Deck 23: Statement of Cash Flows

Question 1

The first step in the preparation of the statement of cash flows is to determine the net cash flow from operating activities.

Answer 1

False

Question 2

Cash receipts from customers are computed by adding a decrease in accounts receivable to revenue from sales.

Answer 2

True

Question 3

When numerous adjustments are necessary, companies often use a cash flow worksheet instead of preparing a statement of cash flows.

Answer 3

False

Question 4

Under the accrual basis of accounting, net income is usually the same as net cash flow from operating activities.

Question 5

Noncash investing and financing activities are disclosed either in a separate schedule or in a separate note to the financial statements.

Question 6

A company can convert net income to net cash flow from operating activities through either the direct method or the indirect method.

Question 7

A company should add back bond premium amortization to net income to arrive at net cash flow from operating activities.

Question 8

Companies classify some cash flows relating to investing or financing activities as operating activities.

Question 9

The net increase (decrease) in cash reported on the statement of cash flows should reconcile the beginning and ending cash balances reported in the comparative balance sheets.

Question 10

The direct method, also called the reconciliation method, reports cash receipts and cash disbursements from operating activities.

Question 11

The FASB encourages the use of the indirect method over the direct method.

Question 12

When prepaid expenses decrease during a period, expenses on the accrual-basis are lower than they are on a cash-basis.

Question 13

The primary purpose of the statement of cash flows is to provide cash-basis information about the company's operating, investing, and financing activities.

Question 14

The statement of cash flows provides information to help investors and creditors assess the cash and noncash investing and financing transactions during the period.

Question 15

The issuance of stock dividends is entered on the cash flow worksheet, but is not reported in the statement of cash flows.

Question 16

Cash payments for operating expenses are computed by subtracting an increase in prepaid expenses and a decrease in accrued expenses payable from operating expenses.

Question 17

Companies report the cash flows from purchases and sales of trading securities as cash flows from operating activities.

Question 18

When accounts receivable decrease during a period, cash-basis revenues are higher than revenues reported on an accrual basis.

Question 19

Income from an investment in common stock using the equity method is added to net income in computing net cash provided from operating activities.

Question 20

The indirect method adjusts net income for items that affected reported net income but did not affect cash.

Question 21

Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual based selling and administrative expenses to the cash basis?

Question 22

To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by

A) re-recording all income statement transactions that directly affect cash in a separate cash flow journal.
B) estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.
C) eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.
D) eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.

Question 23

The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)

A) addition to net income.
B) deduction from net income.
C) investing activity.
D) financing activity.

Question 24

Which of the following would be classified as a financing activity on a statement of cash flows?

A) Declaration and distribution of a stock dividend
B) Deposit to a bond sinking fund
C) Sale of a loan receivable
D) Payment of interest to a creditor

Question 25

When preparing a statement of cash flows, a decrease in accounts receivable during a period would cause which one of the following adjustments in determining cash flow from operating activities?

Question 26

Of the following questions, which one would not be answered by the statement of cash flows?

A) Where did the cash come from during the period?
B) What was the cash used for during the period?
C) Were all the cash expenditures of benefit to the company during the period?
D) What was the change in the cash balance during the period?

Question 27

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash provided by/used by operating activities?

A) Increase in accounts receivable.
B) Gain on sale of land.
C) Amortization of patent.
D) All of these are added to net income to arrive at cash flow from operating activities.

Question 28

anthe Corporation had the following transactions occur in the current year:1. Cash sale of merchandise inventory. 2. Sale of delivery truck at book value. 3. Sale of Xanthe common stock for cash. 4. Issuance of a note payable to a bank for cash. 5. Sale of a security held as an available-for-sale investment. 6. Collection of loan receivable.

A) Five items
B) Four items
C) Three items
D) Two items

Question 29

In determining net cash flow from operating activities, a decrease in accounts payable during a period

A) means that income on an accrual basis is less than income on a cash basis.
B) requires an addition adjustment to net income under the indirect method.
C) requires an increase adjustment to cost of goods sold under the direct method.
D) requires a decrease adjustment to cost of goods sold under the direct method.

Question 30

When preparing a statement of cash flows, an increase in accounts payable during a period would require which of the following adjustments in determining cash flows from operating activities?

Question 31

The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?

A) Statements of cash flows
B) Balance sheets
C) Income statements
D) Statements of retained earnings

Question 32

In a statement of cash flows, the cash flows from investing activities section should report

A) the issuance of common stock in exchange for a factory building.
B) stock dividends received.
C) a major repair to machinery charged to accumulated depreciation.
D) the assignment of accounts receivable.

