Question 1

Sebring Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $140,000 was sold for a $10,000 loss in Year 2. The following selected information is available for Sebring Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

Accepted Answer

To calculate the cash received from the sale of equipment, we need to subtract the loss from the book value (cost - accumulated depreciation) of the equipment.
Book value = $140,000 - $40,000 = $100,000
Cash received = $100,000 - $10,000 = $90,000
Therefore, the correct answer is D: $18,000.

Question 2

The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The amount of cash dividends paid during the year would be:

Accepted Answer

The answer of The accountant for Robinson Company is preparing...

Question 3

Woodlawn Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $233,000
Cash dividends declared for the year $50,000
Proceeds from the sale of equipment $85,000
Gain on the sale of equipment $4,500
Cash dividends payable at the beginning of the year $22,000
Cash dividends payable at the end of the year $30,000
Net income for the year $110,000
The ending balance in retained earnings is:

Accepted Answer

The ending balance in retained earnings is calculated by starting with the beginning balance, adding net income, and subtracting dividends declared. Beginning retained earnings ($233,000) + Net income ($110,000) - Dividends declared ($50,000) = Ending retained earnings ($293,000). Cash dividends payable and proceeds from the sale of equipment, including the gain on sale, do not affect the retained earnings calculation directly.

Question 4

Castine reports tax-exampt income of $305,000 for the year ended December 31, Year 2. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, and a $100,000 decrease in notes payable. Calculate the new cash provided (used) in operating activities using the indirect method.

Accepted Answer

Starting with tax-exempt income of $305,000, add back depreciation of $93,700 and the loss on the sale of equipment of $10,000 for a total of $388,700. Then, adjust for changes in current assets and liabilities by adding back the increase in accounts receivable of $40,200 and the decrease in prepaid expenses of $10,200, and subtracting the increase in accounts payable of $15,200, the decrease in wages payable of $12,500, and the decrease in notes payable of $100,000. The final result is $291,000, which represents the net cash provided by operating activities. Therefore, the correct answer is C) $381,400, which is the result of adding the net cash provided by operating activities of $291,000 to the decrease in noncurrent assets of $90,400 (decrease in notes payable of $100,000 minus the loss on the sale of equipment of $10,000).

Question 5

In preparing a company's statement of cash flows for the year just ended, the following information is available: Loss on the sale of equipment $ 14,000
Purchase of equipment $145,000
Proceeds from the sale of equipment $126,000
Repayment of outstanding bonds $ 87,000
Purchase of treasury shares $ 62,000
Issuance of ordinary shares $ 96,000
Purchase of land $115,000
Increase in accounts receivable during the year $ 43,000
Decrease in accounts payable during the year $ 75,000
Net cash flows from financing activities for the year were:

Accepted Answer

Net cash flows from financing activities include repayment of bonds ($87,000 used), purchase of treasury shares ($62,000 used), and issuance of ordinary shares ($96,000 provided). Therefore, the net cash used by financing activities is $87,000 + $62,000 - $96,000 = $53,000.

Question 6

In preparing a company's statement of cash flows for the most recent year, the following information is available: Loss on the sale of equipment $ 14,000
Purchase of equipment $145,000
Proceeds from the sale of equipment $126,000
Repayment of outstanding bonds $ 87,000
Purchase of treasury shares $ 62,000
Issuance of ordinary shares $ 96,000
Purchase of land $115,000
Increase in accounts receivable during the year $ 43,000
Decrease in accounts payable during the year $ 75,000
Payment of cash dividends $ 35,000
Net cash flows from investing activities for the year were:

Accepted Answer

Net cash flows from investing activities include cash flows related to the purchase and sale of equipment, and the purchase of land. The calculation is as follows: Proceeds from the sale of equipment ($126,000) - Purchase of equipment ($145,000) - Purchase of land ($115,000) = -$134,000, indicating net cash used by investing activities.

Question 7

Trenton reports tax-exempt income of $230,000 for the year ended December 31, Year 2. It also reports $87,700 depreciation expense and a $5,000 gain on the sale of equipment. Its comparative balance sheet reveals a $35,500 decrease in accounts receivable, a $15,750 increase in accounts payable, and a $12,500 decrease in wages payable. Calculate the new cash provided (used) in operating activities using the indirect method.

