Chapter 23 Statement Of Cash Flows Multiple Choice With Solutions
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Chapter 23
Statement of Cash Flows-Solutions at End of Problems
Use the following information for questions 1 through 3. The balance sheet data of Kohler Company at the end of 2013 and 2012 follow: 2013 Cash $ 100,000 Accounts receivable (net) 240,000 Merchandise inventory 280,000 Prepaid expenses 40,000 Buildings and equipment 360,000 Accumulated depreciation—buildings and equipment (72,000) Land 360,000 Totals $1,308,000 Accounts payable Accrued expenses Notes payable—bank, long-term Mortgage payable Common stock, $10 par Retained earnings (deficit)
$272,000 48,000 120,000 836,000 32,000 $1,308,000
2012 $ 140,000 180,000 180,000 100,000 300,000 (32,000) 160,000 $1,028,000 $220,000 72,000 160,000 636,000 (60,000) $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2013, for Naley Company:
1.
The net cash provided by operating activities was a. $104,000. b. $132,000. c. $112,000. d. $96,000.
2.
The net cash provided (used) by investing activities was a. $52,000. b. $(80,000). c. $(272,000). d. $(72,000).
3.
The net cash provided (used) by financing activities was a. $ -0-. b. $(40,000). c. $(80,000). d. $120,000.
1
Use the following information for questions 4 and 5. Napier Co. provided the following information on selected transactions during 2013: Purchase of land by issuing bonds Proceeds from issuing bonds Purchases of inventory Purchases of treasury stock Loans made to affiliated corporations Dividends paid to preferred stockholders Proceeds from issuing preferred stock Proceeds from sale of equipment
$500,000 1,000,000 1,900,000 300,000 700,000 200,000 800,000 100,000
4.
The net cash provided (used) by investing activities during 2013 is a. $100,000. b. $(600,000). c. $(1,100,000). d. $(2,500,000).
5.
The net cash provided by financing activities during 2013 is a. $1,100,000. b. $1,300,000. c. $1,600,000. d. $1,800,000.
Use the following information for questions 6 through 10. Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2013 and 2012 are provided below. BALANCE SHEETS Cash Accounts receivable Merchandise inventory Property, plant and equipment Less accumulated depreciation
12/31/13 $306,000 270,000 288,000 $456,000 (240,000)
Accounts payable Income taxes payable Bonds payable Common stock Retained earnings
216,000 $1,080,000 $ 132,000 264,000 270,000 162,000 252,000 $1,080,000
12/31/12 $ 144,000 162,000 360,000 $720,000 (228,000)
492,000 $1,158,000 $ 72,000 294,000 450,000 162,000 180,000 $1,158,000
INCOME STATEMENT For the Year Ended December 31, 2013 Sales Cost of sales Gross profit
$6,300,000 5,364,000 936,000 2
Selling expenses Administrative expenses Income from operations Interest expense Income before taxes Income taxes Net income
$450,000 144,000
594,000 342,000 54,000 192,000 72,000 $ 216,000
The following additional data were provided: 1. Dividends for the year 2013 were $144,000. 2. During the year, equipment was sold for $180,000. This equipment cost $264,000 originally and had a book value of $216,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales. 3. All depreciation expense is in the selling expense category. Questions 6 through 10 relate to a statement of cash flows (direct method) for the year ended December 31, 2013, for Harlan Mining Company.
6.
The net cash provided by operating activities is a. $306,000. b. $216,000. c. $180,000. d. $150,000.
7.
The net cash provided (used) by investing activities is a. $(264,000). b. $36,000. c. $180,000. d. $(216,000).
8.
Under the direct method, the cash received from customers is a. $6,408,000. b. $6,192,000. c. $6,300,000. d. $6,330,000.
9.
Under the direct method, the total taxes paid is a. $72,000. b. $30,000. c. $42,000. d. $102,000.
10.
The net cash provided (used) by financing activities is a. $(180,000). b. $36,000. c. $(324,000). d. $144,000. 3
Use the following information for questions 11 and 12. Equipment that cost $350,000 and had a book value of $156,000 was sold for $180,000. Data from the comparative balance sheets are: 12/31/13 12/31/12 Equipment $2,160,000 $1,950,000 Accumulated Depreciation 660,000 570,000 11.
Depreciation expense for 2013 was a. $308,000. b. $284,000. c. $54,000. d. $36,000.
12.
