Question 1

The comparative balance sheets of Posner Company,for Years 1 and 2 ended December 31,appear below in condensed form:
 \(\begin{array}{lrr}
&\text { Year 2 }&\text { Year1 }\
\text { Cash } & \$ \overline{53,000} & \$ \overline{50,000} \
\text { Accounts receivable net } & 37,000 & 48,000 \
\text { Inventories } & 108,500 & 100,000 \
\text { Investments } & - & 70,000 \
\text { Equipment } & 573,200 & 450,000 \
\text { Accumulated depreciation —equipment } & \underline {142,000} &\underline { 176,000} \
&\underline {\$ 629.700}&\underline { \$ 542,000 }\
\
\text { Accounts payable } & \$ 62,500 & \$ 43,800 \
\text { Bonds payable, due Year 2 } & - & 100,000 \
\text { Common stock, \$10 par } & 325,000 & 285,000 \
\text { Paid-in capital in excess of par-common stock } & 80,000 & 55,000 \
\text { Retained earnings } & \underline {162,200 }& \underline {58,200}\
&\underline { \$ 629.700 }&\underline { \$ 542,000  }\
\
\text { The income statement for the current year is as follows: }\
\
\text { Sales } & & \$ 625,700 \
\text { Cost of merchandise sold } & & \underline {340,000 }\
\text { Gross profit } & & \$ 285,700 \
\text { Operating expenses: } \
\text { Depreciation expense } & \$ 26,000 & \
\text { Other operating expenses } &\underline { 68,000} & \underline {94,000} \
\text {Income from operations} & &\$ 191,700\ \
\text {Other income:} &  \
\text {Gain on sale of investment} &  \$4,000\
\text {Other expense:} &  \
\text {Interest expense} &\underline { 6,000  } &\underline {  2,000 }   \
\text {Income before income tax} & &\$ 189,700  \
\text {Income tax} & &\underline { 60,700   }  \
\text {Net income} & &\underline {  \$ 129000 }  \
\end{array}\) Additional data for the current year are as follows:
a. Fully depreciated equipment costing $60,000 was scrapped,no salvage,and new equipment was purchased for $183,200.
b. Bonds payable for $100,000 were retired by payment at their face amount.
c. 5,000 shares of common stock were issued at $13 for cash.
d. Cash dividends declared and paid,$25,000.
Prepare a statement of cash flow,using the indirect method of reporting cash flows from operating activities.

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Question 2

An analysis of the general ledger accounts indicates that equipment, with an original cost of $200,000 and accumulated depreciation of $170,000 on the date of sale, was sold for $20,000 during the year.  Using this information, indicate the items to be reported on the statement of cash flows using the indirect method.

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Question 3

The net income reported on an income statement for the current year was $63,000.  Depreciation recorded on fixed assets for the year was $24,000.  Balances of the current asset and current liability accounts at the end and beginning of the year are listed below.  Prepare the Cash Flows from Operating Activities section of the statement of cash flows using the indirect method.

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Question 4

Complete each of the columns on the table below,indicating in which section each item would be reported on the statement of cash flows operating,investing,or financing,the amount that would be reported,and whether the item would create an increase or decrease in cash.For item that affect more than one section of the statement,indicate all affected.Assume the indirect method of reporting cash flows from operating activities.
The first item has been completed as an example.

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Question 5

Sales reported on the income statement were $690,000.The accounts receivable balance declined $39,000 over the year.Determine the amount of cash received from customers.

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Question 6

Cost of merchandise sold reported on the income statement was $155,000.The accounts payable balance increased $8,000,and the inventory balance increased by $21,000 over the year.Determine the amount of cash paid for merchandise.

