For Each of the Following Transactions, Determine What Adjustments Are

question 109

Essay

For each of the following transactions, determine what adjustments are necessary to prepare the statement of cash flows using the indirect method.
a. Firm A sells equipment with a cost of $2,000 and accumulated depreciation of $1,000 for $600 cash.
b. Firm A uses the equity method to record its investment in Firm B. In the current year, A records $1,500 as equity in earnings of affiliate. A also received $1,600 in dividends from B in the current year.
c. Firm A converts $50,000 of debt to common stock. Firm A chooses to report this transaction in the statement of cash flows.

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Definitions:

Materials

Substances or components that are used in the manufacturing process to create products.

Route Sheet

A document detailing the operations, materials, and sequence of work required to manufacture a part or assembly, guiding the production process.

Sequence of Operations

The specific order in which tasks or activities must be carried out to complete a process or manufacture a product efficiently.

Component

An individual part or element that, when combined with others, forms a complex product, system, or assembly.