Question 33

When preparing a statement of cash flows (indirect method), an increase in ending inventory over beginning inventory will result in an adjustment to reported net earnings because

A) cash was increased while cost of goods sold was decreased.
B) cost of goods sold on an accrual basis is lower than on a cash basis.
C) acquisition of inventory is an investment activity.
D) inventory purchased during the period was less than inventory sold resulting in a net cash increase.

Question 34

Which of the following statements about the statement of cash flows is correct?

A) The indirect method starts with income before extraordinary items.
B) The direct method is known as the reconciliation method.
C) The direct method is more consistent with the primary purpose of the statement of cash flows.
D) All of these answers are correct.

Question 35

Cash equivalents are

A) treasury bills, commercial paper, and money market funds purchased with excess cash.
B) investments with original maturities of three months or less.
C) readily convertible into known amounts of cash.
D) All of these answers are correct.

Question 36

When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities?

Question 37

When preparing a statement of cash flows, a decrease in prepaid insurance during a period would require which of the following adjustments in determining cash flows from operating activities?

Question 38

A company borrows $10,000 and signs a 90-day nontrade note payable. In preparing a statement of cash flows (indirect method), this event would be reflected as a(n)

A) addition adjustment to net income in the cash flows from operating activities section.
B) cash outflow from investing activities.
C) cash inflow from investing activities.
D) cash inflow from financing activities.

Question 39

The primary purpose of the statement of cash flows is to provide information

A) about the operating, investing, and financing activities of an entity during a period.
B) that is useful in assessing future cash flow prospects.
C) about the cash receipts and cash payments of an entity during a period.
D) about the entity's ability to meet its obligations and to pay dividends.

Question 40

An objective of the statement of cash flows is to

A) disclose changes during the period in all asset and all equity accounts.
B) disclose the change in working capital during the period.
C) provide information about the operating, investing, and financing activities of an entity during a period.
D) None of these answers are correct.

Question 41

An increase in inventory balance would be reported in a statement of cash flows using the indirect method (reconciliation method) as a(n)

A) addition to net income in arriving at net cash flow from operating activities.
B) deduction from net income in arriving at net cash flow from operating activities.
C) cash outflow from investing activities.
D) cash outflow from financing activities.

Question 42

Which of the following is shown on a statement of cash flows?

A) A stock dividend
B) A stock split
C) An appropriation of retained earnings
D) None of these answers are correct.

Question 43

How should significant noncash transactions be reported in the statement of cash flows according to FASB Statement No. 95?

A) They should be incorporated in the statement of cash flows in a section labeled, "Significant Noncash Transactions."
B) Such transactions should be incorporated in the section (operating, financing, or investing) that is most representative of the major component of the transaction.
C) These noncash transactions are not to be incorporated in the statement of cash flows. They may be summarized in a separate schedule at the bottom of the statement or appear in a separate supplementary schedule to the financials.
D) They should be handled in a manner consistent with the transactions that affect cash flows.

Question 44

Declaration of a cash dividend on common stock affects cash flows from operating activities under the direct and indirect methods as follows:

Question 45

During 2015, Stout Inc. had the following activities related to its financial operations: The amount of net cash used in financing activities to appear in Stout's statement of cash flows for 2015 should be

A) $1,990,000.
B) $2,176,000.
C) $2,536,000.
D) $2,548,000.

Question 46

Hager Company sold some of its plant assets during 2015. The original cost of the plant assets was $750,000 and the accumulated depreciation at date of sale was $700,000. The proceeds from the sale of the plant assets were $75,000. The information concerning the sale of the plant assets should be shown on Hager's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)

A) subtraction from net income of $25,000 and a $50,000 increase in cash flows from financing activities.
B) addition to net income of $25,000 and a $75,000 increase in cash flows from investing activities.
C) subtraction from net income of $25,000 and a $75,000 increase in cash flows from investing activities.
D) addition of $75,000 to net income.

Question 47

A statement of cash flows typically would not disclose the effects of

A) capital stock issued at an amount greater than par value.
B) stock dividends declared.
C) cash dividends paid.
D) a purchase and immediate retirement of treasury stock.

Question 48

An analysis of the machinery accounts of Noller Company for 2015 is as follows: The information concerning Noller's machinery accounts should be shown in Noller's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)

A) subtraction from net income of $100,000 and a $200,000 decrease in cash flows from financing activities.
B) addition to net income of $100,000 and a $200,000 decrease in cash flows from investing activities.
C) $100,000 increase in cash flows from financing activities.
D) $200,000 decrease in cash flows from investing activities.

