Homework SoursePreparing a Statement of Cash Flows Direct Method Use the fo
Preparing a Statement of Cash Flows (Direct Method)
Use the following information about the 2016 cash flows of Mason Corporation to prepare a statement of cash flows under the direct method. Refer to Exhibit 4.3 for the appropriate format.
| Cash balance, end of 2016 | $12,000 |
| Cash paid to employees and suppliers | 148,000 |
| Cash received from sale of land | 40,000 |
| Cash paid to acquire treasury stock | 10,000 |
| Cash balance, beginning of 2016 | 16,000 |
| Cash received as interest | 6,000 |
| Cash paid as income taxes | 11,000 |
| Cash paid to purchase equipment | 89,000 |
| Cash received from customers | 194,000 |
| Cash received from issuing bonds payable | 30,000 |
| Cash paid as dividends | 16,000 |
Solution
Cash flow from direct method :
| Cash flow from operating activities | |
| Cash received from customers | 194000 |
| Cash received as interest | 6000 |
| Cash paid to employees | -148000 |
| Cash paid as income tax | -11000 |
| Net cash provided by operating activities | 41000 |
| Cash flow from investing activities | |
| Sale of land | 40000 |
| Purchase of equipment | -89000 |
| Net cash used by investing activities | -49000 |
| Cash flow from financing activities | |
| Issuance of bonds payable | 30000 |
| Acquisition of treasury stock | -10000 |
| Dividend paid | -16000 |
| Net cash provided by financing activities | 4000 |
| Net decrease in cash | -4000 |
| Cash at beginning of year | 16000 |
| Cash at end of year | 12000 |
