Use the following information regarding the Lund Corporation to (a) prepare a statement of cash flows using the indirect method and (b) compute Lund's operating-cash-flow-to-current-liabilities ratio. Accounts payable increase $13,500 Accounts receivable increase 6,000 Accrued liabilities decrease 4,500 Amortization expense 9,000 Cash balance, January 1 33,000 Cash balance, December 31 22,500 Cash paid as dividends 43,500 Cash paid to purchase land 135,000 Cash paid to retire bonds payable at par 90,000 Cash received from issuance of common stock 52,500 Cash received from sale of equipment 25,500 Depreciation expense 43,500 Gain on sale of equipment 6,000 Inventory decrease 19,500 Net income 114,000 Prepaid expenses increase 3,000 Average current liabilities 150,000 a. Use negative signs with cash outflow answers. LUND CORPORATION Statement of Cash Flows For Year Ended December 31 Cash Flow from Operating Activities Net Income Answer Add (deduct) items to convert net income to cash basis Depreciation Answer Amortization Answer Gain on Sale of Equipment Answer Accounts Receivable Increase Answer Inventory Decrease Answer Prepaid Expenses Increase Answer Accounts Payable Increase Answer Accrued Liabilities Decrease Answer Cash Flow Provided by Operating Activities Answer Cash Flow from Investing Activities Sale of Equipment Answer Purchase of Land Answer Cash Used by Investing Activities Answer Cash Flow from Financing Activities Issuance of Common Stock Answer Retirement of Bonds Payable Answer Payment of Dividends Answer Cash Used by Financing Activities Answer Net Decrease in Cash Answer Cash at Beginning of Year Answer Cash at End of Year Answer b. Operating-cash-flow-to-current-liabilities ratio (Round answers to two decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Statement of Cash Flows (Indirect Method)
Use the following information regarding the Lund Corporation to (a) prepare a statement of cash flows using the indirect method and (b) compute Lund's operating-cash-flow-to-current-liabilities ratio.

Accounts payable increase	$13,500
Accounts receivable increase	6,000
Accrued liabilities decrease	4,500
Amortization expense	9,000
Cash balance, January 1	33,000
Cash balance, December 31	22,500
Cash paid as dividends	43,500
Cash paid to purchase land	135,000
Cash paid to retire bonds payable at par	90,000
Cash received from issuance of common stock	52,500
Cash received from sale of equipment	25,500
Depreciation expense	43,500
Gain on sale of equipment	6,000
Inventory decrease	19,500
Net income	114,000
Prepaid expenses increase	3,000
Average current liabilities	150,000

a. Use negative signs with cash outflow answers.

LUND CORPORATION Statement of Cash Flows For Year Ended December 31
Cash Flow from Operating Activities
Net Income	Answer
Add (deduct) items to convert net income to cash basis
Depreciation	Answer
Amortization	Answer
Gain on Sale of Equipment	Answer
Accounts Receivable Increase	Answer
Inventory Decrease	Answer
Prepaid Expenses Increase	Answer
Accounts Payable Increase	Answer
Accrued Liabilities Decrease	Answer
Cash Flow Provided by Operating Activities	Answer
Cash Flow from Investing Activities
Sale of Equipment	Answer
Purchase of Land	Answer
Cash Used by Investing Activities	Answer
Cash Flow from Financing Activities
Issuance of Common Stock	Answer
Retirement of Bonds Payable	Answer
Payment of Dividends	Answer
Cash Used by Financing Activities	Answer
Net Decrease in Cash	Answer
Cash at Beginning of Year	Answer
Cash at End of Year	Answer

b. Operating-cash-flow-to-current-liabilities ratio (Round answers to two decimal places.)

Answer

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