Question 1

Durrand Corporation's accumulated depreciation increased by $12,000, while patents decreased by $2,200 between consecutive balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $4,300 from sale of land. Reconcile a net income of $65,000 to net cash flow from operating activities.

Accepted Answer

The answer of Durrand Corporation's accumulated depreciation increased by $12,000,...

Question 2

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:

Accepted Answer

The answer of The cash flows from operating activities are...

Question 3

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.

Accepted Answer

The answer of Sales reported on the income statement were...

Question 4

Selected data taken from the accounting records of Laser Inc. for the current year ended December 31, are as follows:
 
During the current year, the cost of merchandise sold was $448,500, and the operating expenses other than depreciation were $78,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows.
Required:
Determine the amount reported on the statement of cash flows for:
(1) Cash payments for merchandise; and
(2) Cash payments for operating expenses.

Accepted Answer

The answer of Selected data taken from the accounting records...

Question 5

The following two problems are independent of one another.

Accepted Answer

The answer of The following two problems are independent of...

Question 6

The board of directors declared cash dividends total $168,000 during 2014. The comparative balance sheet indicated dividends payable of $46,000 at the beginning of the year and $42,000 at the end of the year. What was the amount of cash payment to stockholders during the year?

Accepted Answer

The answer of The board of directors declared cash dividends...

Question 7

Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $5,000, and the inventory balance increased by $11,000 over the year. Determine the amount of cash paid for merchandise.

Accepted Answer

The answer of Cost of merchandise sold reported on the...

Question 8

Master Designs Company has cash flows for operating activities of $350,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain existing capacity.
What is the free cash flow for Master Designs?

Accepted Answer

The answer of Master Designs Company has cash flows for...

Question 9

Free cash flow is
A) all cash in the bank
B) cash from operations
C) cash from financing, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends
D) cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends

Accepted Answer

Free cash flow is the amount of cash generated by a company's operations that is available for distribution to its investors after deducting capital expenditures needed to maintain productive capacity. It is calculated by subtracting the capital expenditures and dividends paid from the cash flow from operations. Therefore, the correct option is D.

Question 10

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows:

Accepted Answer

The answer of Fortune Corporation's comparative balance sheet for current...

Question 11

Free cash flow is cash from operations, less cash for
A) dividends and cash for fixed assets needed to maintain productivity
B) dividends and cash to redeem bonds payable
C) fixed assets needed to maintain productivity
D) fixed assets needed to maintain productivity, and cash to redeem bonds payable

Accepted Answer

Free cash flow is the cash generated by a company's operations that is available for distribution to its investors or for reinvestment in the business. It is calculated as cash from operations minus capital expenditures needed to maintain productivity and dividends paid out to shareholders. Therefore, the correct choice is A, which includes both dividends and capital expenditures needed to maintain productivity.

Question 12

Indicate the section (operating activities, investing activities, financing activities, or none) in which each of the following would be reported on the statement of cash flows prepared by the indirect method:

Accepted Answer

The answer of Indicate the section (operating activities, investing activities,...

Question 13

Kennedy, Inc. reported the following data:
 Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows.

Accepted Answer

The answer of Kennedy, Inc. reported the following data:
 Prepare...

Question 14

Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

Accepted Answer

The answer of Lamar Corporation purchased land for $150,000. Later...

Question 15

The cost of merchandise sold during the year was $45,000. Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total
A) $46,000
B) $44,000
C) $50,000
D) $40,000

Accepted Answer

The formula for calculating cash payments for merchandise using the direct method is: Cost of merchandise sold + Increase in inventory - Decrease in inventory + Decrease in accounts payable - Increase in accounts payable.

Plugging in the given numbers:

$45,000 + ($10,500 - $13,500) + ($7,000 - $5,000) = $45,000 - $3,000 + $2,000 = $44,000

Therefore, the correct answer is B) $44,000.

Question 16

Selected data for the current year ended December 31 are as follows:
  During the current year, the cost of merchandise sold was $620,000 and the operating expenses other than depreciation were $142,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows.
Determine the amount reported on the statement of cash flows for (a) cash payments for merchandise and (b) cash payments for operating expenses.

Accepted Answer

The answer of Selected data for the current year ended...

Question 17

The comparative balance sheet of Barry Company, for 2011 and the preceding year ended December 31, 2010, appears below in condensed form:
  Additional data for the current year are as follows:
  Prepare a statement of cash flows using the indirect method.

Accepted Answer

The answer of The comparative balance sheet of Barry Company,...

Question 18

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:

Accepted Answer

The answer of The cash flows from operating activities are...

Question 19

Balances of the current asset and current liability accounts at the end and beginning of the year are as follows:
  Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.

Accepted Answer

The answer of Balances of the current asset and current...

Question 20

The board of directors declared cash dividends totaling $252,000 during the current year. The comparative balance sheet indicates dividends payable of $48,000 at the beginning of the year and $63,000 at the end of the year. What was the amount of cash payments to stockholders during the year?

Accepted Answer

The answer of The board of directors declared cash dividends...

Quiz 14: Statement of Cash Flows

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:

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.

The following two problems are independent of one another.

The board of directors declared cash dividends total $168,000 during 2014. The comparative balance sheet indicated dividends payable of $46,000 at the beginning of the year and $42,000 at the end of the year. What was the amount of cash payment to stockholders during the year?

Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $5,000, and the inventory balance increased by $11,000 over the year. Determine the amount of cash paid for merchandise.

Master Designs Company has cash flows for operating activities of $350,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain existing capacity. What is the free cash flow for Master Designs?

Free cash flow is

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows:

Free cash flow is cash from operations, less cash for

Indicate the section (operating activities, investing activities, financing activities, or none) in which each of the following would be reported on the statement of cash flows prepared by the indirect method:

Kennedy, Inc. reported the following data: Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows.

Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

The comparative balance sheet of Barry Company, for 2011 and the preceding year ended December 31, 2010, appears below in condensed form: Additional data for the current year are as follows: Prepare a statement of cash flows using the indirect method.

The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:

Balances of the current asset and current liability accounts at the end and beginning of the year are as follows: Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.

The board of directors declared cash dividends totaling $252,000 during the current year. The comparative balance sheet indicates dividends payable of $48,000 at the beginning of the year and $63,000 at the end of the year. What was the amount of cash payments to stockholders during the year?