Q&A Hero

Q: The use of a spreadsheet for analysis is especially useful when preparing the statement of cash flows using the _____________ method.

Q: The reporting of investing and financing activities is _________________ under the direct and indirect methods of preparing the statement of cash flows.

Q: When preparing the operating section of the statement of cash flows using the indirect method, noncash expenses are _____________ net income.

Q: Information to prepare the statement of cash flows usually comes from three sources: (1) __________________________, (2) _______________________ and (3) ____________________.

Q: The cash flow on total assets ratio is computed by dividing _____________ by ____________.

Q: Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.

Q: The statement of cash flows is divided into three sections called the _____________, _____________ and _______________ sections.

Q: Noncash financing and investing activities are disclosed in the ____________ or in a separate ______________________________.

Q: ___________________ activities include those transactions that affect long-term liabilities and equity.

Q: ___________________ activities generally include those transactions and events that affect long-term assets.

Q: _____________ activities include the cash effects of transactions and events that determine net income.

Q: Investments that are readily convertible to a known amount of cash and are sufficiently close to their maturity so that the market value is unaffected by interest rate changes are ______________________________.

Q: A main purpose of the statement of cash flows is to report all the major cash ________ and cash _______________.

Q: Northwest Corporations salaries expense was $18.0 million. What is the amount of cash that the company paid for salaries if the Salaries Payable account increased by $4.0 million?

Q: Fabulous Furnitures inventory increased during the year by $6.0 million. Its accounts payable increased by $4.0 million during the same period. What is the amount of cash Fabulous Furniture paid to suppliers of merchandise during the reporting period if its cost of goods sold was $26.0 million?

Q: Based on the following income statement and balance sheet for Montego Bay Corporation, determine the cash flows from operating activities using the direct method. MONTEGO BAY CORPORATION Income Statement For Year Ended December 31, 2013 Sales $504,000 Cost of goods sold 327,600 Depreciation 42,000 Other operating expenses 125,500 (495,100) Other gains (losses): Gain on sale of equipment 7,200 Income before taxes 16,100 Income tax expense (4,800) Net income $ 11,300 MONTEGO BAY CORPORATION Balance Sheets At December 31 2013 2012 Cash $64,650 $55,800 Accounts receivable 21,000 29,000 Inventory 58,000 52,100 Equipment 240,000 222,000 Accumulated depreciation (106,000) (96,000) Total assets $277,650 $262,900 Liabilities: Accounts payable $28,400 $23,700 Income taxes payable 1,050 1,200 Total liabilities $29,450 $24,900 Equity: Common stock $106,000 $106,000 CC in excess 18,000 18,000 Retained earnings 124,200 114,000 Total equity $248,200 $238,000 Total liabilities and equity $277,650 $262,900

Q: Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the direct method. PETERS COMPANY Income Statement For Year Ended December 31, 2013 Sales $180,000 Cost of goods sold 104,000 Gross profit from sales $ 76,000 Operating expenses: Salaries and wages expense $25,000 Depreciation expense 5,000 Rent expense 7,200 Interest expense 1,900 39,100 Income from operations $36,900 Gain on sale of land 2,000 Net income 38,900 Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as follows: Balance Dec. 31, 2013 Dec, 31, 2012 Accounts receivable $27,600 $24,000 Merchandise inventory 18,200 20,000 Prepaid rent 550 400 Accounts payable 27,100 31,000 Salaries and wages payable 10,400 9,000 Interest payable 300 250

Q: The following information is available for the Arthur Corporation: ARTHUR CORPORATION Balance Sheets At December 31 2013 2012 Assets: Cash $ 24,640 $ 23,040 Accounts receivable 32,180 29,400 Merchandise inventory 73,125 61,710 Long-term investments 55,900 56,400 Equipment 175,500 145,500 Accumulated depreciation (33,550) (31,200) Total assets $327,795 $284,850 Liabilities: Accounts payable $ 65,000 $40,380 Income taxes payable 10,725 10,200 Bonds payable 48,750 66,000 Total liabilities $124,475 $116,580 Equity: Common stock 117,000 96,000 Contributed capital in excess of par 13,000 9,000 Retained earnings 73,320 63,270 Total equity $203,320 $168,270 Total liabilities and equity $327,795 $284,850 ARTHUR CORPORATION Income Statement For Year Ended December 31, 2013 Sales $240,000 Cost of goods sold $80,900 Depreciation expense 29,400 Other operating expenses 48,000 Interest expense 2,000 (160,300) Other gains (losses): Loss on sale of equipment (8,400) Income before taxes 71,300 Income taxes expense (27,650) Net income $ 43,650 Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old equipment with an original cost of $37,550 was sold for $2,100 cash. (3) New equipment was purchased for $67,550 cash. (4) Cash dividends of $33,600 were paid. (5) Additional shares of stock were issued for cash. Required: Prepare a complete statement of cash flows for the 2013 calendar year using the direct method.

