Exam 23: Statement of Cash Flows

Calculations for statement of cash flows.Milner Co. sold a machine that cost $74,000 and had a book value of $44,000 for $48,000. Data from Milner's comparative balance sheets are: InstructionsWhat four items should be shown on a statement of cash flows (indirect method) from this information? Show your calculations.

The net income for the year ended December 31, 2015, for Oliva Company was $1,900,000. Additional information is as follows: Depreciation on plant assets \ 600,000 Amortization of leasehold improvements 340,000 Provision for doubtful accounts on short-term receivables 120,000 Provision for doubtful accounts on long-term receivables 100,000 Interest paid on short-term borrowings 80,000 Interest paid on long-term borrowings 60,000 Based solely on the information given above, what should be the net cash provided by operating activities in the statement of cash flows for the year ended December 31, 2015?

The statement of cash flows provides information to help investors and creditors assess the cash and noncash investing and financing transactions during the period.

Use the following information for questions 61 and 62. Equipment that cost $525,000 and had a book value of $234,000 was sold for $270,000. Data from the comparative balance sheets are: 12/31/15 12/31/14 Equipment \ 3,240,000 \ 2,925,000 Accumulated Depreciation 990,000 855,000 -Equipment purchased during 2015 was

Use the following information for questions 68 and 69. The balance in retained earnings at December 31, 2014 was $1,080,000 and at December 31, 2015 was $873,000. Net income for 2015 was $750,000. A stock dividend was declared and distributed which increased common stock $375,000 and paid-in capital $165,000. A cash dividend was declared and paid. -The stock dividend should be reported on the statement of cash flows (indirect method) as

A statement of cash flows prepared according to IFRS requirements must be prepared using the direct method for operating activities.

Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual based selling and administrative expenses to the cash basis?

Which of the following is shown on a statement of cash flows?

Effects of transactions on statement of cash flows.Indicate for each of the following what should be disclosed on a statement of cash flows (SCF) (indirect method). If not disclosed, write "Not shown." If an item is a noncash transaction that should be shown separately, write "noncash." If an item is added to net income, write "Add," and if an item is deducted from net income, write "Deduct." Show financing and investing outflows in parentheses. For example, an answer might be: Deduct $4,700 or Investing ($31,000). There is more than one answer for some items.(a) For 2015, income before an extraordinary loss was $460,000. A tornado damaged a building and its contents. The proceeds from insurance companies totaled $120,000, which was $50,000 less than the book values. The tax rate was 30%. (Show the calculation of the net income shown on the SCF, and indicate how other items should be shown on the SCF.)(b) Amortization of bond premium, $1,100.(c) The balance in Retained Earnings was $875,000 on December 31, 2014 and $1,310,000 on December 31, 2015. Net income was $1,170,000. A stock dividend was declared and distributed which increased common stock $325,000 and paid-in capital $170,000. (Show calculation of the cash dividend and indicate how it and the stock dividend would be shown on the SCF.)(d) Equipment, that cost $115,000 and had accumulated depreciation of $53,000, was sold for $66,000.(e) The deferred tax liability increased $18,000.(f) Issued 3,000 shares of preferred stock, $50 par, with a market value of $110 per share for land. (Show the amount also.)

When prepaid expenses decrease during a period, expenses on the accrual-basis are lower than they are on a cash-basis.

Of the following questions, which one would not be answered by the statement of cash flows?

Under the accrual basis of accounting, net income is usually the same as net cash flow from operating activities.

Use the following information for questions 85 through 87. The balance sheet data of Kohler Company at the end of 2015 and 2014 follow: 2015 2014 Cash \ 100,000 \ 140,000 Accounts receivable (net) 240,000 180,000 Inventory 280,000 180,000 Prepaid expenses 40,000 100,000 Buildings and equipment 360,000 300,000 Accumulated depreciation\_buildings and equipment (72,000) (32,000) Land 360,000 160,000 Totals \1 ,308,000 \1 ,028,000 Accounts payable \ 272,000 \ 220,000 Accrued expenses 48,000 72,000 Notes payable-bank, long-term 160,000 Mortgage payable 120,000 Common stock, \ 10 par 836,000 636,000 Retained earnings (deficit) 32,000 (60,000) \1 ,308,000 \1 ,028,000 Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2015, for Naley Company: -The net cash provided (used) by financing activities was

In certain circumstances under IFRS, bank overdrafts are considered part of cash and cash equivalents.

Use the following information for questions 102 and 103. A flood damaged a building and contents. Floods are unusual and infrequent in this area. The receipts from insurance companies totaled $500,000, which was $150,000 less than the book values. The tax rate is 30%. -On the statement of cash flows (indirect method), the flood loss should

When preparing a statement of cash flows, a decrease in accounts receivable during a period would cause which one of the following adjustments in determining cash flow from operating activities?

Which of the following statements about the statement of cash flows is correct?

Net cash flow from operating activities for 2015 for Spencer Corporation was $400,000. The following items are reported on the financial statements for 2015: Cash dividends paid on common stock \ 20,000 Depreciation and amortization 12,000 Increase in accounts receivables 24,000 Based on the information above, Spencer's net income for 2015 was

Use the following information for questions 63 through 67. Financial statements for Kiner Company are given below: Total assets on the balance sheet at December 31, 2015 are $4,432,000. Accumulated deprecia-tion on the equipment sold was $224,000. -The book value of the buildings and equipment at December 31, 2015 was

During 2015, Stout Inc. had the following activities related to its financial operations: The amount of net cash used in financing activities to appear in Stout's statement of cash flows for 2015 should be