Question 1

The net income reported on the income statement for the current year was $200,000. Depreciation recorded on plant assets was $38,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and accounts payable decreased by $1,000 and $11,000, respectively. Using the indirect method, how much would be reported for net cash flows from operating activities in the statement of cash flows?

Accepted Answer

Net cash flows from operating activities can be calculated as follows:
Net Income + Depreciation - Increase in Accounts Receivable - Increase in Inventories + Decrease in Prepaid Expenses - Decrease in Accounts Payable
$200,000 + $38,000 - $2,000 - $8,000 - (-$1,000) - (-$11,000) = $218,000

Question 2

Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:
 
-Refer to Figure 15-1. The net cash flows from financing activities last year was

Accepted Answer

The net cash flows from financing activities are negative, indicated by the parentheses, which means there was a net outflow of $80,000.

Question 3

Land costing $78,000 was sold for $93,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Accepted Answer

The amount reported as an investing activity on the statement of cash flows for the sale of land is the cash received from the sale, which is $93,000.

Question 4

The following transactions occurred last year at Jackson Inc.  Based solely on the above information, the net cash flows from financing activities for the year on the statement of cash flows would be

Accepted Answer

The answer of The following transactions occurred last year at...

Question 5

Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:
 
-Refer to Figure 15-1. The net cash flows from operating activities last year was

Accepted Answer

To calculate net cash flows from operating activities, we need to start with net income and adjust for non-cash items and changes in current assets and liabilities. 
Net cash flows from operating activities = Net income + Depreciation expense + Increase in accounts payable – Increase in accounts receivable 
Net cash flows from operating activities = $88,000 + $40,000 + $7,000 - $10,000 = $161,000 
Therefore, the correct answer is option D.

Question 6

If a loss of $9,200 is incurred in selling (for cash) a patent having a book value of $80,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

The total amount reported in the cash flows from investing activities section would be $70,800, which is the cash received from the sale of the patent. This is calculated by subtracting the loss ($9,200) from the book value of the patent ($80,000).

Question 7

Figure 15-2.Chandler Company's net income last year was $98,000 and cash dividends declared and paid to the company stockholders was $13,000. Changes in selected balance sheet accounts for the year appear below:
 
-Refer to Figure 15-2. The net cash flows from investing activities to be reported in a statement of cash flows is

Accepted Answer

The net cash flows from investing activities include the purchase of equipment for $115,000, which is an outflow of cash, thus resulting in $(115,000).

Question 8

The net income reported on the income statement for the current year was $79,000. Depreciation was $6,000. Account receivable and inventories decreased by $1,100 and $2,700, respectively. Prepaid expenses and accounts payable increased, respectively, by $950 and $3,000. How much cash was provided by operating activities?

Accepted Answer

To calculate cash provided by operating activities, start with the net income of $79,000. Add back non-cash expenses like depreciation ($6,000). Adjust for changes in working capital: decrease in accounts receivable ($1,100) and inventories ($2,700) increases cash, while an increase in prepaid expenses ($950) decreases cash, and an increase in accounts payable ($3,000) increases cash. The total is $79,000 + $6,000 + $1,100 + $2,700 - $950 + $3,000 = $90,850.

Question 9

The Laurel Company reported the following data for last year:  Based solely on this information, the net cash flows from financing activities on the statement of cash flows would be

Accepted Answer

Based on the information given in the question, we know that the net increase in long-term debt for the year was $50,000, and the payment of dividends was $10,000. To calculate the net cash flows from financing activities, we need to subtract the payment of dividends from the increase in long-term debt. Therefore:
Net cash flows from financing activities = $50,000 - $10,000 = $40,000
However, this is a net increase in cash flows from financing activities. From the perspective of the statement of cash flows, this represents an outflow of cash, as the company has received more cash from long-term borrowing than it has paid out in dividends. Therefore, we need to express this as a negative number:
Net cash flows from financing activities = -$40,000 = $(60,000)

Question 10

If a loss of $12,500 is incurred in selling (for cash) office equipment having a book value of $50,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

The total amount reported in the cash flows from investing activities section would be $37,500, which is the cash received from the sale of the office equipment. This is calculated by subtracting the loss of $12,500 from the book value of $50,000.

Question 11

The following transactions occurred last year at Dempsey Inc.  Based solely on the above information, the net cash flows from financing activities for the year on the statement of cash flows would be

Accepted Answer

The answer of The following transactions occurred last year at...

Question 12

The net income reported on the income statement for the current year was $635,000. Depreciation recorded on plant assets was $29,000. Accounts receivable and inventories increased by $1,200 and $3,600, respectively. Prepaid expenses and accounts payable decreased by $800 and $16,000 respectively. How much cash was provided by operating activities?