Q: Water Girl Corp.'s 2013 income statement follows: WATER GIRL CORP. Income Statement For Year Ended December 31, 2013 Sales $248,000 Cost of goods sold 116,000 Gross profit $132,000 Operating expenses Wages and salaries expense $44,000 Rent expense 16,000 Depreciation expense 30,000 Amortization expense 12,000 Other expenses 18,000 120,000 Income from operations $ 12,000 Gain on sale of equipment 26,000 Income before taxes $ 38,000 Income tax expense 13,300 Net Income $ 24,700 The company also experienced the following during 2013: Increase in accounts receivable $ 4,000 Increase in accounts payable (all accounts payable transactions are for inventory) 16,000 Increase in income taxes payable 300 Decrease in prepaid expenses 10,000 Decrease in merchandise inventory 14,000 Decrease in long-term notes payable 20,000 Required: Calculate the company's net cash provided or used by operating activities using the direct method.

Q: Based on the information provided below, complete the following worksheet to be used to prepare the statement of cash flows: (a) Net income for the year was $30,000. (b) Dividends of $10,000 were declared and paid. (c) Stylish's only noncash expense was depreciation, which totaled $50,000. (d) The company purchased plant assets for $70,000. (e) Notes payable in the amount of $40,000 were issued during the year for cash. (f) Merchandise inventory increased $30,000. (g) Accounts payable decreased $10,000, STYLISH CORPORATION Spreadsheet for Statement of Cash Flows Indirect Method For Year Ended December 31, 2013 Analysis of Changes 12/31/12 Debit Credit 12/31/13 Balance Sheet Debits Cash $ 70,000 $ 60,000 Accounts receivable 180,000 190,000 Merchandise inventory 200,000 230,000 Plant assets 500,000 570,000 $ 950,000 $ 1,050,000 Balance Sheet Credits Accumulated depreciation $ 100,000 $ 150,000 Accounts payable 170,000 160,000 Notes payable 350,000 390,000 Capital stock 200,000 200,000 Retained earnings 130,000 150,000 $ 950,000 $ 1,050,000 Statement of Cash Flows Operating activities Net income Increase in accounts receivable Increase in merchandise inventory Decrease in accounts payable Depreciation expense Investing activities Cash paid to purchase plant assets Financing activities Cash paid for dividends Cash received from note payable

Q: Use the following information to calculate the net cash provided or used by financing activities for the Brooks Corporation: (a) Net income, $10,000. (b) Sold common stock for $4,000 cash. (c) Paid cash dividend of $3,000. (d) Paid bond payable, $8,000. (e) Purchased equipment for $12,000 cash.

Q: Use the following company information to prepare a schedule of significant noncash investing and financing activities: (a) Sold a building with a book value of $125,000 for $195,000 cash and land with a book value of $32,000 for $65,000 cash. (b) Issued 10,000 shares of $10 par value common stock in exchange for equipment with a market value of $135,000. (c) Retired a $100,000, 10% bond by issuing another $100,000, 12% bond issue. (d) Acquired land by issuing a 10-year, 9%, $44,000 note payable.

Q: Use the following company information to calculate its net cash provided or used by investing activities: (a) Equipment with a book value of $125,000 and an original cost of $220,000 was sold at a gain of $22,000. (b) Paid $49,000 cash for a new truck. (c) Sold land costing $30,000 for $26,000 cash, realizing a $4,000 loss. (d) Purchased treasury stock for $53,000 cash. (e) Long-term investments in stock are sold for $41,000 cash, realizing a gain of $3,500.

Q: The following information is available for the Ehrens Corporation: EHRENS CORPORATION Balance Sheets At December 31 2013 2012 Assets: Cash $ 24,640 $ 23,040 Accounts receivable 32,180 29,400 Merchandise inventory 73,125 61,710 Long-term investments 55,900 56,400 Equipment 175,500 145,500 Accumulated depreciation (33,550) (31,200) Total assets $327,795 $284,850 Liabilities: Accounts payable $ 65,000 $ 40,380 Incomes taxes payable 10,725 10,200 Bonds payable 48,750 66,000 Total liabilities $124,475 $116,580 Equity: Common stock 117,000 96,000 Contributed capital in excess of pay 13,000 9,000 Retained earnings 73,320 63,270 Total equity $203,320 $168,270 Total liabilities and equity $327,795 $284,850 EHRENS CORPORATION Income Statement For Year Ended December 31, 2013 Sales $240,000 Cost of goods sold $80,900 Depreciation expense 29,400 Other operating expenses 48,000 Interest expense 2,000 (160,300) Other gains (losses): Loss on sale of equipment (8,400) Income before taxes 71,300 Income taxes expense 27,650 Net income $ 43,650 Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old equipment with an original cost of $37,550 was sold for $2,100 cash. (3) New equipment was purchased for $67,550 cash. (4) Cash dividends of $33,600 were paid. (5) Additional shares of stock were issued for cash. Prepare a statement of cash flows for the 2013 calendar year using the indirect method.

