Question 1

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: \(\begin{array}{lrr}&\text { December } 31\\text { Assets }&2018&2017\
\hline \text { Cash } & \$ 35,400 & \$ 45,300 \
\text { Accounts receivable } & 11,400 & 14,500 \
\text { Merchandise inventories } & 36,500 & 34,100 \
\text { Equipment } & 90,000 & 66,000 \
\text { Accumulated depreciation } & \underline{(28,600)} & (31,400) \
\text { Total assets } & \$ 144,700 & \$ 128,500\\
\text { Liabilities and Stockholders' Equity }\\hline 
\text { Accounts payable } & \$ 14,300 & \$ 12,500 \
\text { Income taxes payable } & 4,500 & 8,800 \
\text { Long-term notes payable } & 16,500 & 23,000 \
\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \
\text { Retained earnings } & 21,200 & 18,900 \
 \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\text { Sales } & \$ 224,000 \
\text { Cost of goods sold } & 123,000 \
\text { Depreciation expense } & 14,000 \
\text { Other expenses } & 56,000 \
\text { Gain on sale of equipment } & 3,400 \
\text { Income taxes } & 16,000 \
\text { Net income } & \$ 18,400
\end{array}\) During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much is the net cash provided/(used) by investing activities during 2018?

Accepted Answer

The net cash provided/(used) by investing activities during 2018 is calculated as follows:Sale of equipment: $3,600Purchase of equipment: ($24,000)Net cash used in investing activities: ($20,400)

Question 2

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: \(\begin{array}{lrr}&\text { December } 31\\text { Assets }&2018&2017\
\hline \text { Cash } & \$ 35,400 & \$ 45,300 \
\text { Accounts receivable } & 11,400 & 14,500 \
\text { Merchandise inventories } & 36,500 & 34,100 \
\text { Equipment } & 90,000 & 66,000 \
\text { Accumulated depreciation } & \underline{(28,600)} & (31,400) \
\text { Total assets } & \$ 144,700 & \$ 128,500\\
\text { Liabilities and Stockholders' Equity }\\hline 
\text { Accounts payable } & \$ 14,300 & \$ 12,500 \
\text { Income taxes payable } & 4,500 & 8,800 \
\text { Long-term notes payable } & 16,500 & 23,000 \
\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \
\text { Retained earnings } & 21,200 & 18,900 \
 \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\text { Sales } & \$ 224,000 \
\text { Cost of goods sold } & 123,000 \
\text { Depreciation expense } & 14,000 \
\text { Other expenses } & 56,000 \
\text { Gain on sale of equipment } & 3,400 \
\text { Income taxes } & 16,000 \
\text { Net income } & \$ 18,400
\end{array}\) During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much cash was received from the issuance of stock during 2018?

Accepted Answer

The increase in common stock from $65,300 in 2017 to $88,200 in 2018 is $22,900, which represents the cash received from the issuance of stock.

Question 3

Tropical Splendor's statement of cash flows showed the following totals:
Cash provided/(used) by operating activities $ 54,000
Cash provided/(used) by financing activities 21,100
Cash provided/(used) by investing activities (49,000)
Which statement most likely explains what occurred during the year?

Accepted Answer

Tropical Splendor has positive cash flow from operating activities ($54,000) and financing activities ($21,100), but negative cash flow from investing activities (-$49,000). This suggests the company is generating cash from its operations and borrowing (financing activities), and it is using this cash to invest in long-term assets (negative cash flow from investing activities).