Question 49

When preparing a statement of cash flows (indirect method), which of the following is not an adjustment to reconcile net income to net cash provided by operating activities?

A) A change in interest payable
B) A change in dividends payable
C) A change in income taxes payable
D) All of these are adjustments.

Question 50

Which of the following is false concerning the statement of cash flows?

A) When pension expense exceeds cash funding, the difference is deducted from investing activities on the statement of cash flows.
B) The FASB requires companies to classify all income taxes paid as operating cash outflows.
C) Under U.S. GAAP, the purchase of land by issuing stock will be shown as a cash outflow under investing activities and a cash inflow under financing activities.
D) All of the above are true concerning the statement of cash flows.

Question 51

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is deducted from net income to compute cash provided by/used by operating activities?

A) Decrease in accounts receivable.
B) Gain on sale of land.
C) Amortization of patent.
D) All of the above are deducted from net income to arrive at cash flow from operating activities.

Question 52

Use the following information for questions 51 through 55.
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 2015 and 2014 are provided below.
The following additional data were provided:
1. Dividends for the year 2015 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.

-The net cash provided (used) by financing activities is

A) $(180,000).
B) $36,000.
C) $(324,000).
D) $144,000.

Question 53

Use the following information for questions 51 through 55.
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 2015 and 2014 are provided below.
The following additional data were provided:
1. Dividends for the year 2015 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.

-Under the direct method, the total taxes paid is

A) $72,000.
B) $30,000.
C) $42,000.
D) $102,000.

Question 54

In reporting extraordinary transactions on a statement of cash flows (indirect method), the

A) gross amount of an extraordinary gain should be deducted from net income.
B) net of tax amount of an extraordinary gain should be added to net income.
C) net of tax amount of an extraordinary gain should be deducted from net income.
D) gross amount of an extraordinary gain should be added to net income.

Question 55

Dolan Company reports its income from investments under the equity method and recognized income of $25,000 from its investment in Moss Co. during the current year, even though no dividends were declared or paid by Moss during the year. On Dolan's statement of cash flows (indirect method), the $25,000 should

A) not be shown.
B) be shown as cash inflow from investing activities.
C) be shown as cash outflow from financing activities.
D) be shown as a deduction from net income in the cash flows from operating activities section.

Question 56

During 2015, equipment was sold for $312,000. The equipment cost $524,000 and had a book value of $288,000. Accumulated Depreciation-Equipment was $1,374,000 at 12/31/14 and $1,470,000 at 12/31/15. Depreciation expense for 2015 was

A) $96,000.
B) $192,000.
C) $332,000.
D) $384,000.

Question 57

Use the following information for questions 51 through 55.
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 2015 and 2014 are provided below.
The following additional data were provided:
1. Dividends for the year 2015 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.

-The net cash provided by operating activities is

A) $306,000.
B) $216,000.
C) $180,000.
D) $150,000.

Question 58

Use the following information for questions 51 through 55.
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 2015 and 2014 are provided below.
The following additional data were provided:
1. Dividends for the year 2015 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.

-The net cash provided (used) by investing activities is

A) $(264,000).
B) $36,000.
C) $180,000.
D) $(216,000).

Question 59

Use the following information for questions 51 through 55.
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 2015 and 2014 are provided below.
The following additional data were provided:
1. Dividends for the year 2015 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.

-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.

Question 60

Equipment which cost $213,000 and had accumulated depreciation of $114,000 was sold for $111,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n)

A) addition to net income of $12,000 and a $111,000 cash inflow from financing activities.
B) deduction from net income of $12,000 and a $99,000 cash inflow from investing activities.
C) deduction from net income of $12,000 and a $111,000 cash inflow from investing activities.
D) addition to net income of $12,000 and a $99,000 cash inflow from financing activities.

Question 61

Net cash flow from operating activities for 2015 for Spencer Corporation was $400,000. The following items are reported on the financial statements for 2015: $\begin{array}{lr}\text { Cash dividends paid on common stock } & \$ 20,000 \\\text { Depreciation and amortization } & 12,000 \\\text { Increase in accounts receivables } & 24,000\end{array}$ Based on the information above, Spencer's net income for 2015 was

A) $412,000.
B) $396,000.
C) $364,000.
D) $356,000.

Question 62

In preparing Titan Inc.'s statement of cash flows for the year ended December 31, 2015, the following amounts were available: $$\begin{array} { l r } \text { Collect note receivable } & \$ 410,000 \\\text { Issue bonds payable } & 426,000 \\\text { Purchase treasury stock } & 200,000\end{array}$$ What amount should be reported on Titan, Inc.'s statement of cash flows for investing activities?

