Q&A Hero

Q: On July 1, Sterns Co. acquired patent rights for $36,000. The patent has a useful life of 6 years and a legal life of 15 years. Journalize the adjusting entry on December 31 to recognize the amortization.

Q: all of the following statements about free cash flow are false except a.significant free cash flow indicates less potential to finance new investment b.free cash flow is most commonly calculated by subtracting capital expenditures from cash provided by operations and then adding cash dividends c.free cash flow is not reported on the statement of cash flows d.significant free cash flow indicates less potential to pay additional dividends

Q: On July 1, Harding Construction purchases a bulldozer for $228,000. The equipment has an 8-year life with a residual value of $16,000. Harding uses straight-line depreciation. a. Compute the depreciation expense, and journalize the depreciation entry for the first year ending December 31.b. Compute the third year’s depreciation expense, and journalize the depreciation entry for the third year ending December 31.c. Compute the last year’s depreciation expense, and journalize the depreciation entry for the last year.

Q: Sampson Company had the following transactions that took place during the year:I. Paid amount owing to suppliers $2,750.II. Purchased new equipment for $5,000 by signing a long-term note payable.III. Purchased a patent and paid $15,000 cash for the asset.How what is the total effect of these transactions on Free Cash Flow, Current Cash Debt Coverage Ratio, and Cash Debt Coverage Ratio, respectively?

Q: On December 31, Bowman Company estimated that goodwill of $80,000 was impaired. On June 1, a patent with an estimated useful economic life of 10 years was acquired for $252,000.​a. Journalize the adjusting entry on December 31 for the impaired goodwill.b. Journalize the adjusting entry on December 31 for the amortization of the patent rights.

Q: A copy machine acquired on July 1 with a cost of $1,450 has an estimated useful life of 4 years. Assuming that it will have a residual value of $250, determine the depreciation for the first year by the double-declining-balance method.

Q: Sampson Company had the following transactions that took place during the year:I. Recorded credit sales of $2,500II. Collected $1,500 owning from customersIII. Recorded sales returns of $500 and credited the customer's account.What is the total effect of these transactions on Free Cash Flow, Current Cash Debt Coverage Ratio, and Cash Debt Coverage Ratio, respectively?

Q: Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage.​a. 2 yearsb. 8 yearsc. 10 yearsd. 20 yearse. 25 yearsf. 40 yearsg. 50 years

Q: using the following information, which company appears to be most liquid? (in $ millions) xu company lin company ng company chen company cash provided by operating activities for 2010 140 295 110 200 current liabilities for 2009 230 335 205 300 current liabilities for 2010 280 375 240 360 total liabilities for 2009 600 440 275 500 total liabilities for 2010 720 530 325 540 a.xu company b.lin company c.ng company d.chen company

Q: typically a value below what amount for the current cash debt coverage ratio should be further investigated? a.2.0 b.1.4 c.0.6 d.0.4

Q: Determine the depreciation for the year of acquisition and for the following year of a fixed asset acquired on October 1 for $500,000 with an estimated life of 5 years, and residual value of $50,000, using (a) the double-declining-balance method and (b) the straight-line method. Assume a fiscal year ending December 31.

Q: using the following information, which company appears to be least solvent? (in $ millions) xu company lin company ng company chen company cash provided by operating activities for 2010 140 295 110 200 current liabilities for 2009 230 335 205 300 current liabilities for 2010 280 375 240 360 total liabilities for 2009 600 440 275 500 total liabilities for 2010 720 530 325 540 a.xu company b.lin company c.ng company d.chen company

Q: Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. It is estimated that the machine will output an estimated 1,000,000 copies. This year, 315,000 copies were made. Determine the (a) depreciable cost, (b) depreciation rate, and (c) units-of-activity depreciation for the year.

Q: dole company reports a $32,000 increase in inventory and a $8,000 increase in accounts payable during the year. cost of goods sold for the year was $240,000. using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were a.$240,000 b.$264,000 c.$200,000 d.$216,000

Q: On April 15, Compton Co. paid $2,800 to upgrade a delivery truck and $125 for an oil change. Journalize the entries for the upgrade to the delivery truck and oil change expenditures.

Q: the cost of goods sold during the year was $275,000. merchandise inventory decreased by $10,000 during the year and accounts payable decreased by $5,000 during the year. using the direct method of reporting cash flows from operating activities, cash payments for merchandise total a.$280,000 b.$270,000 c.$260,000 d.$290,000

Q: Based on the following data, determine the cost of the land to be reported on the balance sheet.Land purchase price$178,000Broker's commission15,000Payment for demolition and removal of existing building5,000Cash received from sale of materials salvaged from demolished building2,000

Q: On July 1, Andrew Company purchased equipment at a cost of $150,000 that has a depreciable cost of $120,000 and an estimated useful life of 3 years or 60,000 hours​Using straight-line depreciation, journalize the entry to record depreciation expense for (a) the first year, (b) the second year, and (c) the last year.