Question 4

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: \(\begin{array}{lrr}&\text { December } 31\\text { Assets }&2018&2017\
\hline \text { Cash } & \$ 35,400 & \$ 45,300 \
\text { Accounts receivable } & 11,400 & 14,500 \
\text { Merchandise inventories } & 36,500 & 34,100 \
\text { Equipment } & 90,000 & 66,000 \
\text { Accumulated depreciation } & \underline{(28,600)} & (31,400) \
\text { Total assets } & \$ 144,700 & \$ 128,500\\
\text { Liabilities and Stockholders' Equity }\\hline 
\text { Accounts payable } & \$ 14,300 & \$ 12,500 \
\text { Income taxes payable } & 4,500 & 8,800 \
\text { Long-term notes payable } & 16,500 & 23,000 \
\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \
\text { Retained earnings } & 21,200 & 18,900 \
 \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\text { Sales } & \$ 224,000 \
\text { Cost of goods sold } & 123,000 \
\text { Depreciation expense } & 14,000 \
\text { Other expenses } & 56,000 \
\text { Gain on sale of equipment } & 3,400 \
\text { Income taxes } & 16,000 \
\text { Net income } & \$ 18,400
\end{array}\) During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much cash was paid for income taxes during 2018?

Accepted Answer

The cash paid for income taxes can be calculated by adjusting the income taxes payable account for the income taxes expense. The beginning balance of income taxes payable was $8,800, the ending balance was $4,500, and the income taxes expense for the year was $16,000. The cash paid for income taxes is calculated as follows: Beginning balance + Income taxes expense - Ending balance = $8,800 + $16,000 - $4,500 = $20,300.

Question 5

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: \(\begin{array}{lrr}&\text { December } 31\\text { Assets }&2018&2017\
\hline \text { Cash } & \$ 35,400 & \$ 45,300 \
\text { Accounts receivable } & 11,400 & 14,500 \
\text { Merchandise inventories } & 36,500 & 34,100 \
\text { Equipment } & 90,000 & 66,000 \
\text { Accumulated depreciation } & \underline{(28,600)} & (31,400) \
\text { Total assets } & \$ 144,700 & \$ 128,500\\
\text { Liabilities and Stockholders' Equity }\\hline 
\text { Accounts payable } & \$ 14,300 & \$ 12,500 \
\text { Income taxes payable } & 4,500 & 8,800 \
\text { Long-term notes payable } & 16,500 & 23,000 \
\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \
\text { Retained earnings } & 21,200 & 18,900 \
 \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\text { Sales } & \$ 224,000 \
\text { Cost of goods sold } & 123,000 \
\text { Depreciation expense } & 14,000 \
\text { Other expenses } & 56,000 \
\text { Gain on sale of equipment } & 3,400 \
\text { Income taxes } & 16,000 \
\text { Net income } & \$ 18,400
\end{array}\) During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much cash was paid for dividends during 2018?

Accepted Answer

The answer of Marquette Décor is a merchandiser that operates...

Question 6

DR Electric Supply reported interest expense of $6,300 for the year.Interest payable was $780 and $920 at the beginning and the end of the year, respectively.How much cash did DR Electric Supply pay for interest during the year?

Accepted Answer

The cash paid for interest can be calculated using the formula: Cash Paid = Interest Expense + Beginning Interest Payable - Ending Interest Payable. Thus, Cash Paid = $6,300 + $780 - $920 = $6,160.

Question 7

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: \(\begin{array}{lrr}&\text { December } 31\\text { Assets }&2018&2017\
\hline \text { Cash } & \$ 35,400 & \$ 45,300 \
\text { Accounts receivable } & 11,400 & 14,500 \
\text { Merchandise inventories } & 36,500 & 34,100 \
\text { Equipment } & 90,000 & 66,000 \
\text { Accumulated depreciation } & \underline{(28,600)} & (31,400) \
\text { Total assets } & \$ 144,700 & \$ 128,500\\
\text { Liabilities and Stockholders' Equity }\\hline 
\text { Accounts payable } & \$ 14,300 & \$ 12,500 \
\text { Income taxes payable } & 4,500 & 8,800 \
\text { Long-term notes payable } & 16,500 & 23,000 \
\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \
\text { Retained earnings } & 21,200 & 18,900 \
 \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\text { Sales } & \$ 224,000 \
\text { Cost of goods sold } & 123,000 \
\text { Depreciation expense } & 14,000 \
\text { Other expenses } & 56,000 \
\text { Gain on sale of equipment } & 3,400 \
\text { Income taxes } & 16,000 \
\text { Net income } & \$ 18,400
\end{array}\) During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much is the net increase or decrease in cash and cash equivalents during 2018?