Accepted Answer

Starting with net income: 
Net income = $635,000 
Add back depreciation: 
$635,000 + $29,000 = $664,000 
Adjust for changes in accounts receivable and inventory (since they increased, they used up cash): 
$664,000 - $1,200 - $3,600 = $659,200 
Adjust for changes in prepaid expenses and accounts payable (since prepaid expenses decreased and accounts payable decreased, more cash was used): 
$659,200 - (-$800) - (-$16,000) = $644,000 
Therefore, cash provided by operating activities is $644,000.

Question 13

If a gain of $25,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from the investing activities section of the statement of cash flows is

Accepted Answer

The total amount reported in the cash flows from investing activities would be $125,000, which is the cash received from the sale. The gain itself does not affect the cash received; it's the result of subtracting the book value ($100,000) from the cash received ($125,000).

Question 14

Figure 15-2.Chandler Company's net income last year was $98,000 and cash dividends declared and paid to the company stockholders was $13,000. Changes in selected balance sheet accounts for the year appear below:
 
-Refer to Figure 15-2. The net cash flows from operating activities to be reported in a statement of cash flows is

Accepted Answer

Net cash flows from operating activities = Net income + Depreciation and amortization - Increase in working capital = $74,000 + $21,000 - $63,000 = $135,000

Question 15

Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below:
 
-Refer to Figure 15-1. The net cash flows from investing activities last year was

Accepted Answer

The answer of Figure 15-1.Master Company's net income last year...

Question 16

If a gain of $30,000 is incurred in selling (for cash) long-term investments having a book value of $180,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Accepted Answer

The cash inflow from the sale of long-term investments is $210,000 ($180,000 book value + $30,000 gain). Therefore, the total amount reported in the cash flows from investing activities section of the statement of cash flows is $210,000.

Question 17

The net income reported on the income statement for the current year was $100,000. Depreciation recorded on plant assets was $25,000. Accounts receivable and inventories decreased by $5,000 and $15,000, respectively. Prepaid expenses and accounts payable increased by $500 and $4,000, respectively. Using the indirect method, how much would be reported for net cash flows from operating activities in the statement of cash flows?

Accepted Answer

The net cash flows from operating activities is calculated by adjusting the net income for changes in working capital and non-cash expenses. Starting with the net income of $100,000, add back depreciation of $25,000. Then, adjust for changes in working capital: add the decrease in accounts receivable ($5,000) and inventories ($15,000), and add the increase in accounts payable ($4,000). Subtract the increase in prepaid expenses ($500). The total is $100,000 + $25,000 + $5,000 + $15,000 + $4,000 - $500 = $148,500.

Question 18

The following transactions occurred last year at Jackson Inc.  Based solely on the above information, the net cash flows from financing activities for the year on the statement of cash flows would be

Accepted Answer

The answer of The following transactions occurred last year at...

Question 19

A company had net income of $230,000. Depreciation expense is $26,000. During the year accounts receivable and inventory increased $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. Using the indirect method, what is the amount of net cash flows from operating activities on the statement of cash flows?

Accepted Answer

Starting with net income: $230,000
Adding back depreciation expense: $26,000
Adjusting for increase in accounts receivable: -$15,000
Adjusting for increase in inventory: -$40,000
Adjusting for decrease in prepaid expenses: $2,000
Adjusting for decrease in accounts payable: $4,000
Adding back loss on sale of equipment: $3,000
Net cash flows from operating activities: $210,000

Question 20

Figure 15-2.Chandler Company's net income last year was $98,000 and cash dividends declared and paid to the company stockholders was $13,000. Changes in selected balance sheet accounts for the year appear below:
 
-Refer to Figure 15-2. The net cash flows from financing activities to be reported in a statement of cash flows is

Accepted Answer

The answer of Figure 15-2.Chandler Company's net income last year...

Quiz 15: Statement of Cash Flows

Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below: -Refer to Figure 15-1. The net cash flows from financing activities last year was

Land costing $78,000 was sold for $93,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

The following transactions occurred last year at Jackson Inc. Based solely on the above information, the net cash flows from financing activities for the year on the statement of cash flows would be

Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below: -Refer to Figure 15-1. The net cash flows from operating activities last year was

If a loss of $9,200 is incurred in selling (for cash) a patent having a book value of $80,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

The Laurel Company reported the following data for last year: Based solely on this information, the net cash flows from financing activities on the statement of cash flows would be

If a loss of $12,500 is incurred in selling (for cash) office equipment having a book value of $50,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

The following transactions occurred last year at Dempsey Inc. Based solely on the above information, the net cash flows from financing activities for the year on the statement of cash flows would be

If a gain of $25,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from the investing activities section of the statement of cash flows is

Figure 15-1.Master Company's net income last year was $88,000 and cash dividends declared and paid to the company stockholders was $60,000. Changes in selected balance sheet accounts for the year appear below: -Refer to Figure 15-1. The net cash flows from investing activities last year was

If a gain of $30,000 is incurred in selling (for cash) long-term investments having a book value of $180,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

The following transactions occurred last year at Jackson Inc. Based solely on the above information, the net cash flows from financing activities for the year on the statement of cash flows would be