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?

Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the indirect method. \begin{array}{c}\text {PULLMAN COMPANY}\\\text {Income Statement}\\\text {For Year Ended December 31,20 \mathrm{X} 2 }\\\begin{array}{|l|l|r|}\hline \text { Sales } & \quad& \$ 180,000 \\\hline \text { Cost of goods sold } & & 104,000 \\\hline \text { Gross profit from sales } & & \$ 76,000 \\\hline \text { Onerating exnenses: } & &\\\hline \text { Salaries and wages expense } & \$ 25,000 \\\hline \text { Depreciation expense } & 7,000 \\\hline \text { Rent expense } & 7,200 \\\hline \text { Interest expense } & 1,900&41,100\\\hline \text { Income from operations } & & \$ 4,900 \\\hline \text { Loss on sale of land } & & 3,500 \\\hline \text { Net income } & & \$ 31,400\\\hline \end{array}\end{array} Selected beginning and ending balances of current asset and current liability accounts,all of which relate to operating activities,are as follows: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Balance }$ Dec. 31,20X2 Dec. 31, 20X1 Accounts receivable \ 27,600 \ 24,000 Merchandise inventory 22,300 20,000 Prepaid rent 550 400 Accounts payable 27,100 26,000 Salaries and wages payable 10,400 9,000 Interest payable 300 250

All cash transactions eventually affect noncash ________ accounts.

A machine with a cost of $130,000,accumulated depreciation of $85,000,and current year depreciation expense of $17,000 is sold for $40,000 cash.The amount that should be reported as a source of cash under cash flows from investing activities is:

A company had net cash flows from operations of $120,000,cash flows from financing of $330,000,total cash flows of $500,000,and average total assets of $2,500,000.The cash flow on total assets ratio equals:

A statement of cash flows explains the differences between the beginning and ending balances of:

Bagrov Corporation had a net decrease in cash of $10,000 for the current year.Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000.What amount of cash was provided (used)in operating activities?

For each of the following items, indicate whether it would be classified as either an (O) operating activity, an (I) investing activity, a (F) financial activity, or a significant (N) noncash financing and investing activity. -Paid interest on a note payable.

The statement of cash flows reports all but which of the following:

The indirect method for the preparation of the operating activities section of the statement of cash flows:

When using a spreadsheet to prepare the statement of cash flows,a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Investing activities do not include the:

A decrease in the inventory account during the year should be reported on the indirect method statement of cash flows as:

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the indirect method.

Match each of the following items with the appropriate definitions. -A method of computing and reporting that involves adjusting the net income amount by adding and subtracting items that are necessary to yield net cash provided (used)by operating activities.

Financing activities include receiving cash dividends from investments in other companies' stocks.

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash,resulting in a loss of $3,000.The amount to be reported under cash flows from financing activities is:

A cash coverage of growth ratio of less than 1 indicates cash inadequacy to meet asset growth.

Mercury Company reports depreciation expense of $40,000 for Year 2.Also,equipment costing $150,000 was sold for its book value in Year 2.There were no other equipment purchases or sales during the year.The following selected information is available for Mercury Company from its comparative balance sheet.Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment \ 600,000 \ 750,000 Accumulated Depreciation-Equipment 428,000 500,000

Equipment costing $200,000 with accumulated depreciation of $160,000 is sold at a loss of $10,000.This implies that $30,000 cash was received from the sale.