Q: hart company reports a $20,000 increase in inventory and a $5,000 decrease in accounts payable during the year. cost of goods sold for the year was $150,000. using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were a.$150,000 b.$165,000 c.$175,000 d.$135,000

Q: the cost of goods sold during the year was $330,000. merchandise inventory increased by $12,000 during the year and accounts payable decreased by $6,000 during the year. using the direct method of reporting cash flows from operating activities, cash payments for merchandise total a.$336,000 b.$324,000 c.$312,000 d.$348,000

Q: A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful operating life of 13,350 copies. Assuming that it will have a residual value of $75, determine the depreciation for the first year by the following methods:​a. Straight-lineb. Double-declining-balancec. Units-of-activity (4,500 copies were made the first year)

Q: geary company had credit sales of $1,400,000. the beginning accounts receivable balance was $80,000 and the ending accounts receivable balance was $280,000. using the direct method of reporting cash flows from operating activities, what were the cash collections from customers during the period? a.$1,600,000 b.$1,400,000 c.$1,200,000 d.$1,480,000

Q: A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second years by the straight-line method. Round to the nearest whole dollar.

Q: during 2012, white company had $160,000 in cash sales and $1,400,000 in credit sales. the accounts receivable balances were $180,000 and $212,000 at december 31, 2011 and 2012, respectively. using the direct method of reporting cash flows from operating activities, what was the total cash collected from all customers during 2012? a.$1,368,000 b.$1,592,000 c.$1,560,000 d.$1,528,000

Q: A machine costing $185,000 with a 5-year life and $20,000 residual value was purchased on January 2. Compute depreciation for each of the 5 years, using the double-declining-balance method.

Q: the following information relates to neufeld company:Using the direct method of reporting cash flows from operating activities, what was the amount of cash paid for insurance premiums by Neufeld during 2012?a.$1,358,000b.$1,442,000c.$1,680,000d.$1,722,000

Q: On October 1, Sebastian Company acquired new equipment with a fair market value of $458,000. Sebastian received a trade-in allowance of $92,000 on the old equipment of a similar type and paid cash of $366,000. The following information about the old equipment is obtained from the account in the equipment ledger: Cost, $336,000; accumulated depreciation on December 31, the end of the preceding fiscal year, $220,000; annual depreciation, $20,000. Assuming the exchange has commercial substance, journalize the entries for: (a) the current depreciation of the old equipment to the date of trade-in and (b) the exchange transaction on October 1.

Q: Comment on the validity of the following statements. "As an asset loses its ability to provide services, cash needs to be set aside to replace it. Depreciation accomplishes this goal."

Q: cash receipts from customers are greater than sales revenues when there is a(n) a.increase in accounts receivable b.decrease in accounts receivable c.increase in cost of goods sold d.decrease in cost of goods sold

Q: hite company had an increase in inventory of $120,000. the cost of goods sold was $270,000. there was a $30,000 decrease in accounts payable from the prior period. using the direct method of reporting cash flows from operating activities, what were hite's cash payments to suppliers? a.$420,000 b.$180,000 c.$360,000 d.$300,000

Q: On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000. Assume the transaction has commercial substance.​a. Determine the gain to be recorded on the exchange.b. Journalize the entry for the exchange.

Q: Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods:​a. Straight-lineb. Units-of-activity (1,200 hours first year; 2,250 hours second year)c. Double-declining-balance

Q: hogan company has other operating expenses of $260,000. there has been a decrease in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 larger than in the prior period. using the direct method of reporting cash flows from operating activities, what were hogan's cash payments for operating expenses? a.$248,000 b.$252,000 c.$220,000 d.$300,000

Q: which of the following items does not appear in the statement of cash flows under the direct method? a.cash payments to suppliers b.cash collections from customers c.depreciation expense d.cash from the sale of equipment

Q: Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year, 2,300,000 tons were mined and sold.a. Determine the depletion rate.b. Determine the amount of depletion expense for the current year.c. Journalize the adjusting entry to recognize the depletion expense.