Q: Martin, Inc.'s, income statement is shown below. Based on this income statement and the other information provided, calculate the net cash provided by operations using the indirect method. MARTIN, INC. Income Statement For Year Ended December 31, 2013 Sales $248,000 Cost of goods sold 116,000 Gross profit $132,000 Operating expenses: Wages and salaries expense $ 44,000 Rent expense 16,000 Depreciation expense 30,000 Other operating expenses 18,000 108,000 Income from operations $ 24,000 Gain on sale of equipment 26,000 Income before income taxes $ 50,000 Income taxes expense 17,500 Net income $ 32,500 Additional information: Increase in accounts receivable $ 4,000 Increase in accounts payable 16,000 Increase in income taxes payable 300 Decrease in prepaid expenses 10,000 Decrease in merchandise inventory 14,000 Decrease in long-term notes payable 20,000

Q: Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method. RASHID CORPORATION Income Statement For Year Ended December 31, 2013 Sales $504,000 Cost of goods sold $327,600 Depreciation expense 42,000 Other operating expenses 125,500 (495,100) Other gains (losses): Gain on sale of equipment 7,200 Income before taxes $ 16,100 Income tax expense (4,800) Net income $ 11,300 RASHID CORPORATION Balance Sheets At December 31 2013 2012 Assets Cash $ 64,650 $ 55,800 Accounts receivable 21,000 29,000 Inventory 58,000 52,100 Equipment 240,000 222,000 Accumulated depreciation (106,000) ( 96,000) Total assets $277,650 $262,900 Liabilities: Accounts payable $ 28,400 $ 23,700 Income taxes payable 1,050 1,200 Total liabilities $ 29,450 $ 24,900 Equity Common stock $106,000 $106,000 Contributed Capital in excess of par value 18,000 18,000 Retained earnings 124,200 114,000 Total equity $248,200 $238,000 Total liabilities and equity $277,650 $262,900

Q: For each of the following independent cases, use the information provided to calculate the missing cash inflow or cash outflow: (a.) Interest payable, beginning-year $ 4,200 Interest expense 26,700 Interest payable, year-end 3,000 Cash paid for interest $________ (b.) Prepaid insurance, beginning of year $ 7,000 Insurance expense 16,800 Prepaid insurance, year-end 3,400 Cash paid for insurance $________ (c.) Interest receivable, beginning of year $ 800 Interest revenue 12,600 Interest receivable, year-end 1,200 Cash received for interest $________ (d.) Accounts payable, beginning of year $ 60,000 Cost of goods sold 244,000 Merchandise inventory, beginning of year 35,000 Merchandise inventory, year-end 40,500 Accounts payable, year-end 64,800 Cash paid for merchandise $_______

Q: For each of the following separate cases, use the information provided to calculate the missing cash inflow or cash outflow: (a) Accounts receivable balances: Beginning of year $ 60,000 End of year 57,000 Sales revenue (all on credit) 375,000 Cash received from customers $________ (b) Accounts payable balances: Beginning of year $ 42,000 End of year 45,000 Merchandise inventory balances: Beginning of year 50,000 End of year 47,500 Cost of goods sold 250,000 Cash paid for merchandise inventory $_______ (c) Interest payable balances: Beginning of year $ 7,500 End of year 9,200 Interest expense 35,000 Cash paid for interest $________

Q: The following selected account balances are taken from a merchandising company's records: Dec. 31 2012 Dec. 31 2013 For the Year 2013 Merchandise inventory $ 15,600 $ 21,200 Accounts payable 32,400 27,400 Salaries payable 4,400 3,000 Accounts receivable 42,000 36,000 Total assets 234,000 286,000 Sales $312,000 Cost of goods sold 165,600 Salaries expense 48,000 (a) Calculate the cash payments made during 2013 for merchandise. Assume all of the company's accounts payable balances are a result from merchandise purchases. (b) Calculate the cash receipts from customer sales during 2013. (c) Calculate the cash payments for salaries during 2013.