Accepted Answer

The net decrease in cash and cash equivalents during 2018 is calculated by comparing the cash balances at the beginning and end of the year. The cash balance at the end of 2018 is $35,400, and at the end of 2017, it was $45,300. Therefore, the net decrease in cash is $45,300 - $35,400 = $9,900.

Question 8

Which of the following is not an addition to net income when determining the cash flows from operating activity under the indirect method?

Accepted Answer

A gain on sale of equipment is not added back to net income in the operating section of the cash flow statement under the indirect method because it is considered an investing activity, not an operating activity. The gain is subtracted from net income to adjust for the fact that it does not affect cash flows from operating activities.

Question 9

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: \(\begin{array}{lrr}&\text { December } 31\\text { Assets }&2018&2017\
\hline \text { Cash } & \$ 35,400 & \$ 45,300 \
\text { Accounts receivable } & 11,400 & 14,500 \
\text { Merchandise inventories } & 36,500 & 34,100 \
\text { Equipment } & 90,000 & 66,000 \
\text { Accumulated depreciation } & \underline{(28,600)} & (31,400) \
\text { Total assets } & \$ 144,700 & \$ 128,500\\
\text { Liabilities and Stockholders' Equity }\\hline 
\text { Accounts payable } & \$ 14,300 & \$ 12,500 \
\text { Income taxes payable } & 4,500 & 8,800 \
\text { Long-term notes payable } & 16,500 & 23,000 \
\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \
\text { Retained earnings } & 21,200 & 18,900 \
 \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\text { Sales } & \$ 224,000 \
\text { Cost of goods sold } & 123,000 \
\text { Depreciation expense } & 14,000 \
\text { Other expenses } & 56,000 \
\text { Gain on sale of equipment } & 3,400 \
\text { Income taxes } & 16,000 \
\text { Net income } & \$ 18,400
\end{array}\) During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much cash was provided/(used) by financing activities in 2018?

Accepted Answer

Financing activities include transactions involving debt, equity, and dividends. Here, we calculate cash provided/(used) by financing activities by looking at changes in long-term notes payable, common stock, and dividends paid. 1. **Long-term notes payable** decreased by $23,000 - $16,500 = $6,500, indicating cash was used to reduce debt.2. **Common stock** increased by $88,200 - $65,300 = $22,900, indicating cash was provided by issuing more stock.3. **Dividends** can be calculated indirectly. Given that net income was $18,400 and retained earnings increased by $21,200 - $18,900 = $2,300, it implies dividends paid were $18,400 - $2,300 = $16,100.However, the dividends calculation seems to be unnecessary for determining cash flow from financing activities directly from the given data. The direct cash flow effects are from long-term notes payable and common stock changes.So, the net cash provided by financing activities is:- $6,500 (used to reduce debt) + $22,900 (from issuing stock) = $16,400 provided by financing activities.The correct calculation should focus on the explicit changes in financing-related accounts:- Cash used to reduce long-term notes payable: $6,500 used.- Cash provided by issuing common stock: $22,900 provided.Thus, the net cash provided by financing activities is $22,900 - $6,500 = $16,400. However, considering the options provided and the apparent confusion, the correct approach to match the options given would involve re-evaluating the calculation based on the explicit changes in the financing accounts provided. Given the discrepancy in the explanation and the options provided, it appears there was a mistake in the calculation process described. The correct focus should be on the net changes in the financing accounts without considering dividends directly, as dividends are not explicitly accounted for in the options given. The correct answer should reflect the net changes in financing activities based on the information provided about long-term notes payable and common stock.

Question 10

Wellington Cabinets sells its merchandise on account.The company has provided the following information for 2018 and 2017: $\begin{array}{lrr}&2018&2017\
\text { Accounts receivable } & \$ 1 \overline{25,000} & \$ 1 \overline{32,000} \
\text { Sales } & 1,800,000 & 1,650,000
\end{array}$ How much cash did Wellington Cabinets collect from customers during 2018?