Q: clark corporation shows income tax expense of $280,000. there has been a $20,000 decrease in federal income taxes payable and a $28,000 increase in state income taxes payable during the year. using the direct method of reporting cash flows from operating activities, what was clark's cash payment for income taxes? a.$280,000 b.$272,000 c.$232,000 d.$328,000

Q: Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.a. What is the book value at the end of the sixth year of use?b. If early in the seventh year it is estimated that the remaining useful life is 5 years (instead of 4) and the residual value is $6,000, what is the amount of depreciation for the seventh year?

Q: which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method? a.cash receipts from customers b.cash paid for income taxes c.gain on sale of equipment d.cash paid to employees

Q: which of the following statements concerning the statement of cash flows is true? a.the statement of cash flows is usually more accurate when using the indirect method b.if the direct method is used, a supplementary schedule reconciling the net income to net cash from operating activities must still be provided c.the statement of cash flows reflects both earnings per share and cash per share d.the statement of cash flows is an optional financial statement for external reporting purposes

Q: dexter company reports the following:if cost of goods sold for the year is $180,000, the amount of cash paid to suppliers using the direct method isa.$175,000b.$185,000c.$145,000d.$215,000

Q: during the year, salaries payable decreased by $12,000. using the direct method of reporting cash flows from operating activities, if salary expense amounted to $380,000 for the year, the cash paid to employees (including deductions from gross pay) is a.$392,000 b.$380,000 c.$368,000 d.$404,000

Q: a statement of cash flows summarizes the operating, ____________, and ___________ activities of an entity.

Q: during the _______________, cash from operations and net income are approximately the same.

Q: net cash provided/used by operating activities can be determined using the ____________ method or the ______________ method.

Q: the cash effects of selling goods and services appears in the ______________ activities section of a statement of cash flows.

Q: using the indirect approach, noncash charges in the income statement are ___________ to net income and noncash credits are ______________ to compute cash provided by operations.

Q: during the growth phase, a company will start to generate small amounts of cash _______________.

Q: the sale of equipment at less than its book value is a(an) ______________ of cash that is reported in the ______________ activities section.

Q: if accounts receivable increase during a period, revenues on an accrual basis are ______________ than revenues on a cash basis.

Q: the cash ______________ is a measure of solvency that uses cash figures.

Q: the current cash debt coverage ratio is computed by dividing net cash provided by operating activities by _________________ liabilities.

Q: cost of goods sold for the year amounted to $100,000, and during the year, inventory ______________ by $7,000 and accounts payable ______________ by $3,000 resulting in cash paid to suppliers of $90,000.

Q: Match each of the following assets to its proper classification (a–d). Each classification may be used more than once.a. Fixed assetb. Intangible assetc. Natural resourced. None of theseGold mine

Q: in computing cash payments for operating expenses, a decrease in prepaid expenses is ______________ and an increase in accrued expenses payable is ______________ to (from) operating expenses, exclusive of depreciation.

Q: in computing cash payments for income taxes, a decrease in income taxes payable is ______________ to (from) income tax expense.

Q: under the direct method, the two largest classes of items in the operating activities section for a merchandising company are cash ________________________ and cash _________________________.

Q: for each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method.A. Added to net incomeB. Deducted from net incomeC. Cash outflow—investing activityD. Cash inflow—investing activityE. Cash outflow—financing activityF. Cash inflow—financing activityG. Significant noncash investing and financing activity____ 1. Decrease in accounts payable during a period____ 2. Declaration and payment of a cash dividend.____ 3. Loss on sale of land.____ 4. Decrease in accounts receivable during a period.____ 5. Redemption of bonds for cash.____ 6. Proceeds from sale of equipment at book value.____ 7. Issuance of common stock for cash.____ 8. Purchase of a building for cash.____ 9. Acquisition of land in exchange for common stock.____ 10. Increase in merchandise inventory during a period.

Q: For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the direct method.A. Added in determining cash receipts from customersB. Deducted in determining cash receipts from customersC. Added in determining cash payments to suppliersD. Deducted in determining cash payments to suppliersE. Cash outflow—investing activityF. Cash inflow—investing activityG. Cash outflow—financing activityH. Cash inflow—financing activityI. Significant noncash investing and financing activityJ. Is not shown____ 1. Decrease in accounts payable during a period.____ 2. Declaration and payment of a cash dividend.____ 3. Decrease in accounts receivable during a period.____ 4. Depreciation expense.____ 5. Conversion of bonds payable into common stock.____ 6. Decrease in merchandise inventory during a period.____ 7. Sale of equipment for cash at book value.____ 8. Issuance of preferred stock for cash.____ 9. Purchase of land for cash.____ 10. Loss on sale of a plant asset.

Q: why is the statement of cash flows useful?

