Exam 12: Reporting Cash Flows

Stormer Company reports the following amounts on its statement of cash flow: Net cash provided by operating activities was $28,000; net cash used in investing activities was $10,000 and net cash used in financing activities was $12,000. If the beginning cash balance is $5,000, what is the ending cash balance?

Keita Co. reported net income of $213.4 million, net cash provided by operating activities of $151.3 million, total cash flows of $187.7 million, and average total assets of 2,314.8 million at the end of the year. Calculate the cash flow on total assets ratio for Keita.

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: Net income for the year was \ 52,000 Accounts payable increased by 18,000 Accounts receivable decreased by 25,000 Inventories increased by 5,000 Depreciation expense was 30,000 Net cash provided by operating activities was:

The purchase of stock in another company is classified as an investing activity.

The cash flow on total assets ratio compared to the total assets ratio can be used as an indicator of earnings quality.

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

Explain the value of separating cash flows into operating activities, investing activities, and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from investing activities generally affect:

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:

Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term investment and financing decisions.

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

A company's income statement showed the following: net income, $124,000 and depreciation expense, $30,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; and accounts payable increased $3,400. Calculate the net cash provided or used by operating activities.

Based on the information provided below for Krackle Corp., complete the following worksheet to be used to prepare the statement of cash flows using the indirect method. (a) Net income for the year was $30,000. (b) Dividends of $10,000 were declared and paid. (c) Krackle'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.

Cash flows from interest received on loans are reported in the statement of cash flows as part of:

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

The accountant for Huckleberry Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year \ 151,000 Cash dividends declared for the year 46,000 Net income for the year 92,000 What is the ending balance for retained earnings?

Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended December 31, 20X2 using the indirect method, and (2) compute the company's cash flow on total assets ratio for 20X2. Derby Company Balance Sheets At December 31 202 20X1 Assets: \& \ Cash \ 85,600 \ 65,200 Accounts receivable, net 72,850 56,750 Merchandise inventory 157,750 144,850 Prepaid expenses 6,080 12,680 Equipment 280,600 145,600 Accumulated depreciation-Equipment Total assets Liabilities: \& \ Accounts payable 52,850 45,450 Income taxes payable 15,240 12,240 Notes payable (long term) Total liabilities \1 27,290 \1 36,890 Equity: Common stock 200,000 150,000 Paid-in capital in excess of par 53,000 40,000 Retained earnings Total equity Total liabilities and equity Derby Company Income Statement For Year Ended December 31, 20X2 Costes \4 88,000 Depreciation expense 43,000 Other operating expenses 106,260 Interest expense (368,200) Other gains (losses): Gain on sale of equipment Income before taxes 124,500 underline income taxes expense underline Net income Additional Information a. A $20,000 note payable is retired at its carrying value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $120,000 cash. d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. e. Prepaid expenses relate to Other Expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit.

Rowan, 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. Rowan, Inc. Income Statement For Year Ended December 31,20X1 Sales Cost of goods sold Grossprofit Operating expenses Wages and salaries expense Rent expense Depreciation expense Other operating expenses Income from operations Gain on sale of equipment Income before income taxes Income taxes expense Net incone \ 44,000 16,000 30,000 18,000 \2 48,000 116,000 \1 32,000 108,000 \2 4,000 26,000 \5 0,000 \1 7,500 \3 2,500 Additional information: Increase in accounts receivable \ 4,000 Increase in accounts payable 16,000 Increase in income taxes payable 300 Decrease in prepaid expenses 10,00 Decrease in merchandise inventory 14,00 Decrease in long-term notes payable 20,000

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: 1. Net income for the year was \ 52,000 Accounts payable decreased by \ 18,000 Accounts receivable increased by \ 25,000 Inventories increased by \ 5,000 Cash dividends paid were \ 14,000 Depreciation expensewas \ 20,000 Net cash provided by operating activities was:

The appropriate section in the statement of cash flows for reporting the cash payment of wages is: