Posted: July 12th, 2016

Gain on Sale of Investments?

(a) Fully depreciated equipment costing $60,000 was scraped, no salvage, and equipment was purchased for $183,200
(b) Bonds payable for $100,000 were retired by payment at their face amount.
(c) 5,000 shares of common stock were issued at $13 for cash.
(d) Cash dividends declared and paid, $25,000.

Posner Company
Statement of Cash Flows – Indirect Method
For the Year Ended December 31, 2011

Cash flows from Operating Activities
Net Income $129,000
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation $26,000 ?
Gain on Sale of Investments (4,000) ?
Changes in current operating assets and liabilities:
Decrease in Accounts Receivable 11,000
Increase in Inventory (8,500)
Increase in Accounts Payable 18,700
Net cash Flow from Operating Activities 172,200
Cash Flows from Investing Activities
Investments (66,000) ?
Equipment Purchase (243,200) ?
Net Cash Flow for Investing Activities (309,200)
Cash Flows from Financing Activities
Bonds Payable 100,000
Common Stock Issuance 65,000
Dividends Paid (25,000)
Net cash Flow used for Financing Activities 140,000
Increase in Cash 3,000
Cash at the beginning of the year 50,000
Cash at the end of the year 53,000

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