14-6 Why aren't transactions involving accounts payable considered to be financing activities?
Related questions
Determining Cash Flows from Financing Activities: NotesPayable
All transactions involving Notes Payable and related accounts ofSally Company during 2014 follow.
| Dr. | Cr. | |||
| Cash | 36,000 | |||
| NotesPayable | 36,000 | |||
| Bank loan | ||||
| Dr. | Cr. | |||
| Patent | 60,000 | |||
| NotesPayable | 60,000 | |||
| Purchase of patentby issuing note payable | ||||
| Dr. | Cr. | |||
| Notes Payable | 10,000 | |||
| Interest Expense | 1,000 | |||
| Cash | 11,000 | |||
| Repayment of notepayable at maturity |
Determine the amounts of the transactions affecting financingactivities and show how they appear on the statement of cash flowsfor 2014. Use the minus sign to indicate cash outflows or adecrease in cash.
| Issue of notes payable: | $ | -Select-OperatingActivitiesInvesting ActivitiesFinancing ActivitiesSchedule ofNoncash Investing and Financing TransactionsItem 2 |
| Repayment of notes payable: | $ | -Select-OperatingActivitiesInvesting ActivitiesFinancing ActivitiesSchedule ofNoncash Investing and Financing TransactionsItem 4 |
| Issue of note payable forpatent: | $ |
Statement of Cash Flows
The following are several items involving the cash flow activities of the ROCKY HORROR PICTURE CO. for 2016:
Net income, $41,500
Payment of dividends, $15,700
Ten-year, $34,400 bonds payable were issued at face value
Depreciation expense, $15,700
Building acquired at a cost of $39,900
Accounts receivable decreased by $3,200
Accounts payable decreased by $3,100
Equipment acquired at a cost of $7,600
Inventories increased by $7,700
Beginning cash balance, $24,600
Required:
Prepare Rocky Horror Picture's statement of cash flows for 2016 using the indirect method. Use a minus sign for any negative amounts.
| ROCKY HORROR PICTURE CO. | ||
| Statement of Cash Flows | ||
| For Year Ended December 31, 2016 | ||
| Net Cash Flow From Operating Activities | ||
| $ | ||
| Adjustments for differences between income flows and cash flows from operating activities: | ||
| $ | ||
| Cash Flows From Investing Activities | ||
| $ | ||
| Cash Flows From Financing Activities | ||
| $ | ||
| $ | ||
| $ | ||