Equipment purchased during 2013 was a. $560,000. b. $350,000. c. $210,000. d. $366,000.
13.
Net cash flow from operating activities for 2013 for Spencer Corporation was $450,000. The following items are reported on the financial statements for 2013: Cash dividends paid on common stock Depreciation and amortization Increase in accounts receivables
20,000 12,000 24,000
Based on the information above, Spencer’s net income for 2013 was a. $462,000. b. $446,000. c. $414,000. d. $406,000.
4
Chapter 23
Statement of Cash Flows-Solutions
Use the following information for questions 1 through 3. The balance sheet data of Kohler Company at the end of 2013 and 2012 follow: 2013 Cash $ 100,000 Accounts receivable (net) 240,000 Merchandise inventory 280,000 Prepaid expenses 40,000 Buildings and equipment 360,000 Accumulated depreciation—buildings and equipment (72,000) Land 360,000 Totals $1,308,000 Accounts payable Accrued expenses Notes payable—bank, long-term Mortgage payable Common stock, $10 par Retained earnings (deficit)
$272,000 48,000 120,000 836,000 32,000 $1,308,000
2012 $ 140,000 180,000 180,000 100,000 300,000 (32,000) 160,000 $1,028,000 $220,000 72,000 160,000 636,000 (60,000) $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2013, for Naley Company:
1.
The net cash provided by operating activities was a. $104,000. b. $132,000. c. $112,000. d. $96,000. Net Income 132,000 (note 1) +Depreciation 44,000 (note 2) +Loss 8,000 (note 3) Change in AR (60,000) Change in Inventory (100,000) Change in Prepaid Expenses 60,000 Change in AP 52,000 Change in Accrued Expenses (24,000) Net Cash Provided by Operating 112,000
Note 1 Beg Retained Earnings + Net Income -Dividends = End Retained Earnings X = 132,000
Note 2
(60,000) x (40,000) 32,000
Beg Accum. Depreciation
32,000 5
-Accum Depreciation on Sold Equipment (4,000) + Depreciation Expense x = End Accum Depreciation 72,000 X = 44,000 Note 3
2.
3.
Selling Price Book Value Loss on Sale
8,000 16,000 (8,000)
The net cash provided (used) by investing activities was a. $52,000. b. $(80,000). c. $(272,000). d. $(72,000). Purchase of Equipment Cash from Sale of Equipment Net Cash used by Investing Activities
(80,000) * 8,000 (72,000)
* Beginning Equipment Less cost of equipment sold Plus Equipment purchased Ending Equipment X = 80,000
300,000 20,000 x 360,000
The net cash provided (used) by financing activities was a. $ -0-. b. $(40,000). c. $(80,000). d. $120,000. Payment of Note Payable Funds from Mortgage Payable Payment of Dividends Net Cash Used by Financing Activities
(160,000) 120,000 (40,000) (80,000)
Use the following information for questions 4 and 5. Napier Co. provided the following information on selected transactions during 2013: Purchase of land by issuing bonds Proceeds from issuing bonds Purchases of inventory Purchases of treasury stock Loans made to affiliated corporations Dividends paid to preferred stockholders Proceeds from issuing preferred stock Proceeds from sale of equipment
4.The net cash provided (used) by investing activities during 2013 is a. $100,000. b. $(600,000). c. $(1,100,000). d. $(2,500,000). 6
$500,000 1,000,000 1,900,000 300,000 700,000 200,000 800,000 100,000
Loans to Affiliates Sale of Equipment Net Cash Used in Investing Activities 5.
(700,000) 100,000 (600,000)
The net cash provided by financing activities during 2013 is a. $1,100,000. b. $1,300,000. c. $1,600,000. d. $1,800,000. Proceeds from Bond Issuance Purchase of Treasury Stock Dividends paid Proceeds from Stock Issuance Net Cash Provided by Financing Activities
1,000,000 (300,000) (200,000) 800,000 1,300,000
Use the following information for questions 6 through 10. Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2013 and 2012 are provided below. BALANCE SHEETS Cash Accounts receivable Merchandise inventory Property, plant and equipment Less accumulated depreciation
12/31/13 $306,000 270,000 288,000 $456,000 (240,000)
Accounts payable Income taxes payable Bonds payable Common stock Retained earnings
216,000 $1,080,000
12/31/12 $ 144,000 162,000 360,000 $720,000 (228,000)
$ 132,000 264,000 270,000 162,000 252,000 $1,080,000
492,000 $1,158,000 $ 72,000 294,000 450,000 162,000 180,000 $1,158,000
INCOME STATEMENT For the Year Ended December 31, 2013 Sales Cost of sales Gross profit Selling expenses Administrative expenses Income from operations Interest expense Income before taxes Income taxes Net income
$6,300,000 5,364,000 936,000 $450,000 144,000
The following additional data were provided: 1. Dividends for the year 2013 were $144,000. 7
594,000 342,000 54,000 192,000 72,000 $ 216,000
2. During the year, equipment was sold for $180,000. This equipment cost $264,000 originally and had a book value of $216,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales. 3. All depreciation expense is in the selling expense category. Questions 6 through 10 relate to a statement of cash flows (direct method) for the year ended December 31, 2013, for Harlan Mining Company.
