Exam 16: Reporting the Statement of Cash Flows

Financing activities include (a) the purchase and sale of long-term assets, (b) the purchase and sale of short-term investments, and (c) lending and collecting on loans.

The statement of cash flows reports:

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:

Martin, 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. Additional information:

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:

Woodlawn 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 $233,000 Cash dividends declared for the year $50,000 Proceeds from the sale of equipment $85,000 Gain on the sale of equipment $4,500 Cash dividends payable at the beginning of the year $22,000 Cash dividends payable at the end of the year $30,000 Net income for the year $110,000 The amount of cash paid for dividends was:

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Weston is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from investing activities:

A corporation reported average total assets in Year 1 of $397,350 and $440,800 in Year 2. Its net operating cash flow for Year 1 was $35,667 and $35,790 for Year 2. Calculate the cash flow on total assets ratio for both years. Comment on the results.

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

Accounting standards:

When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

Sebring Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $140,000 was sold for its book value in Year 2. The following selected information is available for Sebring Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

The usual first step in preparing the statement of cash flows is computing the net increase or net decrease in cash.

When preparing the operating activities section of the statement of cash flows using the indirect method, nonoperating gains are added to net income.

The following information is available for the Eldridge Company: Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old machinery with an original cost of $45,060 was sold for $2,520 cash. (3) New machinery was purchased for $81,060 cash. (4) Cash dividends of $40,320 were paid. (5) Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for calendar-year 2011 using the indirect method.

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

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

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.

Use the following information about the calendar-year cash flows of MacArthur Company to prepare a statement of cash flows (direct method) and a schedule of noncash investing and financing activities.