Q: Based on the following information provided about a company's operations, calculate its cost of goods purchased and its cash paid for merchandise. Cost of goods sold $413,000 Merchandise inventory, beginning year 70,000 Accounts payable, beginning year 52,000 Merchandise inventory, end-of-year 67,000 Accounts payable, end-of-year 48,000

Q: Use the following information about the calendar-year cash flows of MacArthur Company to prepare a statement of cash flows (direct method) and a schedule of noncash investing and financing activities. Cash and cash equivalents, beginning-year balance $ 18,000 Cash and cash equivalents, year-end balance 78,750 Cash payments for merchandise inventory 75,750 Cash paid for store equipment 15,750 Cash borrowed on three-month note payable 22,500 Cash dividends paid 12,000 Cash paid for salaries 39,000 Cash payments for other operating expenses 48,000 Building purchased and financed by long-term note payable 78,000 Cash received from customers 220,500 Cash interest received 8,250

Q: Use the following calendar-year information to prepare David Company's statement of cash flows using the direct method. You may omit the schedule reconciling net income and net cash provided or used by operating activities. Cash paid to purchase machinery $ 124,000 Cash paid for merchandise inventory 220,000 Cash paid for operating expenses 280,000 Cash paid for interest 4,000 Cash received for interest 10,000 Cash proceeds from sale of land 100,000 Cash balance at beginning of year 15,000 Cash balance at end of year 77,000 Cash borrowed on a short-term note 25,000 Cash dividends paid 24,000 Cash received from stock issuance 57,000 Cash collections from customers 522,000

Q: A company reported average total assets of $496,000 in 2012 and $604,000 in 2013. Its net operating cash flow was $41,150 in 2012 and $55,500 in 2013. Calculate its cash flow on total assets ratio for both years. Comment on the results.

Q: A corporation reported average total assets of $397,350 in 2012 and $440,800 in 2013. Its net operating cash flow was $35,667 for 2012 and $35,790 for 2013. Calculate the cash flow on total assets ratio for both years. Comment on the results.

Q: A company reported operating cash flows of $23,400 in 2012 and $26,220 in 2013. The average total assets for the company in 2012 was $262,000 and $285,000 in 2013. Calculate the cash flow on total assets ratio for both years. Comment on the results.

Q: A company reported assets of $13,362 million at January 1 and $13,369 million as of December 31 of the current year. The companys net cash flows from operations was $2,204 million. Calculate the cash flow on total assets ratio.

Q: A company reported net cash provided by operating activities of $131.4 million. Assets totaled $2,197.7 million at the beginning of the year and $2,040.0 million at the end of the year. Calculate this companys cash flow on total assets ratio.

Q: A company reported operating cash flows of $57,000 and average total assets of $962,000. Calculate the companys cash flow on total assets ratio.

Q: Explain the use of a spreadsheet in the preparation of the statement of cash flows.

Q: Explain how to determine cash flows from investing and financing activities.

Q: Explain how the operating activities section of the statement of cash flows is prepared when using the indirect method.

Q: What are the five usual steps involved in the preparation of the statement of cash flows?

Q: Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

Q: Explain the what value separating cash flows into operating activities, investing activities, and financing activities has to financial statement users when it comes analyzing cash flows and the company's financial condition.

Q: Describe the format of the statement of cash flows, including the reporting of significant noncash investing and financing activities.

Q: Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

Q: Explain the purpose and format of the statement of cash flows. Also, describe its use to decision makers.

Q: Match each of the following items with the appropriate definitions: 1. A calculation of the net cash provided (used) by operating activities that lists the major items of operating cash receipts and then subtracts the major items of operating cash payments. Indirect method 2. A financial statement that reports the cash inflows and cash outflows for an accounting period and classifies those cash flows as operating, investing, or financing activities. Statement of cash flows 3. Activities that involve the production or purchase of merchandise and the sale of goods or services to customers, including expenditures related to administering the business. Direct method 4. Transactions with a company's owners and creditors that include obtaining cash from issuing debt and repaying the amounts borrowed and obtaining cash from or distributing cash to owners. Investing activities 5. A calculation that reports net income and then adjusts the net income amount by adding and subtracting items that are necessary to yield net cash provided (used) by operating activities. Financing activities 6. Transactions that include making and collecting notes receivable or purchasing and selling plant assets or investments in other than cash equivalents and trading securities. Operating activities

