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1. Adjustments to Net Income via the Indirect Method: Operating Activities LOI Tiffany Company uses the indirect method to prepare the operating activities section of the statement of cash flows. The following activities occurred during the year at Tiffany Company: Depreciation expense Gain on the sale of used delivery truck Bad-debt expense Increase in accounts payable Purchase of a new delivery truck Loss on retirement of bonds Increase in prepaid rent Decrease in inventory Increase in investments a. b. . d. e. f. g. h. i. Amortization of patents j. Required For each of the preceding items, fill in the blank to indicate whether it would be added to net income (A), deducted from net income (D), or not reported in this section of the statement, under the indirect method (NR). 2. Investing vs. Financing Activities and Cash Equivalents LOI, 3 The following transactions occurred for a company during the year. a. Purchased a six-month certificate of deposit b. Purchased a 90-day Treasury bill c. Issued 10,000 shares of common stock d. Purchased 5,000 shares of stock of another e. Purchased 10,000 shares of its own stock to be held in the treasury f. Invested $10,000 in a money market fund g.Sold 1,500 shares of stock of another company h.Purchased 10-year bonds of another company i. Issued 20-year bonds j. Repaid a nine-month bank note company Required Using the following legend, indicate how each of the preceding transactions would be reported on the statement of cash flows: 1= inflow from investing activities O1= outflow from investing activities IF =inflow from financing activities outflow from financing activities CE = classified as a cash equivalent and included with cash for purposes of preparing the statement of cash flows OF

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