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The three accounts shown below and on page 626 appear in the general ledger of Cesar Corp. during 2007.
Equipment
Date
Debit
Credit
Balance
Jan.1
160,000
July 31
Purchase of equipment
70,000
230,000
Sept. 2
Cost of equipment constructed
53,000
283,000
Nov. 10
Cost of equipment sold
49,000
234,000
Accumulated Depreciation- Equipment
Jan. 1
71,000
Accumulated depreciation on equipment sold
30,000
41,000
Dec. 31
Depreciation for year
28,000
69,000
Retained Earnings
105,000
Aug. 23
Dividends (cash)
14,000
91,000
Net income
67,000
158,000
Instructions
From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on sale of equipment was $5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of $53,000.)
P*12-5A Grania Company's income statement contained the condensed information below.
GRANIA COMPANY
Income Statement
For the Year Ended December 31, 2007
Revenues
$970,000
Operating expenses, excluding depreciation
$624,000
Depreciation expense
60,000
Loss on sale of equipment
16,000
700,000
Income before income taxes
270,000
Income tax expense
40,000
$230,000
Grania's balance sheet contained the comparative data at December 31, shown on page 630.
2007
2006
Accounts receivable
$75,000
$60,000
Accounts payable
Income taxes payable
11,000
7,000
Accounts payable pertain to operating expenses.
Prepare the operating activities section of the statement of cash flows using the indirect method.
*P12-6A Data for Grania Company are presented in P12-5A.
Prepare the operating activities section of the statement of cash flows using the direct method.
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