Explain How the Following Transactions Should Be Reported in the Statement

question 62

Essay

Explain how the following transactions should be reported in the statement of cash flows, assuming the indirect method is used to determine cash flows from operating activities. Identify all available options. If not reported on the statement of cash flows, indicate the disclosure requirements, if any.
1. An increase in allowance for bad debts by $18,000.
2. A principal payment of $35,000 on a lease liability subsequent to the commencement date of the lease.

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Definitions:

Taxpayer

An individual or entity that is legally obligated to pay taxes to a federal, state, or local government.

Maximum-Security Prison

A facility designed to house the most dangerous inmates, featuring strict security measures and limited freedoms.

Trials

Formal proceedings to test or prove something in a scientific or legal context, often involving experimentation or the judicial process.

Appeals

Processes or efforts made to persuade or request something from someone, often in a legal context or in seeking support or sympathy.