6.
The net cash provided by operating activities is a. $306,000. b. $216,000. c. $180,000. d. $150,000. Direct Method: Cash received from Customers (See # 8) Less Cash paid for Merchandise Less Cash spent Selling/Admin Less Cash paid for Interest Less Cash paid for Taxes(See # 9) Net Cash Provided by Operating Activities
Cash Paid for Merchandise: Cost of sales Less Loss on Equipment sale Less Decrease in Inventory Less Increase in AP Cash paid
6,192,000 (5,196,000) ( 534,000) ( 54,000) ( 102,000) 306,000
5,364,000 (36,000) (72,000) (60,000) 5,196,000
Cash spent on Selling/Administrative Selling/Administrative 594,000 Less Depreciation expense included (60,000) Cash paid for selling/administrative 534,000 Selling/administrative and interest expense treated as cash since there were no accrued liabilities shown on the balance sheet.
Reconciliation/Indirect Method Net Income +Depreciation Expense +Loss on Equipment Sale Change in AR Change in Inventory Change in AP Change in Taxes Payable Net Cash Provided by Operating Activities 7.
216,000 60,000 36,000 (108,000) 72,000 60,000 (30,000) 306,000
The net cash provided (used) by investing activities is a. $(264,000). b. $36,000. c. $180,000. d. $(216,000). 8
Sale of Equipment Net Cash Provided by Investing Activities 8.
Under the direct method, the cash received from customers is a. $6,408,000. b. $6,192,000. c. $6,300,000. d. $6,330,000. Beginning AR Sales Less Ending AR Cash received from customers
9.
180,000 180,000
162,000 6,300,000 (270,000) 6,192,000
Under the direct method, the total taxes paid is a. $72,000. b. $30,000. c. $42,000. d. $102,000. Beginning Taxes Payable Plus Income Tax Expense Less Income Taxes Paid Ending Taxes Payable X = $102,000
10.
294,000 72,000 x 264,000
The net cash provided (used) by financing activities is a. $(180,000). b. $36,000. c. $(324,000). d. $144,000. Payment of Dividends Redemption of Bonds Net Cash Used in Financing Activities
(144,000) (180,000) (324,000)
Use the following information for questions 11 and 12. Equipment that cost $350,000 and had a book value of $156,000 was sold for $180,000. Data from the comparative balance sheets are: 12/31/13 12/31/12 Equipment $2,160,000 $1,950,000 Accumulated Depreciation 660,000 570,000 11.
Depreciation expense for 2013 was a. $308,000. b. $284,000. c. $54,000. d. $36,000. Beginning Accum Depreciation Less Depreciation on Equipment Sold 9
570,000 (194,000)
Plus 2013 Depreciation Expense Ending Accum Depreciation
x 660,000
X = $284,000
12.
Equipment purchased during 2013 was a. $560,000. b. $350,000. c. $210,000. d. $366,000. Beginning Equipment Less Cost of Equipment Sold Plus Equipment Purchased Ending Equipment
$1,950,000 (350,000) X $2,160,000
X = $560,000
13.
