Jelly Bean Company Uses the Indirect Method to Prepare Its

question 16

Multiple Choice

Jelly Bean Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet: $\begin{array}{c}\text { Jelly Company}\\\text { Comparative Balance Sheet}\\\text { December 31,2017 and 2016}\\\begin{array}{|l|r|r|r|}\hline&2016 & 2015 & \text { Increase/(Decrease) }\\\hline \text { Common Stock } & \$ 31,000 & \$ 2,200 & \$ 28,800 \\\hline \text { Retained Earnings } & 120,000 & 79,000 & 41,000 \\\hline \text { Treasury Stock } & (\underline{13,000}) & (\underline{8,500}) & \underline{(4,500) } \\\hline \text { Total Equity } & \$ 138,000 & \$ 72,70 & \$ 65,300 \\\hline\end{array}\end{array}$ Note:
1.There were no stock retirements during the year.
2.There were no sales of treasury stock during the year.
Compute the cash flow from transactions involving treasury stock.

• A)zero net cash flow
• B)$4,500 of positive cash flow
• C)$4,500 negative cash flow
• D)$13,000 negative cash flow

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