Q: Selected information from Jet Companys 2013 financial statements is shown below (in millions): Inventory decreased $6.0 Accounts payable increased by $7.0 Cost of goods sold $36.50 Salaries expense $24.0 Salaries payable decreased $6.0 Accounts receivable increased by $10.0 Sales $56.4 What is the amount of cash paid for salaries by Jet during 2013? A. $4.0 B. $6.0 C. $24.0 D. $30.0 E. $18.0

Q: Selected information from Jet Companys 2013 financial statements is shown below (in millions): Inventory decreased $6.0 Accounts payable increased by $7.0 Cost of goods sold $36.50 Salaries expense $24.0 Salaries payable decreased $6.0 Accounts receivable increased by $10.0 Sales $56.4 What is the amount of cash paid for purchases by Jet during 2013? A. $36.5 B. $47.5 C. $37.5 D. $35.5 E. $23.5

Q: Selected information from Jet Companys 2013 financial statements is shown below (in millions): Inventory decreased $6.0 Accounts payable increased by $7.0 Cost of goods sold $36.50 Salaries expense $24.0 Salaries payable decreased $6.0 Accounts receivable increased by $10.0 Sales $56.4 What is the amount of cash received from Jets customers during 2013? A. $66.4 B. $10.0 C. $46.4 D. $19.9 E. $56.4

Q: Wessen Company reports net income of $200,000 for the year ended December 31, 2013. It also reports $40,000 depreciation expense, $22,500 amortization expense, and a $15,000 loss on the sale of machinery. Its comparative balance sheets reveal a $225,700 increase in accounts receivable, $31,600 decrease in accounts payable, $15,000 decrease in prepaid expenses, and $48,100 decrease in wages payable. What net cash flows are provided (used) by operating activities using the indirect method? A. ($12,900) B. $57,900 C. $50,400 D. ($57,900) E. ($50,400)

Q: Wessen Company reports net income of $180,000 for the year ended December 31, 2013. It also reports $45,800 depreciation expense, $21,410 amortization expense, and a $15,000 gain on the sale of machinery. Its comparative balance sheets reveal a $28,300 increase in accounts receivable, $20,400 decrease in accounts payable, $10,470 increase in prepaid expenses, and $33,140 decrease in wages payable. What net cash flows are provided (used) by operating activities using the indirect method? A. ($140,200) B. $133,490 C. $139,900 D. ($133,490) E. $78,300

Q: Walker Company reports net income of $420,000 for the year ended December 31, 2013. It also reports $75,600 depreciation expense and a gain of $11,000 on the sale of machinery. Its comparative balance sheets reveal a $33,600 decrease in accounts receivable, $17,220 increase in accounts payable, $9,240 increase in prepaid expenses, and $13,020 increase in wages payable. What is the net cash flows provided (used) by operating activities using the indirect method? A. ($539,200) B. $300,800 C. $561,200 D. ($300,800) E. $539,200

Q: Spirit Company, a merchandiser, recently completed its 2013 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow: SPIRIT COMPANY Comparative Balance Sheet December 31, 2013 and 2012 2013 2012 Assets Cash $ 49,200 $ 73,500 Accounts receivable 65,830 51,000 Merchandise inventory 276,000 252,500 Prepaid expenses 1,000 1,600 Equipment 159,000 106,500 Accum. depreciationEquipment (31,000) (40,000) Total assets $520,030 $445,100 Liabilities and Equity Accounts payable $ 58,555 $ 112,000 Short-term notes payable 9,000 7,000 Long-term notes payable 65,000 48,500 Common stock, $5 par value 162,750 150,750 Paid-in capital in excess of par, common stock 36,000 0 Retained earnings 188,725 126,850 Total liabilities and equity $520,030 $445,100 SPIRIT COMPANY Income Statement For Year Ended December 31, 2013 Sales $584,000 Cost of goods sold 283,000 Gross profit 301,000 Operating expenses Depreciation expense $ 20,000 Other expenses 132,400 152,400 Other gains (losses) Loss on sale of equipment 5,875 Income before taxes $142,725 Income taxes expense 24,250 Net income $118,475 Additional information on year 2013 transactions: a. The loss on the cash sale of equipment was $5,875 (details in b). b. Sold equipment costing $46,500, for a loss of $5,875. c. Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance. d. Borrowed $2,000 cash by signing a non-sales related short-term note payable. e. Paid $47,500 cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for $20 cash per share. g. Net income and dividends were the only items that affected retained earnings. Required: Compute the net cash flows provided (used) by operating activities using the indirect method. A. ($53,175) B. $47,300 C. $53,175 D. ($47,300) E. $128,635

