Exam 12: Reporting and Analyzing Cash Flows

The statement of cash flows is:

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

All cash transactions eventually affect noncash ___________ accounts.

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 direct method. PETERS COMPANY Income Statement For Year Ended December 31, 2013 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 5,000 Rent expense 7,200 Interest expense 1,900 39,100 Income from operations \ 36,900 Gain on sale of land 2,000 Net income 38,900 Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as follows: Balance Accounts receivable Dec. 31,2013 Dec, 31,2012 Merchandise inventory \ 27,600 \ 24,000 Prepaid rent 18,200 20,000 Accounts payable 550 400 Salaries and wages payable 27,100 31,000 Interest payable 10,400 9,000

Selected information from Jet Company's 2013 financial statements is shown below (in millions): Inventory decreased $\$ 6.0 \quad$ Accounts payable increased by $\$ 7.0$ Cost of goods sold $\$ 36.50 \quad$ Salaries expense $\$ 24.0$ Salaries payable decreased $\$ 6.0 \quad$ Accounts receivable increased by $\$ 10.0$ Sales $\$ 56.4$ -What is the amount of cash paid for purchases by Jet during 2013?

A company had cost of goods sold of $150,000 during a given period.Compute cash paid for merchandise during this period given the following data: Begirruing Balarce Endirg Balarce Accounts payable \ 20,000 \ 17,500 Merchandise inventory 35,000 42,000

The following selected account balances are taken from a merchandising company's records: Dec. 31 Dec. 31 For the 2012 2013 Year 2013 Merchardise irventory \ 15,600 Accourits payable 32,400 27,400 Salaries payable 4,400 3,000 Accourts receivable 42,000 36,000 Total assets 234,000 286,000 Sales \ 332,000 Cost of goods sold 165,600 Salaries expense 48,000 (a)Calculate the cash payments made during 2013 for merchandise.Assume all of the company's accounts payable balances are a result from merchandise purchases. (b)Calculate the cash receipts from customer sales during 2013. (c)Calculate the cash payments for salaries during 2013.

Based on the following income statement and balance sheet for Montego Bay Corporation, determine the cash flows from operating activities using the direct method. MONTEGO BAY CORPORATION Income Statement For Year Ended December 31, 2013 Sales \ 504,000 Cost of goods sold 327,600 Depreciation 42,000 Other operating expenses 125,500 (495,100) Other gains (losses): Gain on sale of equipment 7,200 Income before taxes 16,100 Income tax expense (4,800) Net income \ 11,300 MONTEGO BAY CORPORATION Balance Sheets At December 31 2013 2012 Cash \ 64,650 \ 55,800 Accounts receivable 21,000 29,000 Inventory 58,000 52,100 Equipment 240,000 222,000 Accumulated depreciation (106,000) (96,000) Total assets Liabilities: Accounts payable \ 28,400 \ 23,700 Income taxes payable 1,050 Total liabilities \ 29,450 \ 24,900 Equity: Common stock \ 106,000 \ 106,000 CC in excess 18,000 18,000 Retained earnings 124,200 114,000 Total equity \ 248,200 \ 238,000 Total liabilities and equity

An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes is a(n):

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

The cash flow on total assets ratio is defined as the total cash flows from operations divided by the average total assets.

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

The cash flow on total assets ratio is computed by dividing _____________ by ____________.

Financing activities include the purchase and sale of long-term assets.

The purchase of stock in another company is considered to be a financing activity.

The following information is available for the Ehrens Corporation: EHRENS CORPORATION Balance Sheets At December 31 2013 2012 Assets: Cash Accounts receivable 32,180 29,400 Merchandise inventory 73,125 61,710 Long-term investments 55,900 56,400 Equipment 175,500 145,500 Accumulated depreciation (33,550) (31,200) Total assets \ 327,795 \ 284,850 Liabilities: Accounts payable \ 65,000 \ 40,380 Incomestaxes payable 10,725 10,200 Bonds payable Total liabilities \ 124,475 \ 116,580 Equity: Common stock 117,000 96,000 Contributed capital in excess of pay 13,000 9,000 Retained earnings Total equity Total liabilities and equity \ 327,795 \ 284,850 EHRENS CORPORATION Income Statement For Year Ended December 31, 2013 Sales \ 240,000 Cost of goods sold \ 80,900 Depreciation expense 29,400 Other operating expenses 48,000 Interest expense 2,000 (160,300) Other gains (losses): Loss on sale of equipment (8,400) Income before taxes 71,300 Income taxes expense 27,650 Net income \ 43,650 Additional information: (1)There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2)Old equipment with an original cost of $37,550 was sold for $2,100 cash. (3)New equipment was purchased for $67,550 cash. (4)Cash dividends of $33,600 were paid. (5)Additional shares of stock were issued for cash. Prepare a statement of cash flows for the 2013 calendar year using the indirect method.

Information to prepare the statement of cash flows usually comes from (a)comparative balance sheets, (b)current income statement, and (c)additional information.

Walker Company reports net income of $420,000 for the year ended December 31, 2013.It also reports $75,600 depreciation expense and a gain of $11,000 on the sale of machinery.Its comparative balance sheets reveal a $33,600 decrease in accounts receivable, $17,220 increase in accounts payable, $9,240 increase in prepaid expenses, and $13,020 increase in wages payable.What is the net cash flows provided (used)by operating activities using the indirect method?

Explain the use of a spreadsheet in the preparation of the statement of cash flows.

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: