research the applicable generally accepted accounting principles and prepare a writt 610567

Researching GAAP Situation – You are the new accountant for 12th National Bank and are preparing its 2007 statement of cash flows. The bank reports net income of $75,800 on its 2007 income statement. Included in this net income are the following items:

$6,700 gain on sale of trading securities, $1,200 unrealized holding gain on trading securities, and $5,100 loss on sale of securities available for sale. Among its 2007 transactions, the bank sold trading securities with a carrying value of $22,900 for $29,600, and purchased trading securities for $65,200. The bank sold securities available for sale with a cost (and carrying value) of $58,700 for $53,600, and purchased securities available for sale for $39,400. It also made routine 90-day loans of $47,500 to customers and collected $20,000 principal on these customer loans. As a result of the preceding information, the bank’s trading securities account increased by $43,500, the securities available for sale account decreased by $19,300, and the loans receivable account increased by $27,500. The bank uses the indirect approach to report operating cash flows on its statement of cash flows.

Directions

Research the applicable generally accepted accounting principles and prepare a written memo to the 12th National Bank’s auditors that explains how you plan to report the preceding items on the bank’s 2007 statement of cash flows. Cite your reference and applicable paragraph numbers.