Exam 16: Reporting the Statement of Cash Flows

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.

The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

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. ________ (1) Cash sales of merchandise. ________ (2) Sale of land for cash. ________ (3) Signed a note payable in exchange for cash. ________ (4) Purchased supplies for cash. ________ (5) Paid cash to settle an account payable. ________ (6) Purchased a warehouse in exchange for shares of its stock. ________ (7) Paid interest on a note payable. ________ (8) Reissued treasury stock. ________ (9) Purchased equipment for cash. ________ (10) Purchased equipment in exchange for a 6-month note payable.

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

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.

A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:

Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method. Cash paid to purchase machinery \ 124,000 Cash paid for merchandise inventory 220,000 Cash paid for operating expenses 280,000 Cash paid for interest 4,000 Cash received for interest 10,000 Cash proceeds from sale of land 15,000 Cash balance at beginning of year 77,000 Cash balance at end of year 25,000 Cash borrowed on a short-term note 24,000 Cash dividends paid 57,000 Cash received from stock issuance 522,000

Use the following information to calculate cash paid for wages and salaries: Salaries expense \ 168,000 Salaries payable, January 1 6,400 Salaries payable, December 31 10,600

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

The accountant for Mandarin 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 \ 819,000 Net income for the year 230,000 Cash dividends declared for the year 42,000 Retained earnings balanes at the end of the year 1,007,000 Cash dividends payable at the begining of the year 10,000 Cash dividends payable at the end of the year 11,000 84 What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows?

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

A company reported net income of $132,000, operating cash flows of $87,000, total cash flows of $112,000, and average total assets of $1,053,000. Calculate its cash flow on total assets ratio.

Jamison Company reports depreciation expense of $35,000 for Year 2. Also, equipment costing $140,000 was sold for a $5,000 gain in Year 2. The following selected information is available for Jamison Company from its comparative balance sheet. Compute the cash received from the sale of the equipment. At December 31 Year 2 Year 1 Equipment \ 610,000 \ 750,000 Accumulated Depreciation-Equipment 428,000 500,000

Which of the following items is reported on the statement of cash flows under financing activities?

A cash equivalent is:

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. PULLMAN COMPANY Income Statement For Year Ended December 31, 20X2 Sales \ 180,000 Cost of goods sold 104,000 Gross profit from sales \ 76,000 Operating expenses: Salaries and wages expense \ 25,000 Depreciation expense 7,000 Rent expense 7,200 Interest expense 1,900 Income from operations \ 34,900 Loss on sale of land 3,500 Net income \ 31,400 Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as follows: 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

Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

The statement of cash flows reports:

Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000. This implies that $40,000 cash was received from the sale.