Q: Spirit Company, a merchandiser, recently completed its 2013 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow: SPIRIT COMPANY Comparative Balance Sheet December 31, 2013 and 2012 2013 2012 Assets Cash $ 49,200 $ 73,500 Accounts receivable 65,830 51,000 Merchandise inventory 276,000 252,500 Prepaid expenses 1,000 1,600 Equipment 159,000 106,500 Accum. depreciationEquipment (31,000) (40,000) Total assets $520,030 $445,100 Liabilities and Equity Accounts payable $ 58,555 $ 112,000 Short-term notes payable 9,000 7,000 Long-term notes payable 65,000 48,500 Common stock, $5 par value 162,750 150,750 Paid-in capital in excess of par, common stock 36,000 0 Retained earnings 188,725 126,850 Total liabilities and equity $520,030 $445,100 SPIRIT COMPANY Income Statement For Year Ended December 31, 2013 Sales $584,000 Cost of goods sold 283,000 Gross profit 301,000 Operating expenses Depreciation expense $ 20,000 Other expenses 132,400 152,400 Other gains (losses) Loss on sale of equipment 5,875 Income before taxes $142,725 Income taxes expense 24,250 Net income $118,475 Additional information on year 2013 transactions: a. The loss on the cash sale of equipment was $5,875 (details in b). b. Sold equipment costing $46,500, for a loss of $5,875. c. Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance. d. Borrowed $2,000 cash by signing a nonsales-related short-term note payable. e. Paid $47,500 cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for $20 cash per share. g. Net income and dividends were the only items that affected retained earnings. Required: Compute the net cash flows provided (used) by investing activities. A. ($23,375) B. $23,375 C. $46,500 D. ($35,000) E. $35,000

Q: Spirit Company, a merchandiser, recently completed its 2013 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow: SPIRIT COMPANY Comparative Balance Sheet December 31, 2013 and 2012 2013 2012 Assets Cash $ 49,200 $ 73,500 Accounts receivable 65,830 51,000 Merchandise inventory 276,000 252,500 Prepaid expenses 1,000 1,600 Equipment 159,000 106,500 Accum. depreciationEquipment (31,000) (40,000) Total assets $520,030 $445,100 Liabilities and Equity Accounts payable $ 58,555 $ 112,000 Short-term notes payable 9,000 7,000 Long-term notes payable 65,000 48,500 Common stock, $5 par value 162,750 150,750 Paid-in capital in excess of par, common stock 36,000 0 Retained earnings 188,725 126,850 Total liabilities and equity $520,030 $445,100 SPIRIT COMPANY Income Statement For Year Ended December 31, 2013 Sales $584,000 Cost of goods sold 283,000 Gross profit 301,000 Operating expenses Depreciation expense $ 20,000 Other expenses 132,400 152,400 Other gains (losses) Loss on sale of equipment 5,875 Income before taxes $142,725 Income taxes expense 24,250 Net income $118,475 Additional information on year 2010 transactions: a. The loss on the cash sale of equipment was $5,875 (details in b). b. Sold equipment costing $46,500, for a loss of $5,875. c. Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance. d. Borrowed $2,000 cash by signing a non-sales related short-term note payable. e. Paid $47,500 cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for $20 cash per share. g. Net income and dividends were the only items that affected retained earnings. Required: Calculate the net cash flows provided (used) by financing activities. A. ($118,100) B. $118,100 C. $54,100 D. ($54,100) E. $2,500

Q: Spirit Company, a merchandiser, recently completed its 2013 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow: SPIRIT COMPANY Comparative Balance Sheet December 31, 2013 and 2012 2013 2012 Assets Cash $ 49,200 $ 73,500 Accounts receivable 65,830 51,000 Merchandise inventory 276,000 252,500 Prepaid expenses 1,000 1,600 Equipment 159,000 106,500 Accum. depreciationEquipment (31,000) (40,000) Total assets $520,030 $445,100 Liabilities and Equity Accounts payable $ 58,555 $ 112,000 Short-term notes payable 9,000 7,000 Long-term notes payable 65,000 48,500 Common stock, $5 par value 162,750 150,750 Paid-in capital in excess of par, common stock 36,000 0 Retained earnings 188,725 126,850 Total liabilities and equity $520,030 $445,100 SPIRIT COMPANY Income Statement For Year Ended December 31, 2013 Sales $584,000 Cost of goods sold 283,000 Gross profit 301,000 Operating expenses Depreciation expense $ 20,000 Other expenses 132,400 152,400 Other gains (losses) Loss on sale of equipment 5,875 Income before taxes $142,725 Income taxes expense 24,250 Net income $118,475 Additional information on year 2013 transactions: a. The loss on the cash sale of equipment was $5,875 (details in b). b. Sold equipment costing $46,500, for a loss of $5,875. c. Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance. d. Borrowed $2,000 cash by signing a nonsales-related short-term note payable. e. Paid $47,500 cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for $20 cash per share. g. Net income and dividends were the only items that affected retained earnings. Required: What is the amount of dividends declared and distributed in 2013? A. $180,350 B. $8,375 C. $61,875 D. $56,600 E. $70,250