Accepted Answer

The answer of Wellington Cabinets sells its merchandise on account.The...

Question 11

Marquette Décor is a merchandiser that operates a small retail store.Comparative balance sheets for the years ending December 31, 2018 and 2017 and its income statement for 2018 follow: \(\begin{array}{lrr}&\text { December } 31\\text { Assets }&2018&2017\
\hline \text { Cash } & \$ 35,400 & \$ 45,300 \
\text { Accounts receivable } & 11,400 & 14,500 \
\text { Merchandise inventories } & 36,500 & 34,100 \
\text { Equipment } & 90,000 & 66,000 \
\text { Accumulated depreciation } & \underline{(28,600)} & (31,400) \
\text { Total assets } & \$ 144,700 & \$ 128,500\\
\text { Liabilities and Stockholders' Equity }\\hline 
\text { Accounts payable } & \$ 14,300 & \$ 12,500 \
\text { Income taxes payable } & 4,500 & 8,800 \
\text { Long-term notes payable } & 16,500 & 23,000 \
\text { Common stock, } \$ 2 \text { par } & 88,200 & 65,300 \
\text { Retained earnings } & 21,200 & 18,900 \
 \text { Total liabilities and stockholders' equity } & \$ 144,700 & \$ 128,500 \\\text { Sales } & \$ 224,000 \
\text { Cost of goods sold } & 123,000 \
\text { Depreciation expense } & 14,000 \
\text { Other expenses } & 56,000 \
\text { Gain on sale of equipment } & 3,400 \
\text { Income taxes } & 16,000 \
\text { Net income } & \$ 18,400
\end{array}\) During the year, equipment with an original cost of $17,000, and accumulated depreciation totaling $16,800 was sold for $3,600.Dividends were declared and paid during the year.How much cash was used to acquire new equipment during 2018?

Accepted Answer

The answer of Marquette Décor is a merchandiser that operates...

Question 12

The following amounts were provided by Brighthouse Lighting for the 2017: $\begin{array}{lr}
\text { Beginning retained earnings } & \$ 650,000 \
\text { Ending retained earnings } & 630,000 \
\text { Cash provided by operations } & 2,240,000 \
\text { Net income for } 2017 & 2,160,000
\end{array}$ How much will Brighthouse report on it statement of cash flows for 'dividends paid' during 2017?

Accepted Answer

The answer of The following amounts were provided by Brighthouse...

Question 13

The following amounts are taken from Wellington Cabinets' financial statements: $\begin{array}{lrr}&2017&2018\
\text { Merchandise inventory } & \$ 600,000 & \$ 700,000 \
\text { Accounts payable } & 70,000 & 110,000 \
\text { Cost of qoods sold } & 3,100,000 & 4,200,000
\end{array}$ The company uses accounts payable only for purchases of merchandise inventory.What amount of cash did Wellington Cabinets pay to for inventory during 2018?

Accepted Answer

To calculate the cash paid for inventory during 2018, we use the formula: Cash Paid for Inventory = Cost of Goods Sold + Ending Inventory - Beginning Inventory + Beginning Accounts Payable - Ending Accounts Payable. Plugging in the values: $4,200,000 + 700,000 - 600,000 + 70,000 - 110,000 = 4,260,000$.

Question 14

Which of the following is subtracted from net income under the indirect method to determine net cash provided/(used) by operating activities?

Accepted Answer

Under the indirect method, increases in current assets other than cash, such as merchandise inventory, are subtracted from net income to determine net cash provided by operating activities. This is because an increase in inventory represents cash outflow that does not affect net income immediately.

Quiz 13: Statement of Cash Flows

DR Electric Supply reported interest expense of $6,300 for the year.Interest payable was $780 and $920 at the beginning and the end of the year, respectively.How much cash did DR Electric Supply pay for interest during the year?

Which of the following is not an addition to net income when determining the cash flows from operating activity under the indirect method?

Which of the following is subtracted from net income under the indirect method to determine net cash provided/(used) by operating activities?