Accepted Answer

The calculation for cash provided (used) in operating activities using the indirect method starts with the tax-exempt income of $230,000. Then, adjustments are made for non-cash items and changes in working capital:- Add back depreciation expense: $87,700- Subtract gain on sale of equipment: -$5,000 (since it doesn't affect cash from operating activities)- Adjust for decrease in accounts receivable (increase in cash): $35,500- Adjust for increase in accounts payable (increase in cash): $15,750- Adjust for decrease in wages payable (decrease in cash): -$12,500So, the calculation is: $230,000 + $87,700 - $5,000 + $35,500 + $15,750 - $12,500 = $351,450.

Question 8

Sebring Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $140,000 was sold for its carrying amount in Year 2. The following selected information is available for Sebring Company from its comparative balance sheets. Compute the cash received from the sale of the equipment.

Accepted Answer

The answer of Sebring Company reports depreciation expense of $40,000...

Question 9

Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

Accepted Answer

Cash collections from customers are a source of cash from operating activities when using the direct method to prepare the cash flow statement.

Question 10

Beewell's net income for the year ended December 31, Year 2 was $185,000. Information from Beewell's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2.

Accepted Answer

The answer of Beewell's net income for the year ended...

Question 11

Beewell's net income for the year ended December 31, Year 2 was $185,000. Information from Beewell's comparative balance sheets is given below. Compute the cash received from the sale of its ordinary shares during Year 2.

Accepted Answer

The answer of Beewell's net income for the year ended...

Question 12

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from investing activities:

Accepted Answer

The answer of Weston is preparing the company's statement of...

Question 13

Sebring Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $140,000 was sold for a $5,000 gain in Year 2. The following selected information is available for Sebring Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

Accepted Answer

The answer of Sebring Company reports depreciation expense of $40,000...

Question 14

Analysis reveals that a company had a net decrease in cash of $4,000 for the current year. Net cash provided by operating activities was $18,000; net cash used in investing activities was $10,000 and net cash used in financing activities was $12,000. If the year-end cash balance is $21,000, the beginning cash balance was:

Accepted Answer

The beginning cash balance can be calculated by adding the net decrease in cash to the year-end cash balance: $21,000 (year-end balance) + $4,000 (net decrease) = $25,000.

Question 15

Stojko Corporation had a net decrease in cash of $10,000 for the current year. Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000. What amount of cash was provided (used) in operating activities?

Accepted Answer

Using the indirect method of the statement of cash flows, we can calculate the cash provided or used in operating activities by starting with the net decrease in cash and adding back the cash used in investing and financing activities. 
Cash provided (used) in operating activities = Net Decrease in Cash + Net Cash Used in Investing Activities + Net Cash Used in Financing Activities 
= -$10,000 + (-$52,000) + (-$38,000) 
= -$100,000 
Since this amount is negative, it means that cash was used in operating activities. Therefore, the correct answer is option C, $80,000 provided.

Question 16

Use the following information to calculate cash received from dividends:

Accepted Answer

There is no information provided regarding the dividend rate or the number of shares held. Therefore, we cannot calculate the cash received from dividends.

Question 17

The accountant for Robinson Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: What is the ending balance for retained earnings?

Accepted Answer

The answer of The accountant for Robinson Company is preparing...

Question 18

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from operating activities using the indirect method. Management wishes to maximize cash flows from operating activities.

Accepted Answer

The answer of Weston is preparing the company's statement of...

Question 19

Woodlawn Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $233,000
Cash dividends declared for the year $50,000
Proceeds from the sale of equipment $85,000
Gain on the sale of equipment $4,500
Cash dividends payable at the beginning of the year $22,000
Cash dividends payable at the end of the year $30,000
Net income for the year $110,000
The amount of cash paid for dividends was:

Accepted Answer

The answer of Woodlawn Company is preparing the company's statement...

Question 20

Castine reports income before taxes of $310,000 and income taxes paid of $5,000 for the year ended December 31, Year 2. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, a $75,000 increase in equipment, and a $100,000 decrease in notes payable. Calculate the increase in cash for Year 2.

Accepted Answer

To calculate the increase in cash, we need to use the formula: 
Increase in Cash = Income before taxes - Income taxes paid + Depreciation expense + Loss on sale of equipment + Decrease in accounts receivable + Increase in prepaid expenses + Increase in accounts payable + Decrease in wages payable + Increase in equipment - Decrease in notes payable

Substituting the values, we get:

Increase in Cash = $310,000 - $5,000 + $93,700 - $10,000 + ($40,200) - ($10,200) + $15,200 - ($12,500) +$75,000 - ($100,000)
Increase in Cash = $206,400

Therefore, the increase in cash for Year 2 was $206,400. Option D is the correct answer.

Quiz 16: Statement of Cash Flows