Exam 13: Statement of Cash Flows

On the basis of the following data for Breach Co. for the current and preceding years ended December 31, prepare a statement of cash flows for the current year using the indirect method. Assume that equipment costing $25,000 was purchased for cash and no long term assets were sold during the period. Stock was issued for cash-3,200 shares at par. Net income for the current year was $76,000. Cash dividends declared and paid were $13,000.

The comparative balance sheet of Barry Company for Years 1 and 2 ended December 31 appears below in condensed form: Additional data for the current year are as follows: (a) Net income, $\$ 75,800$ . (b) Depreciation reported on income statement, $\$ 38,000$ . (c) Fully depreciated equipment costing $\$ 60,000$ was scrapped, no salvage, and equipment was purchased for $\$ 150,000$ . (d) Bonds payable for $\$ 75,000$ were retired by payment at their face amount. (e) 2,500 shares of common stock were issued at $\$ 30$ for cash. (f) Cash dividends declared and paid, $\$ 40,000$ . (g) Investments of $\$ 100,000$ were sold for $\$ 125,000$ . What are the net cash flows from operating, investing, and financing activities for Year 2?

Under the direct method of preparing a statement of cash flows, the gain on the sale of land is not adjusted or reported as part of cash flows from operating activities.

Which of the following is a noncash investing and financing activity?

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Issuance of bond payable

The comparative balance sheet of Barry Company for Years 1 and 2 ended December 31 appears below in condensed form: ​ Additional data for the current year are as follows: (a) Net income, $\$ 75,800$ . (b) Depreciation reported on income statement, $\$ 38,000$ . (c) Fully depreciated equipment costing $\$ 60,000$ was scrapped, no salvage, and equipment was purchased for $\$ 150,000$ . (d) Bonds payable for $\$ 75,000$ were retired by payment at their face amount. (e) 2,500 shares of common stock were issued at $\$ 30$ for cash. (f) Cash dividends declared and paid, $\$ 40,000$ . (g) Investments of $\$ 100,000$ were sold for $\$ 125,000$ . ​ Prepare a statement of cash flows using the indirect method.

For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -Gain on sale of investments

Baxter Company reported a net loss of $13,000 for the year ended December 31. During the year, accounts receivable decreased by $5,000, inventory increased by $8,000, accounts payable increased by $10,000, and depreciation expense of $4,000 was recorded. During the year, operating activities

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded. Net cash provided by operating activities for the year is

Selected data for the current year ended December 31 are as follows: Balance Balance December 31 January 1 Accrued expenses (operating expenses) \ 29,500 \ 22,000 Accounts payable (merchandise creditors) 90,000 135,000 Inventories 42,500 68,000 Prepaid expenses 23,000 20,000 ​ During the current year, the cost of goods sold was $620,000 and the operating expenses other than depreciation were $142,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows. Determine the amount reported on the statement of cash flows for (a) cash payments for merchandise and (b) cash payments for operating expenses.

Land costing $71,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

Selected data taken from the accounting records of Laser Inc. for the current year ended December 31 are as follows: Balance, December 31 Balance, January 1 Accrued operating expenses \ 5,590 \ 6,110 Accounts payable (merchandise creditors) 41,730 46,020 Inventories 77,350 84,110 Prepaid expenses 3,250 3,900 ​ During the current year, the cost of goods sold was $448,500, and the operating expenses other than depreciation were $78,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows. ​ Required: Determine the amount reported on the statement of cash flows for: (a) Cash payments for merchandise (b) Cash payments for operating expenses

There is no difference in the investing and financing sections of the statement of cash flows using the indirect and direct method.

The direct method of preparing the operating activities section of the statement of cash flows reports major classes of cash receipts and cash payments related to the day-to-day operations of the business.

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Payment of dividends to stockholders

On the statement of cash flows, the cash flows from financing activities section would include

Cash flows from investing activities, as part of the statement of cash flows, include payments for the acquisition of fixed assets.

Purchasing equipment by issuing a six-month note should be shown on the statement of cash flows under the investing activities section.

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in