Net cash flow from operating activities for 2013 for Spencer Corporation was $450,000. The following items are reported on the financial statements for 2013: Cash dividends paid on common stock Depreciation and amortization Increase in accounts receivables
20,000 12,000 24,000
Based on the information above, Spencer’s net income for 2013 was a. $462,000. b. $446,000. c. $414,000. d. $406,000. Net Income + Depreciation/Amortization -Increase in AR Net Cash Flows from Operating X = $462,000
10
X 12,000 (24,000) $450,000
Statement of Cash Flows-Solutions at End of Problems
Use the following information for questions 1 through 3. The balance sheet data of Kohler Company at the end of 2013 and 2012 follow: 2013 Cash $ 100,000 Accounts receivable (net) 240,000 Merchandise inventory 280,000 Prepaid expenses 40,000 Buildings and equipment 360,000 Accumulated depreciation—buildings and equipment (72,000) Land 360,000 Totals $1,308,000 Accounts payable Accrued expenses Notes payable—bank, long-term Mortgage payable Common stock, $10 par Retained earnings (deficit)
$272,000 48,000 120,000 836,000 32,000 $1,308,000
2012 $ 140,000 180,000 180,000 100,000 300,000 (32,000) 160,000 $1,028,000 $220,000 72,000 160,000 636,000 (60,000) $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2013, for Naley Company:
1.
The net cash provided by operating activities was a. $104,000. b. $132,000. c. $112,000. d. $96,000.
2.
The net cash provided (used) by investing activities was a. $52,000. b. $(80,000). c. $(272,000). d. $(72,000).
3.
The net cash provided (used) by financing activities was a. $ -0-. b. $(40,000). c. $(80,000). d. $120,000.
1
Use the following information for questions 4 and 5. Napier Co. provided the following information on selected transactions during 2013: Purchase of land by issuing bonds Proceeds from issuing bonds Purchases of inventory Purchases of treasury stock Loans made to affiliated corporations Dividends paid to preferred stockholders Proceeds from issuing preferred stock Proceeds from sale of equipment
$500,000 1,000,000 1,900,000 300,000 700,000 200,000 800,000 100,000
4.
The net cash provided (used) by investing activities during 2013 is a. $100,000. b. $(600,000). c. $(1,100,000). d. $(2,500,000).
5.
The net cash provided by financing activities during 2013 is a. $1,100,000. b. $1,300,000. c. $1,600,000. d. $1,800,000.
Use the following information for questions 6 through 10. Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2013 and 2012 are provided below. BALANCE SHEETS Cash Accounts receivable Merchandise inventory Property, plant and equipment Less accumulated depreciation
12/31/13 $306,000 270,000 288,000 $456,000 (240,000)
Accounts payable Income taxes payable Bonds payable Common stock Retained earnings
216,000 $1,080,000 $ 132,000 264,000 270,000 162,000 252,000 $1,080,000
12/31/12 $ 144,000 162,000 360,000 $720,000 (228,000)
492,000 $1,158,000 $ 72,000 294,000 450,000 162,000 180,000 $1,158,000
INCOME STATEMENT For the Year Ended December 31, 2013 Sales Cost of sales Gross profit
$6,300,000 5,364,000 936,000 2
Selling expenses Administrative expenses Income from operations Interest expense Income before taxes Income taxes Net income
$450,000 144,000
594,000 342,000 54,000 192,000 72,000 $ 216,000
The following additional data were provided: 1. Dividends for the year 2013 were $144,000. 2. During the year, equipment was sold for $180,000. This equipment cost $264,000 originally and had a book value of $216,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales. 3. All depreciation expense is in the selling expense category. Questions 6 through 10 relate to a statement of cash flows (direct method) for the year ended December 31, 2013, for Harlan Mining Company.
6.
The net cash provided by operating activities is a. $306,000. b. $216,000. c. $180,000. d. $150,000.
7.
The net cash provided (used) by investing activities is a. $(264,000). b. $36,000. c. $180,000. d. $(216,000).
8.
Under the direct method, the cash received from customers is a. $6,408,000. b. $6,192,000. c. $6,300,000. d. $6,330,000.
9.
Under the direct method, the total taxes paid is a. $72,000. b. $30,000. c. $42,000. d. $102,000.
10.
The net cash provided (used) by financing activities is a. $(180,000). b. $36,000. c. $(324,000). d. $144,000. 3
Use the following information for questions 11 and 12. Equipment that cost $350,000 and had a book value of $156,000 was sold for $180,000. Data from the comparative balance sheets are: 12/31/13 12/31/12 Equipment $2,160,000 $1,950,000 Accumulated Depreciation 660,000 570,000 11.
Depreciation expense for 2013 was a. $308,000. b. $284,000. c. $54,000. d. $36,000.
12.
Equipment purchased during 2013 was a. $560,000. b. $350,000. c. $210,000. d. $366,000.
13.
