Clayborne Company reported the following changes in the balance sheet accounts between Year 1 and Year 2.No dividends are paid during the year, land was sold at its book value of $30,000 and any change in the patent account is due to amortization.
Required:

Given the changes in the balance sheet for Year 2, state:
a. whether the change in each account indicates that an addition or subtraction needs to be made to determine cash flow, and
b. in what section of the statement of cash flows the adjustment would appear. Indicate if no adjustment is necessary.

Question

Clayborne Company reported the following changes in the balance sheet accounts between Year 1 and Year 2.No dividends are paid during the year, land was sold at its book value of $30,000 and any change in the patent account is due to amortization.
 Required:

Given the changes in the balance sheet for Year 2, state:
a.	whether the change in each account indicates that an addition or subtraction needs to be made to determine cash flow, and
b.	in what section of the statement of cash flows the adjustment would appear. Indicate if no adjustment is necessary.

Quizplus · Accepted Answer

The Answer of Clayborne Company reported the following changes in the balance sheet accounts between Year 1 and Year 2.No dividends are paid during the year, land was sold at its book value of $30,000 and any change in the patent account is due to amortization.
 Required:

Given the changes in the balance sheet for Year 2, state:
a.	whether the change in each account indicates that an addition or subtraction needs to be made to determine cash flow, and
b.	in what section of the statement of cash flows the adjustment would appear. Indicate if no adjustment is necessary.

Clayborne Company Reported the Following Changes in the Balance Sheet