Chapter 10
The Statement of Cash Flow
509
AP-5B (
2
)
Danes Company had net income for 2016 of $120,000. Included in net income was a
depreciation of $3,000, a gain of the sale of land of $5,000 and income taxes of $30,000. Using
the information given, calculate the increase or decrease in cash from operating activities
using the indirect method.
Analysis
Why are some items from the income statement added back to net income on the cash flow
statement?
AP-6B (
2
)
The following information pertains to Bush Company for the fiscal year 2016.
Purchase of plant and equipment
$33,000
Sale of long-term investments
12,000
Increase in accounts payable
6,000
Repayment of bonds payable
15,000
Depreciation of plant and equipment
7,000
Calculate the increase (decrease) in cash from investing activities.
