Asked by Devon Westerlund on Jun 04, 2024
Verified
The following information is available for the Aarons Corporation:
Additional information:
(1)There was no gain or loss on the sales of the long-term investments,nor on the bonds retired.
(2)Old equipment with an original cost of $37,550 was sold for $2,100 cash.
(3)New equipment was purchased for $67,550 cash.
(4)Cash dividends of $33,600 were paid.
(5)Additional shares of stock were issued for cash.
Prepare a complete statement of cash flows for Year 2 using the indirect method.
Indirect Method
An approach to preparing the cash flow statement where the net income is adjusted for non-cash transactions and changes in working capital to estimate cash flows from operating activities.
Cash Dividends
A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.
Long-Term Investments
Assets that a company intends to hold for more than one year, including stocks, bonds, and real estate.
- Formulate the Cash Flow Statement by employing the indirect strategy.
Verified Answer
ES
Ernestina SorianoJun 08, 2024
Final Answer : 
(a)Received from sales of long-term investments: $56,400 - $55,900 = $500
(b)Received from stock issuance:
(c)Paid to retire bonds: $66,000 - $48,750 = $17,250
(a)Received from sales of long-term investments: $56,400 - $55,900 = $500(b)Received from stock issuance:
(c)Paid to retire bonds: $66,000 - $48,750 = $17,250
Learning Objectives
- Formulate the Cash Flow Statement by employing the indirect strategy.