Net cash flow from operating activities for 2013 for Spencer Corporation was $450,000. The following items are reported on the financial statements for 2013: Cash dividends paid on common stock Depreciation and amortization Increase in accounts receivables
20,000 12,000 24,000
Based on the information above, Spencer’s net income for 2013 was a. $462,000. b. $446,000. c. $414,000. d. $406,000.
4
Chapter 23
Statement of Cash Flows-Solutions
Use the following information for questions 1 through 3. The balance sheet data of Kohler Company at the end of 2013 and 2012 follow: 2013 Cash $ 100,000 Accounts receivable (net) 240,000 Merchandise inventory 280,000 Prepaid expenses 40,000 Buildings and equipment 360,000 Accumulated depreciation—buildings and equipment (72,000) Land 360,000 Totals $1,308,000 Accounts payable Accrued expenses Notes payable—bank, long-term Mortgage payable Common stock, $10 par Retained earnings (deficit)
$272,000 48,000 120,000 836,000 32,000 $1,308,000
2012 $ 140,000 180,000 180,000 100,000 300,000 (32,000) 160,000 $1,028,000 $220,000 72,000 160,000 636,000 (60,000) $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2013, for Naley Company:
1.
The net cash provided by operating activities was a. $104,000. b. $132,000. c. $112,000. d. $96,000. Net Income 132,000 (note 1) +Depreciation 44,000 (note 2) +Loss 8,000 (note 3) Change in AR (60,000) Change in Inventory (100,000) Change in Prepaid Expenses 60,000 Change in AP 52,000 Change in Accrued Expenses (24,000) Net Cash Provided by Operating 112,000
Note 1 Beg Retained Earnings + Net Income -Dividends = End Retained Earnings X = 132,000
Note 2
(60,000) x (40,000) 32,000
Beg Accum. Depreciation
32,000 5
-Accum Depreciation on Sold Equipment (4,000) + Depreciation Expense x = End Accum Depreciation 72,000 X = 44,000 Note 3
2.
3.
Selling Price Book Value Loss on Sale
8,000 16,000 (8,000)
The net cash provided (used) by investing activities was a. $52,000. b. $(80,000). c. $(272,000). d. $(72,000). Purchase of Equipment Cash from Sale of Equipment Net Cash used by Investing Activities
(80,000) * 8,000 (72,000)
* Beginning Equipment Less cost of equipment sold Plus Equipment purchased Ending Equipment X = 80,000
300,000 20,000 x 360,000
The net cash provided (used) by financing activities was a. $ -0-. b. $(40,000). c. $(80,000). d. $120,000. Payment of Note Payable Funds from Mortgage Payable Payment of Dividends Net Cash Used by Financing Activities
(160,000) 120,000 (40,000) (80,000)
Use the following information for questions 4 and 5. Napier Co. provided the following information on selected transactions during 2013: Purchase of land by issuing bonds Proceeds from issuing bonds Purchases of inventory Purchases of treasury stock Loans made to affiliated corporations Dividends paid to preferred stockholders Proceeds from issuing preferred stock Proceeds from sale of equipment
4.The net cash provided (used) by investing activities during 2013 is a. $100,000. b. $(600,000). c. $(1,100,000). d. $(2,500,000). 6
$500,000 1,000,000 1,900,000 300,000 700,000 200,000 800,000 100,000
Loans to Affiliates Sale of Equipment Net Cash Used in Investing Activities 5.
(700,000) 100,000 (600,000)
The net cash provided by financing activities during 2013 is a. $1,100,000. b. $1,300,000. c. $1,600,000. d. $1,800,000. Proceeds from Bond Issuance Purchase of Treasury Stock Dividends paid Proceeds from Stock Issuance Net Cash Provided by Financing Activities
1,000,000 (300,000) (200,000) 800,000 1,300,000
Use the following information for questions 6 through 10. Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One statement that the enterprise is anxious to have prepared is a statement of cash flows. Financial statements of Harlan Mining Co. for 2013 and 2012 are provided below. BALANCE SHEETS Cash Accounts receivable Merchandise inventory Property, plant and equipment Less accumulated depreciation
12/31/13 $306,000 270,000 288,000 $456,000 (240,000)
Accounts payable Income taxes payable Bonds payable Common stock Retained earnings
216,000 $1,080,000
12/31/12 $ 144,000 162,000 360,000 $720,000 (228,000)
$ 132,000 264,000 270,000 162,000 252,000 $1,080,000
492,000 $1,158,000 $ 72,000 294,000 450,000 162,000 180,000 $1,158,000
INCOME STATEMENT For the Year Ended December 31, 2013 Sales Cost of sales Gross profit Selling expenses Administrative expenses Income from operations Interest expense Income before taxes Income taxes Net income
$6,300,000 5,364,000 936,000 $450,000 144,000
The following additional data were provided: 1. Dividends for the year 2013 were $144,000. 7
594,000 342,000 54,000 192,000 72,000 $ 216,000
2. During the year, equipment was sold for $180,000. This equipment cost $264,000 originally and had a book value of $216,000 at the time of sale. The loss on sale was incorrectly charged to cost of sales. 3. All depreciation expense is in the selling expense category. Questions 6 through 10 relate to a statement of cash flows (direct method) for the year ended December 31, 2013, for Harlan Mining Company.