A) $410,000
B) $210,000
C) $836,000
D) $226,000

Question 63

Use the following information for questions 63 through 67.
Financial statements for Kiner Company are given below: Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated deprecia-tion on the equipment sold was $224,000.
Capital stock (plus any additional paid-in capital) at December 31, 2015 was

A) $1,600,000.
B) $1,840,000.
C) $1,040,000.
D) $2,480,000.

Question 64

Use the following information for questions 63 through 67.
Financial statements for Kiner Company are given below: Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated deprecia-tion on the equipment sold was $224,000.
When the equipment was sold, the Buildings and Equipment account received a credit of

A) $192,000.
B) $416,000.
C) $320,000.
D) $224,000.

Question 65

During 2015, Orton Company earned net income of $464,000 which included deprecia-tion expense of $78,000. In addition, the company experienced the following changes in the account balances listed below: $$\begin{array} { l r l r } { \text { Increases } } && { \text { Decreases } } \\\text { Accounts payable } & \$ 45,000 & \text { Accounts receivable } & \$ 12,000 \\\text { Inventory } & 36,000 & \text { Accrued liabilities } & 24,000 \\\quad \text { Prepaid insurance } & 33,000 & &\end{array}$$ Based upon this information what amount will be shown for net cash provided by operating activities for 2015?

A) $572,000
B) $545,000
C) $365,000
D) $347,000

Question 66

Use the following information for questions 68 and 69.
The balance in retained earnings at December 31, 2014 was $1,080,000 and at December 31, 2015 was $873,000. Net income for 2015 was $750,000. A stock dividend was declared and distributed which increased common stock $375,000 and paid-in capital $165,000. A cash dividend was declared and paid.
The stock dividend should be reported on the statement of cash flows (indirect method) as

A) an outflow from financing activities of $375,000.
B) an outflow from financing activities of $540,000.
C) an outflow from investing activities of $540,000.
D) Stock dividends are not shown on a statement of cash flows.

Question 67

Use the following information for questions 61 and 62.
Equipment that cost $525,000 and had a book value of $234,000 was sold for $270,000. Data from the comparative balance sheets are: $\begin{array}{lrr}&12 / 31 / 15&12 / 31 / 14\\\text { Equipment } & \$ 3,240,000 & \$ 2,925,000 \\\text { Accumulated Depreciation } & 990,000 & 855,000\end{array}$

-Equipment purchased during 2015 was

A) $840,000.
B) $525,000.
C) $315,000.
D) $549,000.

Question 68

Jarvis, Inc. reported net income of $44,000 for the year ended December 31, 2015. Included in net income was a gain on early extinguishment of debt of $60,000 related to bonds payable with a book value of $1,200,000. Each of the following accounts increased during 2015: $$\begin{array} { l l } \text { Notes receivable } & \$ 45,000 \\\text { Deferred tax liability } & \$ 10,000 \\\text { Treasury stock } & \$ 120,000\end{array}$$ What is the amount of cash used by financing activities for Jarvis, Inc. for the year ended December 31, 2015?

A) $1,260,000
B) $1,270,000
C) $1,900,000
D) $ 225,000

Question 69

Jarvis, Inc. reported net income of $44,000 for the year ended December 31, 2015 Included in net income were depreciation expense of $8,400 and a gain on sale of equipment of $1,700. The equipment had an historical cost of $40,000 and accumulated depreciation of $24,000. Each of the following accounts increased during 2015: $$\begin{array} { l l } \text { Patents } & \$ 5,500 \\\text { Prepaid rent } & \$ 6,800 \\\text { Available-for-sale securities } & \$ 1,000 \\\text { Bonds payable } & \$ 5,000\end{array}$$ What is the amount of cash provided by or used by investing activities for Jarvis, Inc. for the year ended December 31, 2015?

A) ( $ 4,800)
B) $16,700
C) $11,200
D) $12,200

Question 70

Use the following information for questions 63 through 67.
Financial statements for Kiner Company are given below: Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated deprecia-tion on the equipment sold was $224,000.
The accounts payable at December 31, 2015 were

A) $176,000.
B) $432,000.
C) $128,000.
D) $592,000.

Question 71

Use the following information for questions 63 through 67.
Financial statements for Kiner Company are given below: Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated deprecia-tion on the equipment sold was $224,000.
The book value of the buildings and equipment at December 31, 2015 was

A) $2,032,000.
B) $2,080,000.
C) $2,848,000.
D) $2,352,000.