Q: Spirit Company, a merchandiser, recently completed the 2013 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow: SPIRIT COMPANY Comparative Balance Sheet December 31, 2013 and 2012 2013 2012 Assets Cash $ 49,200 $ 73,500 Accounts receivable 65,830 51,000 Merchandise inventory 276,000 252,500 Prepaid expenses 1,000 1,600 Equipment 159,000 106,500 Accum. depreciationEquipment (31,000) (40,000) Total assets $520,030 $445,100 Liabilities and Equity Accounts payable $ 58,555 $ 112,000 Short-term notes payable 9,000 7,000 Long-term notes payable 65,000 48,500 Common stock, $5 par value 162,750 150,750 Paid-in capital in excess of par, common stock 36,000 0 Retained earnings 188,725 126,850 Total liabilities and equity $520,030 $445,100 SPIRIT COMPANY Income Statement For Year Ended December 31, 2013 Sales $584,000 Cost of goods sold 283,000 Gross profit 301,000 Operating expenses Depreciation expense $ 20,000 Other expenses 132,400 152,400 Other gains (losses) Loss on sale of equipment 5,875 Income before taxes $142,725 Income taxes expense 24,250 Net income $118,475 Additional information on year 2013 transactions: a. The loss on the cash sale of equipment was $5,875 (details in b). b. Sold equipment costing $46,500, for a loss of $5,875. c. Purchased equipment costing $99,000 by paying $35,000 cash and signing a long-term note payable for the balance. d. Borrowed $2,000 cash by signing a non-sales related short-term note payable. e. Paid $47,500 cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for $20 cash per share. g. Net income and dividends were the only items that affected retained earnings. Required: Determine the cash received by Spirit for the equipment sold in item B above. A. $5,875 B. $11,625 C. $46,500 D. $17,500 E. $20,000

Q: A corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2014 fiscal year was $634,000. Depreciation and amortization expense of $60,000 and $30,000 respectively were included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash: Decrease in accounts receivable $ 22,000 Increase in inventories 9,400 Increase prepaid expenses 8,900 Increase in salaries payable 10,400 Decrease in income taxes payable 14,400 Determine the net cash flow provided (used) by operating activities. A. ($692,500) B. $692,500 C. $723,700 D. ($536,300) E. ($723,700)

Q: The accounting records of Miller Company provided the data below ($ in 000s). Net income $ 17,500 Depreciation expense 8,400 Increase in accounts receivable 4,400 Decrease in inventory 6,400 Decrease in prepaid insurance 1,500 Decrease in salaries payable 2,700 Increase in interest payable 900 What is the net cash provided (used) by operating activities? A. $20,600 B. $27,600 C. $3,800 D. ($27,600) E. $41,800

Q: Net income of Lucky Company was $52,000. The accounting records reveal depreciation expense of $99,000 as well as increases in prepaid rent, salaries payable, and income taxes payable of $74,000, $15,700, and $14,000, respectively. What is the net cash flow provided (used) by operating activities? A. $254,700 B. $47,300 C. $195,300 D. $150,700 E. $106,700

Q: A company had wage expense of $750,000 during a given period. Compute cash paid for wages during this period given the following data: Beginning Balance Ending Balance Wages Payable $100,000 $25,500 A. $750,000 B. $675,500 C. $824,500 D. $74,500 E. $125,500

Q: A company had cost of goods sold of $150,000 during a given period. Compute cash paid for merchandise during this period given the following data: Beginning Balance Ending Balance Accounts payable $20,000 $17,500 Merchandise inventory 35,000 42,000 A. $145,500 B. $159,500 C. $140,500 D. $154,500 E. $157,000

Q: When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires: A. A reconciliation to the statement of cash flows under the indirect method. B. A reconciliation of net income to net cash provided or used by operating activities. C. Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities. D. The income statement to be prepared under the cash basis of accounting. E. Noncash investing and financing activities must be included in the statement of cash flows.

Q: When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from financing activities generally affect: A. Net income, current assets, and current liabilities. B. Noncurrent assets. C. Noncurrent liabilities and equity accounts. D. Both noncurrent assets and noncurrent liabilities. E. Equity accounts only.