Q: a

Q: distinguish among the three activities reported in the statement of cash flows.

Q: (a) what are the phases of the corporate life cycle? (b) what effect does each phase have on the numbers reported in a statement of cash flows?

Q: Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:CustomerAmountJ. Jackson$10,000L. Stanton9,500C. Barton13,100S. Fenton 2,400Total$35,000​a. Journalize the write-offs for the current year under the direct write-off method.b. Journalize the write-offs for the current year under the allowance method. Also, journalize the adjusting entry for uncollectible receivables assuming the company made $2,400,000 of credit sales during the year and, based on the industry average, the company expects uncollectible receivables to be 1.5% of credit sales.c. How much higher or lower would Morry Company’s net income have been under the direct write-off method than under the allowance method?

Q: Sunshine Service Center received a 120-day, 6% note for $40,000, dated April 12 from a customer on account.a. Determine the due date of the note.b. Determine the maturity value of the note.c. Journalize the entry for the receipt of the payment of the note at maturity.

Q: when preparing a statement of cash flows using the indirect method, why is depreciation added back to net income within the operating activities section when using the indirect method?

Q: Other than Accounts Receivable and Notes Receivable, name other receivables that might be included in the general ledger.

Q: how is it possible for a company to suffer a net loss for a given year, yet produce a positive net cash flow from operating activities?

Q: On the basis of the following data related to assets due within one year for Barnes Co., prepare a partial balance sheet at December 31. Show total current assets.Accounts receivable$ 38,000Allowance for doubtful accounts5,000Cash45,000Interest receivable5,500Merchandise inventory88,000Notes receivable100,000

Q: when preparing a statement of cash flows using the direct method, why must the sales revenue figure be adjusted to arrive at cash receipts from sales?

Q: Determine the due date and amount of interest due at maturity on the following notes: OriginationFaceTermInterestMaturityInterest DateAmountof NoteRateDateAmounta.Mar. 15$8,00060 days9%______________b.May 112,00090 days8%______________

Q: Flint Hills Trading Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better. Mark Menke, manager of the manufacturing division, sold off old manufacturing equipment. He also reclassified several workers to part-time (30 hours per week) and hired additional temporary workers to take up the slack. This saved the company money, since part-time workers do not have the same insurance and other benefits as full-time workers.Jeff Jurgens, financial manager, immediately suspended payments on all accounts except those on which interest would accrue. He also instituted aggressive collection procedures.Required:1. Were Mark Menke's actions ethical? Explain.2. Were Jeff Jurgens's actions ethical? Explain.3. Were the company president's actions ethical? Explain.

Q: You are the accountant for a small manufacturing firm. Your company is privately held, so there is no current requirement to issue financial statements using GAAP. You were hired four years ago, and at that time you instituted a cash budgeting system. Presently, you prepare a schedule of predicted cash sources and cash needs at the end of each week for the following week.Gary Scribner, the company's president, has asked whether a statement of cash flows would also be useful.Required:Prepare a short memorandum to the president indicating whether you believe such an addition to the financial statements to be useful. Include in your memo the benefits that might be expected from a statement of cash flows and whether those are different from the benefits of a cash sources and cash needs listing

Q: For fiscal Year 1 and Year 2, Grange Co. reported the following:​ Year Ended December 31,​ Year 2 Year 1Sales$34,124,961$44,123,486Accounts receivable719,365749,321​a. Compute the accounts receivable turnover for Year 2. Round to two decimal places.b. Compute the days’ sales in receivables at the end of Year 2. Round to two decimal places.

Q: under ifrs, bank overdrafts are classified as a. operating activities b. investing activities c. financing activities d. cash and cash equivalents

Q: Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens is uncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry that is required using the allowance method.

Q: each of the following items may be classified as operating or financing activities under ifrs except a. dividends paid b. dividends received c. interest paid d. all of the above may be classified as such

Q: which of the following activities is excluded from the statement of cash flows under ifrs? a. financing activities b. investing activities c. noncash investing and financing activities d. operating activities

Q: Determine the due date and the amount of interest due at maturity on the following notes: Date of NoteFace AmountInterest RateTerm of Notea.October 1$21,000 8%60 daysb.August 309,00010120 daysc.May 3012,0001290 daysd.March 615,000960 dayse.May 239,0001060 days

Q: Journalize the following transactions (assume a 360-day year when computing interest): Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co. on account.May 30 The note of March 1 was dishonored.

Q: under ifrs, some companies present which section of the cash flow statement as a single line item? a. operating activities b. investing activities c. financing activities d. noncash investing and financing activities