Question 72

Use the following information for questions 63 through 67.
Financial statements for Kiner Company are given below: Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated deprecia-tion on the equipment sold was $224,000.
The balance in the Retained Earnings account at December 31, 2015 was

A) $720,000.
B) $1,760,000.
C) $1,520,000.
D) $2,000,000.

Question 73

During 2015, Greta Company earned net income of $212,000 which included depreciation expense of $39,000. In addition, the company experienced the following changes in the account balances listed below: Based upon this information what amount will be shown for net cash provided by operating activities for 2015?

A) $266,000.
B) $252,500.
C) $162,500.
D) $153,500.

Question 74

Lindsay Corporation had net income for 2015 of $2,500,000. Additional information is as follows: $\begin{array}{lr}\text { Depreciation of plant assets } & \$ 1,200,000 \\\text { Amortization of intangibles } & 240,000 \\\text { Increase in accounts receivable } & 420,000 \\\text { Increase in accounts payable } & 540,000\end{array}$ Lindsay's net cash provided by operating activities for 2015 was

A) $4,060,000.
B) $3,940,000.
C) $3,820,000.
D) $2,180,000.

Question 75

In preparing Titan Inc.'s statement of cash flows for the year ended December 31, 2015, the following amounts were available: $$\begin{array} { l r } \text { Collect note receivable } & \$ 410,000 \\\text { Issue bonds payable } & 426,000 \\\text { Purchase treasury stock } & 200,000\end{array}$$ What amount should be reported on Titan, Inc's statement of cash flows for financing activities?

A) $ 16,000
B) $836,000
C) $226,000
D) $210,000

Question 76

Minear Company reported net income of $450,000 for the year ended 12/31/15. Included in the computation of net income were: depreciation expense, $60,000; amortization of a patent, $32,000; income from an investment in common stock of Brett Inc., accounted for under the equity method, $48,000; and amortization of a bond discount, $12,000. Minear also paid an $80,000 dividend during the year. The net cash provided by operating activities would be reported at

A) $506,000.
B) $426,000.
C) $394,000.
D) $314,000.

Question 77

Use the following information for questions 68 and 69.
The balance in retained earnings at December 31, 2014 was $1,080,000 and at December 31, 2015 was $873,000. Net income for 2015 was $750,000. A stock dividend was declared and distributed which increased common stock $375,000 and paid-in capital $165,000. A cash dividend was declared and paid.
The amount of the cash dividend was

A) $372,000.
B) $417,000.
C) $582,000.
D) $957,000.

Question 78

Jarvis, Inc. reported net income of $44,000 for the year ended December 31, 2015 Included in net income were depreciation expense of $8,400 and a gain on sale of equipment of $1,700. Each of the following accounts increased during 2015: $$\begin{array} { l l } \text { Accounts receivable } & \$ 2,200 \\\text { Inventory } & \$ 4,500 \\\text { Prepaid rent } & \$ 6,800 \\\text { Available-for-sale securities } & \$ 1,000 \\\text { Accounts payable } & \$ 5,000\end{array}$$ What is the amount of cash provided by operating activities for Jarvis, Inc. for the year ended December 31, 2015?

A) $41,200
B) $43,900
C) $32,200
D) $42,200

Question 79

Use the following information for questions 61 and 62.
Equipment that cost $525,000 and had a book value of $234,000 was sold for $270,000. Data from the comparative balance sheets are: $\begin{array}{lrr}&12 / 31 / 15&12 / 31 / 14\\\text { Equipment } & \$ 3,240,000 & \$ 2,925,000 \\\text { Accumulated Depreciation } & 990,000 & 855,000\end{array}$

-Depreciation expense for 2015 was

A) $462,000.
B) $426,000.
C) $81,000.
D) $54,000.

Question 80

The following information was taken from the 2015 financial statements of Dunlop Corporation: $\begin{array}{lr}\text { Bonds payable, January 1, 2015 } & \$ 600,000 \\\text { Bonds payable, December 31,2015 } & 3,600,000\end{array}$ During 2015
$\bullet$ A $540,000 payment was made to retire bonds payable with a face amount of $600,000.
$\bullet$ Bonds payable with a face amount of $240,000 were issued in exchange for equipment.In its statement of cash flows for the year ended December 31, 2015, what amount should Dunlop report as proceeds from issuance of bonds payable?

A) $3,000,000
B) $3,300,000
C) $3,360,000
D) $3,840,000