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Question 7

The comparative balance sheet of ConnieJo Company,for December 31,Years 1 and 2 ended December 31 appears below in condensed form:
 $\begin{array}{lrr}
&\underline {\text { Year 2 }}&\underline {\text { Year 1 }}\
\
\text { Cash } & \$ 45,000 & \$ 53,500 \
\text { Accounts receivable net } & 51,300 & 58,000 \
\text { Inventories } & 147,200 & 135,000 \
\text { Investments } & 0 & 60,000 \
\text { Equipment } & 493,000 & 375,000 \
\text { Accumulated depreciation -equipment } & \underline {113,700} & \underline {128,000}\
& \underline {\$ 622.800 } & \underline {\$ 553.500 }\
\
  \text { Accounts payable }& \$ 61,500 & \$ 42,600 \
  \text { Bonds payable, due Year 4 }& 0 & 100,000

\end{array}$ $\begin{array}{lrrr}
\text { Common stack, \$10 par } & 250,000 & 200,000 \
\text { Paid-in capital in excess of par-common stock } & 75,000 & 50,000 \
\text { Retained earnings } & 236,300 & 160,900 \
& \underline {\$ 622,800}&\underline {\$ 553,500} \
\
\text { The income statement for the current year is as follows: }\
\
\text { Sales }&&\$ 623,000  \
\text { Cost of merchandise sold }&&348,500\
\text { Gross profit }&&\underline { \$ 274,500}\
\text { Operating expenses: }\
\text { Depreciation expense }&\$ 24,700\ 
\text { Other operating expenses  }&\underline{75,300} & \underline{100,000}\
\text { Income from operations}&&{\$ 174,500}\
\text { Other income }\
\text { Gain on sale of investment }& \$5000\
\text { Other expense: }\
\text { Interest expense } &  \underline{12,000} & \underline{7,000}\
 \text { Income before income tax } & & {\$ 167,500} \
\text { Income tax } &  &  \underline{64,100} \
\text {Net Income } & &\$ 103,400
\end{array}$ Additional data for the current year are as follows:
a. Fully depreciated equipment costing $39,000 was scrapped,no salvage,and equipment was purchased for $157,000.
b. Bonds payable for $100,000 were retired by payment at their face amount.
c. 5,000 shares of common stock were issued at $15 for cash.
d. Cash dividends declared were paid $28,000.
e. All sales are on account.
Prepare a statement of cash flows,using the direct method of reporting cash flows from operating activities.

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Question 8

The following two scenarios are independent of one another.
1-	An analysis of the general ledger accounts indicates that office equipment was sold for $39,600 during the year.  The equipment originally cost $68,000 and had accumulated depreciation of $22,500 on the date of sale.  Indicate how the elements of this transaction would be reported on the statement of cash flows using the indirect method.
2-	An analysis of the general ledger accounts indicates that delivery equipment, which cost $97,000 and on which accumulated depreciation totaled $42,100 on the date of sale, was sold for $57,500 during the year.  Using this information, indicate the items to be reported on the statement of cash flows.

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Question 9

On the basis of the details of the common stock account presented below, calculate the total amount to be recorded in financing section of the statement of cash flows. Assume any stock issues were at par.

Indicate whether the amount results in an increase or decrease in cash.

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Question 10

Balances of the current asset and current liability accounts at the end and beginning of the year are as follows:
 $\begin{array}{lr}
&\underline { \text { End}}&\underline { \text {  Beginning }}\ 
\text { Cash } & \$ 67,000 &\$ 73,000 \
\text { Accounts receivable net } & 73,000 &60,000 \
\text { Inventories } & 54,000&47,000 \
\text { Accounts payable }  \
\text { merchandise creditors } & 43,000 &37,000  \
\text { Salaries payable } & 2,800 &3,800 \
\text { Sales on account }  & 210,000 \
\text { Cost of merchandise sold } & 70,000\
\text { Operating expenses other than depreciation }& 67,000
\end{array}$ Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.

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Question 11

The board of directors of Kendall Co.declared cash dividends totaling $390,000 during the current year.The comparative balance sheet indicates dividends payable of $58,000 at the beginning of the year and $73,000 at the end of the year.What was the amount of cash payments Kendall Co.made to stockholders during the year?

