purchased land for $140,000. Later in the yearthe company sold land with a book value of $180,000 for $202,000.Show how the effects of these transactions are reported on thestatement of cash flows using the indirect method.


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Statement of Cash Flows

Cash flows from operating activities:

Cash paid for purchase of land

Cash received for sale of land

Gain on sale of land

Loss on sale of land

Correct 5
$

Correct 6

Cash flows from investing activities:

Cash paid for sale of land

Cash received for sale of land

Gain on sale of land

Loss on sale of land

Correct 8
$

Correct 9

Cash paid for purchase of land

Gain on sale of land

Loss on sale of land

Correct 10

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Beverley Smith
Beverley SmithLv2
28 Sep 2019

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Cash flows from Operating Activities
Income Statement Indirect Method Direct Method
Net income
Adjustments:
Sales $311 Decrease in accounts receivable 7 Cash receivedfrom customers
Gain on sale of equipment 25 Gain on sale of equipment (25)(Not reported—no cash effect)
Cost of goods sold Increase in inventory (13)
Increase in accounts payable 19 Cash paid to suppliers(175)
Salaries expense (44)
7 Cash paid to employees (37)
Depreciation expense (10) Depreciation expense 10 Cash paidfor depreciation
Interest expense Decrease in bond discount 4 Cash paid forinterest (10)
Insurance expense (23) Decrease in prepaid insurance 10 Cashpaid for insurance
Loss on sale of land (7) Loss on sale of land 7 (Notreported—no cash effect)
Income tax expense (29) Increase in income tax payable Cashpaid for income taxes (22)
Net Income $223 Net cash flows from operating activities $26Net cash flows from operating activities $-244

Gee Company’s accounting records and financial statementsreported the following:
Cash paid to acquire machinery $70,000
Proceeds from sale of land 80,000
Loss from the sale of land 5,000
Cash paid to acquire a trademark 38,000
Treasury stock purchased for cash 50,000
Dividend revenue received 20,000
Gee prepares its financial statements in accordance with IFRS.In its statement of cash flows, Gee most likely reports net cashoutflows from investing activities of:
$ 8,000.
$11,000.
$28,000.
$33,000.
ReferenceseBook & Resources
Multiple ChoiceDifficulty: 2 MediumLearning Objective: 21-07Identify transactions that represent noncash investing andfinancing activities.
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Statement of Cash Flows

The following is a list of the items to be included in thepreparation of Warrick Company's 2016 statement of cash flows:

Net income, $59,200

Payment for purchase of building, $98,000

Increase in accounts receivable, $7,400

Proceeds from issuance of common stock, $37,100

Increase in accounts payable, $4,500

Proceeds from sale of land, $7,000

Depreciation expense, $12,600

Payment of dividends, $36,000

Gain on sale of land, $5,300

Decrease in inventory, $3,700

Payment for purchase of long-term investments, $9,600

Amortization of discount on bonds payable, $1,900

Proceeds from issuance of note, $18,000

Increase in deferred taxes payable, $5,000

Equipment acquired by capital lease, $19,500

Decrease in salaries payable, $2,300

Beginning cash balance, $20,300

Required

1. Prepare the statement of cash flows.

WARRICK COMPANY
Statement of Cash Flows
For Year Ended December 31, 2016
Operating Activities:
Net income $
Adjustment for noncash income items:
Add: Depreciation expense
Add: Amortization of discount on bonds payable
Add: Accumulated depreciation
Less: Gain on sale of land
Adjustments for cash flow effects
from working capital items:
Increase in accounts receivable
Decrease in inventory
Increase in accounts payable
Decrease in salaries payable
Net cash provided by operating activities $
Investing Activities:
Payment for purchase of building $
Proceeds from sale of land
Payment for purchase of long-term investments
Net cash used for investing activities
Financing Activities:
Proceeds from issuance of common stock $
Payment of accounts payable
Proceeds from issuance of note
Net cash provided by financing activities
Net Decrease in Cash $
Cash, January 1, 2016
Cash, December 31, 2016 $
Investing and Financing Activities Not Affecting Cash
Investing Activities:
Acquisition of equipment under capital lease $
Financing Activities:
Incurrence of capital lease obligation for equipment

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