60.1K

Verified Solution

Link Copied!

Mohawk Ltd. is a private corporation. Below are some activities for their year ended December 31,

2023:

Net income after taxes for 2023 totaled $75,000.

Declared and issued a two-for-one stock split.

Accounts receivable increased $18,000 in 2023.

Accounts payable increased $12,000 in 2023.

Depreciation expense for the year was $15,000.

Sold an investment for its book value of $10,000.

Mohawk purchased an equipment for $ 100,000. They paid $ 50,000 in cash and the remaining

balance will be settled by issuance of common shares.

Long term notes payable increased by $ 20,000.

Bonds payable was initially issued at a discount and the amortization for the discount

amounted to $ 6,000 in 2023.

Declared a $20,000 cash dividend payable on January 15, 2024. The dividends payable

account increased $15,000 in 2023.

Mohawk recorded a $5,000 impairment loss on a patent it owns.

Required:

1. Prepare the cash flows from operating activities section of the cash flow statement using the

indirect method. (9 Marks)

2. Identify how the activities listed above that are not operating activities would be reported in the

cash flow statement. (10 Marks)

3. Based on the information provided and your cash flow analysis for the operating activities,

provide 4 comments regarding their financial performance for their year ended December 31,

2023. (8 Marks)

Answer & Explanation Solved by verified expert

See Answer