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Question 12

The comparative balance sheet of Barry Company for Years 1 and 2 ended December 31 appears below in condensed form:
 $\begin{array}{lrr}
&\underline {\text { Year 2 }}&\underline {\text { Year 1 }}\
\text { Cash } & \$ 72,000 & \$ 42,500 \
\text { Accounts receivable net } & 61,000 & 70,200 \
\text { Inventories } & 121,000 & 105,000 \
\text { Investments } & - & 100,000 \
\text { Equipment } & 515,000 & 425,000 \
\text { Accumulated depreciation -equipment } & 153,000 & 175,000\
\
&\underline{ \$ 616,000 }&\underline{ \$  567,700 }\
\
\
\text { Accounts payable } & \$ 59,750 & \$ 47,250 \
\text { Bonds payable } & - & 75,000 \
\text { Common stock, } \$ 20 \text { par } & 375,000 & 325,000 \
\text { Premium on common stock } & 50,000 & 25,000 \
\text { Retained earnings } &\underline{ \$ 131,250 }& \underline{95,450} \
&\underline{ \$ 616,000 }&\underline{ \$  567,700 }\
\text { Addlitional data for the current vear are as follows:}
\end{array}$ a Net income,$75,800.
b Depreciation reported on income statement,$38,000.
c Fully depreciated equipment costing $60,000 was scrapped,no salvage,and equipment was purchased for $150,000.
d Bonds payable for $75,000 were retired by payment at their face amount.
e 2,500 shares of common stock were issued at $30 for cash.
f Cash dividends declared and paid,$40,000.
g Investments of $100,000 were sold for $125,000.
Prepare a statement of cash flows using the indirect method.

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Question 13

Based on the following,what is free cash flow?
 $\begin{array}{lccc}
  \text { Net cash flow from operating activities}&\$ 318,000 \
  \text { Net cash flow used for investing activities}&30,000\
  \text { Net cash flow from financing activities
}& 30,000\
\end{array}$
 Cash flows from operations include $2,000 for depreciation.Cash flows from investing include the purchase of a replacement asset for $100,000 and the sale of the one used in production,which is now obsolete,for $70,000.Cash flows from financing include $70,000 of borrowing.

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Question 14

The Dickinson Company reported net income of $155,000 for the current year.Depreciation recorded on buildings and equipment amounted to $65,000 for the year.In addition,a building with an original cost of $250,000 and accumulated depreciation of $190,000 on the date of the sale,was sold for $75,000.Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
 $\begin{array}{l}
\begin{array}{lll}
\
\text { Cash}\
\text { Accounts receivable}\
\text { Inventories}\
\text { Accounts payable }\
\end{array}
\begin{array}{c}
\underline { \text { End  of Year}}\
\$ 20,000 \
19,000 \
50,000 \
12,000
\end{array}
\begin{array}{c}

\underline { \text { Beginning  of Year}}\
\$ 15,000 \
32,000 \
65,000 \
18,000
\end{array}
\end{array}$
 Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

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Question 15

The net income reported on the income statement for the current year was $58,000.Depreciation recorded on fixed assets for the year was $24,000.In addition,equipment with an original cost of $130,000 and accumulated depreciation of $115,000 on the date of the sale,was sold for $20,000.Balances of the current asset and current liability accounts at the end and beginning of the year are listed below.Prepare the cash flows from operating activities section of a statement of cash flows using the indirect method.

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Question 16

Balances of the current asset and current liability accounts at the end and beginning of the year are as follows:
 $\begin{array}{lr}
&\underline { \text { End}}&\underline { \text { Beginning}}\
\text { Cash } & \$ 62,000 &\$ 73,000 \
\text { Accounts receivable net } & 75,000 &60,000 \
\text { Inventories } & 54,000 &47,000 \
\text { Accounts payable merchandise creditors } & 43,000 &37,000 \
\text { Salaries payable } & 2,800 &3,800\
\text { Sales on account } & 210,000 \
\text { Cost of merchandise sold } & 70,000 \
\text { Onerating expenses other than depreciation } & 67000
\end{array}$ Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.

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Quiz 14: Statement of Cash Flows

Sales reported on the income statement were $690,000.The accounts receivable balance declined $39,000 over the year.Determine the amount of cash received from customers.

Cost of merchandise sold reported on the income statement was $155,000.The accounts payable balance increased $8,000,and the inventory balance increased by $21,000 over the year.Determine the amount of cash paid for merchandise.

On the basis of the details of the common stock account presented below, calculate the total amount to be recorded in financing section of the statement of cash flows. Assume any stock issues were at par. Indicate whether the amount results in an increase or decrease in cash.