Exam 13: Statement of Cash Flows

Slipper Company sold a productive asset,a machine,for cash.It originally cost $20,000.The accumulated depreciation at the date of disposal was $15,000.A gain on the disposal of $2,000 was reported.What was the asset's selling price?

Which of the following statements about the quality of income ratio is correct?

Atkins Corporation has provided the following information for the year ended December 31,2010: The equipment account balance increased $200,000. The equipment accumulated depreciation account increased $35,000. Equipment costing $50,000 was sold during the year resulting in a $10,000 gain. Depreciation expense on the equipment recorded during the year was $65,000. Which of the following statements is correct with respect to cash flow from investing activities determination? Assume that the equipment purchase and sale resulted in cash flows.

Most companies use the direct method for disclosing their cash flows from operating activities rather than the indirect method.

Which of the following is correct?

Cash flows associated with property,plant,and equipment acquisition and disposition are reported as cash flows from investing activities.

Use the following information to prepare a statement of cash flows (direct method)for Ames Corporation for the year ended December 31,2011. Cash and cash equivalent balances: 12-31-2010 \ 26,000 12-31-2011 18,000 Cash paid for purchase of treasury stock 50,000 Accepted note receivable in exchange for a computer that had been used in business operations 10,000 Depreciation expense 15,000 Cash received from customers 200,000 Cash paid for operating expenses 75,000 Cash paid for merchandise 130,000 Cash received from dividends 2,000 Cash paid for dividends 5,000 Cash paid for office building 75,000 Cash borrowed on a 6-month note payable 40,000 Cash received from issuance of bonds payable 90,000 Cash paid for bond interest expense 5,000

Darwin Company,a manufacturer,has provided the following information pertaining to its recent year of operation: Net income,$200,000; Accounts receivable increased $18,000; Prepaid insurance increased $7,000; Depreciation expense was $25,000; Loss on sale of a building was $22,000; Wages payable increased $14,000; Unearned revenue decreased $21,000. How much was Darwin's net cash inflow from operating activities?

Which of the following would not be considered a cash equivalent?

Only highly liquid investments with original maturities of less than six months at the date of purchase qualify as cash equivalents.

Cash flows from financing activities include those cash flows with respect to issuing and retiring long-term debt and equity.

The following information was reported from the statement of cash flows for Landlover's Restaurants for the years 2008 through 2010 (in millions of dollars): 2010 2009 2008 Net income \ 45 \ 42 \ 27 Cash provided (used) by operations 122 112 89 Cash provided (used) by investments (190) (275) (105) Cash provided (used) by financing 90 146 21 Requirements: A.Calculate the quality of income ratio for the years 2008 through 2010. B.Interpret the quality of income ratio for Landlover's for the three year period.

The financial statements for World Company show the following: Cost of goods sold,$725,000. Beginning Balance Ending Balance Merchandise Inventory \ 45,000 \ 56,000 Accounts Receivable 53,000 50,000 Accounts Payable 37,000 42,000 How much cash was paid to suppliers?

While preparing a statement of cash flows,you encountered the following transaction: February 1,2011: Battles Corporation acquired a small office building in exchange for 5,000 shares of its own common stock; par value $10 per share; market value $15 per share. Should this transaction be shown on the statement of cash flows? Why or why not?

Canadian Beer had a capital acquisitions ratio of 7.49,which means its net income exceeded its cash investment in property,plant and equipment by almost 7.5 times.

Cash flows associated with issuance and retirement of long-term debt and equity are reported as cash flows from investing activities.

The payment of interest on a note payable is a cash flow from a financing activity.

Roberts Company sold equipment for $250,000,purchased a building for $6,500,000,sold short-term investments for $280,000,repaid principal on a note payable for $2,300,000 plus $230,000 of interest,and paid cash dividends of $20,000.How much was the net cash flow from financing activities?

Brice Corporation reported the following information: 2010 Income Statement: Sales Revenue \ 8,200,000 Cost of goods sold Gross profit 1,800,000 Operating expenses (includes \ 200,000 depreciation expense) Pretax income 550,000 Income tax expense ( 30\% rate) Net Income \ 385,000 Accounts receivable \ 800,000 \ 600,000 Inventory 520,000 480,000 Prepaid expenses 110,000 120,000 Accounts payable 340,000 310,000 Accrued liabilities 80,000 90,000 Income taxes payable 25,000 40,000 Unearned revenue 100,000 200,000 Compute Brice Corporation's cash collected from customers for 2010.

Wish Corporation acquired a computer for $15,000 and paid for it in full by issuing 1,000 shares of its own common stock,par $10 (current market price $15 share).This transaction should not be reported on the statement of cash flows because cash was neither paid out nor received.