Q: When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from investing activities generally affect: A. Net income, current assets, and current liabilities. B. Noncurrent assets. C. Noncurrent liability and the equity accounts. D. Both noncurrent assets and noncurrent liabilities. E. Equity accounts only.

Q: When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from operating activities generally affect: A. Net income, current assets, and current liabilities. B. Noncurrent assets. C. Noncurrent liability and the equity accounts. D. Both noncurrent assets and noncurrent liabilities. E. Equity accounts only.

Q: Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method? A. Credit sales. B. Cash collections from customers. C. Depreciation expense. D. Cash received from the sale of a building. E. Cash received from the sale of treasury stock.

Q: The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is: A. Cash. B. Cash received from customers. C. Increase (decrease) in accounts receivable. D. Net income. E. Adjustments to net income.

Q: Given the following information, determine the amount of cash flows from investing and financing activities. Net income $70,000 Loss on sale of plant assets 25,000 Cash received from sale of plant assets 36,000 Cash received from issuing stock 80,000 Increase in income taxes payable 20,000 A. Cash provided by investing activities, $11,000 Cash provided by financing activities, $80,000 B. Cash used by investing activities, $80,000 Cash used by financing activities, $11,000 C. Cash provided by investing activities, $80,000 Cash provided by financing activities, $36,000 D. Cash used by investing activities, $25,000 Cash used by financing activities, $36,000 E. Cash provided by investing activities, $36,000 Cash provided by financing activities, $80,000

Q: Given the following information, determine the amount of cash flows from investing and financing activities. Net income $50,000 Loss on sale of plant assets 15,000 Cash received from sale of plant assets 26,000 Cash received from issuing stock 70,000 Increase in income taxes payable 120,000 A. Cash provided by investing activities, $11,000 Cash provided by financing activities, $70,000 B. Cash used by investing activities, $11,000 Cash used by financing activities, $70,000 C. Cash provided by investing activities, $26,000 Cash provided by financing activities, $55,000 D. Cash used by investing activities, $26,000 Cash used by financing activities, $55,000 E. Cash provided by investing activities, $26,000 Cash provided by financing activities, $70,000

Q: Under IFRS, cash outflows for interest expense are classified as A. Operating. B. Investing. C. Financing. D. Operating or investing, assuming that the classification is applied consistently across all periods. E. Investing or financing, depending upon who is the recipient of the interest paid.

Q: Which of the following items is reported on the statement of cash flows under financing activities? A. Declaration of a cash dividend. B. Payment of a cash dividend. C. Declaration of a stock dividend. D. Payment of a stock dividend. E. Stock split.

Q: Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Cash paid for purchase of plant assets $15,000 Decrease in interest payable 2,000 Depreciation expense 30,000 Gain on retirement of bonds 32,000 Increase in accounts receivable 40,000 Loss on sale of plant assets 5,000 Net Income 76,000 A. $22,000 B. $117,000 C. $69,000 D. $37,000 E. $91,000

Q: The amount of income earned per share of a company's common stock is known as: A. Restricted retained earnings per share. B. Earnings per share. C. Continuing operations per share. D. Dividends per share. E. Book value per share.

Q: A company has 5,000 shares of $1 par value common stock and 6,000 shares of 2%, $98 par, noncumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was $750,000. Net income for the current year was $400,000. If the company paid a dividend of $3 per share on its common stock, what is the balance in Retained Earnings at the end of the year? A. $1,123,240 B. $1,135,000 C. $1,150,000 D. $735,000 E. $723,240

Q: A company has 3,000 shares of $2 par value common stock and 1,500 shares of 8%, $150 par, noncumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was $400,000. The net loss for the current year was $30,000. If the company paid a dividend of $1 per share on its common stock, what is the balance in Retained Earnings at the end of the year? A. $349,000 B. $365,800 C. $451,000 D. $400,000 E. $409,000

Q: A company has 2,000 shares of $1 par value common stock and 200 shares of 5%, $110 par, noncumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was $500,000. Net income for the current year was $300,000. If the company paid a dividend of $2 per share on its common stock, what is the balance in Retained Earnings at the end of the year? A. $800,000 B. $805,100 C. $794,900 D. $494,900 E. $194,900

Q: When all of the authorized shares have the same rights and characteristics, the stock is referred to as: A. Preferred shares under both IFRS and GAAP. B. Common shares under both IFRS and GAAP. C. Plain shares under IFRS and common shares under GAAP. D. Simple shares under IFRS and pure shares under GAAP. E. Share capital under IFRS and common shares under GAAP.