6.
The net cash provided by operating activities is a. $306,000. b. $216,000. c. $180,000. d. $150,000. Direct Method: Cash received from Customers (See # 8) Less Cash paid for Merchandise Less Cash spent Selling/Admin Less Cash paid for Interest Less Cash paid for Taxes(See # 9) Net Cash Provided by Operating Activities
Cash Paid for Merchandise: Cost of sales Less Loss on Equipment sale Less Decrease in Inventory Less Increase in AP Cash paid
6,192,000 (5,196,000) ( 534,000) ( 54,000) ( 102,000) 306,000
5,364,000 (36,000) (72,000) (60,000) 5,196,000
Cash spent on Selling/Administrative Selling/Administrative 594,000 Less Depreciation expense included (60,000) Cash paid for selling/administrative 534,000 Selling/administrative and interest expense treated as cash since there were no accrued liabilities shown on the balance sheet.
Reconciliation/Indirect Method Net Income +Depreciation Expense +Loss on Equipment Sale Change in AR Change in Inventory Change in AP Change in Taxes Payable Net Cash Provided by Operating Activities 7.
216,000 60,000 36,000 (108,000) 72,000 60,000 (30,000) 306,000
The net cash provided (used) by investing activities is a. $(264,000). b. $36,000. c. $180,000. d. $(216,000). 8
Sale of Equipment Net Cash Provided by Investing Activities 8.
Under the direct method, the cash received from customers is a. $6,408,000. b. $6,192,000. c. $6,300,000. d. $6,330,000. Beginning AR Sales Less Ending AR Cash received from customers
9.
180,000 180,000
162,000 6,300,000 (270,000) 6,192,000
Under the direct method, the total taxes paid is a. $72,000. b. $30,000. c. $42,000. d. $102,000. Beginning Taxes Payable Plus Income Tax Expense Less Income Taxes Paid Ending Taxes Payable X = $102,000
10.
294,000 72,000 x 264,000
The net cash provided (used) by financing activities is a. $(180,000). b. $36,000. c. $(324,000). d. $144,000. Payment of Dividends Redemption of Bonds Net Cash Used in Financing Activities
(144,000) (180,000) (324,000)
Use the following information for questions 11 and 12. Equipment that cost $350,000 and had a book value of $156,000 was sold for $180,000. Data from the comparative balance sheets are: 12/31/13 12/31/12 Equipment $2,160,000 $1,950,000 Accumulated Depreciation 660,000 570,000 11.
Depreciation expense for 2013 was a. $308,000. b. $284,000. c. $54,000. d. $36,000. Beginning Accum Depreciation Less Depreciation on Equipment Sold 9
570,000 (194,000)
Plus 2013 Depreciation Expense Ending Accum Depreciation
x 660,000
X = $284,000
12.
Equipment purchased during 2013 was a. $560,000. b. $350,000. c. $210,000. d. $366,000. Beginning Equipment Less Cost of Equipment Sold Plus Equipment Purchased Ending Equipment
$1,950,000 (350,000) X $2,160,000
X = $560,000
13.
Net cash flow from operating activities for 2013 for Spencer Corporation was $450,000. The following items are reported on the financial statements for 2013: Cash dividends paid on common stock Depreciation and amortization Increase in accounts receivables
20,000 12,000 24,000
Based on the information above, Spencer’s net income for 2013 was a. $462,000. b. $446,000. c. $414,000. d. $406,000. Net Income + Depreciation/Amortization -Increase in AR Net Cash Flows from Operating X = $462,000
10
X 12,000 (24,000) $450,000
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