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. $\begin{array}{|l|r|} \hline \text { Cash and cash equivalents, beginning-year balance } & \$ 18,000 \\ \hline \text { Cash and cash equivalents, year-end balance } & 78,750 \\ \hline \text { Cash payments for merchandise inventory } & 75,750 \\ \hline \text { Cash paid for store equipment } & 15,750 \\ \hline \text { Cash borrowed on three-month note payable } & 22,500 \\ \hline \text { Cash dividends paid } & 12,000 \\ \hline \text { Cash paid for salaries } & 39,000 \\ \hline \text { Cash payments for other operating expenses } & 48,000 \\ \hline \text { Building purchased and financed by long-term note payable } & 78,000 \\ \hline \text { Cash received from customers } & 220,500 \\ \hline \text { Cash interest received } & 8,250\\ \hline \end{array}$

The answer of Use the following information about the calendar-year...

A company had wage expense of $750,000 during a given period.Compute cash paid for wages during this period given the following data. \[\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Beginning } \\ \text { Balance } \end{array} & \begin{array} { c } \text { Ending } \\ \text { Balance } \end{array} \\ \hline \text { Wages Payable } & \$ 100,000 & \$ 25,500 \\ \hline \end{array}\]

A) $750,000 B) $675,500 C) $824,500 D) $74,500 E) $125,500 A) $750,000 B) $675,500 C) $824,500 D) $74,500 E) $125,500

Match between columns Premises: Purchased a warehouse in exchange for shares of its stock Sale of land for cash Signed a note payable in exchange for cash Purchased equipment in exchange for a 6-month note payable Paid interest on a note payable Purchased equipment for cash Purchased supplies for cash Cash sales of merchandise Paid cash to settle an account payable Reissued its own treasury stock

The Answer of (O) operating activity and (I) investing activity is...

Exam 12: Reporting and Analyzing Cash Flows

Based on the following income statement and balance sheet for Montego Bay Corporation,determine the cash flows from operating activities using the direct method.

(Essay)

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Question 141

The reporting of financing activities is identical under either the direct and indirect methods for preparing the statement of cash flows.

(True/False)

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Question 142

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. Cash and cash equivalents, beginning-year balance \ 18,000 Cash and cash equivalents, year-end balance 78,750 Cash payments for merchandise inventory 75,750 Cash paid for store equipment 15,750 Cash borrowed on three-month note payable 22,500 Cash dividends paid 12,000 Cash paid for salaries 39,000 Cash payments for other operating expenses 48,000 Building purchased and financed by long-term note payable 78,000 Cash received from customers 220,500 Cash interest received 8,250

(Essay)

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Question 143

Match each of the following items with the appropriate definitions.

Indirect method

Transactions that include making and collecting notes receivable or purchasing and selling plant assets or investments in other than cash equivalents and trading securities

Operating activities

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

Statement of cash flows

A calculation that reports net income and then adjusts the net income amount by adding and subtracting items that are necessary to yield net cash provided (used) by operating activities

Correct Answer:

Verified

Indirect method

Operating activities

Statement of cash flows

Financing activities

Investing activities

Direct method

(Matching)

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Question 144

Holly Company's accounts receivable increased during the year by $8.5 million.It had a bad debt expense of $3.0 million,and its allowance for uncollectible accounts increased by $1.5 million.What is the amount of cash received from customers if Holly's sales were $50.2 million?

(Multiple Choice)

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Question 145

The cash flow on total assets ratio reflects the company's actual cash flows and therefore,is affected by the accounting constraints of recognition and measurement for net income.

(True/False)

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Question 146

Wilma Corporation prepares its statement of cash flows using the indirect method to report operating activities.Net income for the 2011 fiscal year was $634,000.Depreciation and amortization expense of $60,000 and 30,000 respectively were included with operating expenses in the income statement.The following information describes the changes in current assets and liabilities other than cash: Decrease in accounts receivable \ 22,000 Increase in inventories 9,400 Increase prepaid expenses 8,900 Increase in salaries payable 10,400 Decrease in income taxes payable 14,400 Determine the net cash flow provided (used)by operating activities.

(Multiple Choice)

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Question 147

The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:

(Multiple Choice)

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Question 148

When preparing the operating section of the statement of cash flows using the indirect method,non-cash operating expenses are added back to net income.

(True/False)

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Question 149

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.

(True/False)

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Question 150

A company reported operating cash flows of $57,000 and average total assets of $962,000.Calculate the company's cash flow on total assets ratio.

(Short Answer)

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Question 151

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

(True/False)

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Question 152

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used.

(True/False)

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Question 153

For each of the following items,indicate whether it would be classified as either an operating activity,an investing activity,a financing activity or a significant,noncash financing and investing activity.

(Essay)

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Question 154

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable.The entire transaction is disclosed to users on the statement of cash flows and/or in its notes.

(True/False)

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Question 155

A company had wage expense of $750,000 during a given period.Compute cash paid for wages during this period given the following data. Beginning Balance Ending Balance Wages Payable \ 100,000 \ 25,500

(Multiple Choice)

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Question 156

___________________ activities include those transactions that affect long-term liabilities and equity.

(Short Answer)

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Question 157

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

(Multiple Choice)

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Question 158

When the operating activities section of the statement of cash flows is reported using the direct method,the FASB requires:

(Multiple Choice)

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Question 159

For each of the following items, indicate whether it would be classified as either an operating activity, an investing activity, a financing activity or a significant, noncash financing and investing activity.

Purchased a warehouse in exchange for shares of its stock

(O) operating activity

Sale of land for cash

(I) investing activity

Signed a note payable in exchange for cash

(F) financing activity

Correct Answer:

Verified

Purchased a warehouse in exchange for shares of its stock

Sale of land for cash

Signed a note payable in exchange for cash

Purchased equipment in exchange for a 6-month note payable

(Matching)

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Question 160

Based on the following income statement and balance sheet for Montego Bay Corporation,determine the cash flows from operating activities using the direct method.

The reporting of financing activities is identical under either the direct and indirect methods for preparing the statement of cash flows.

Holly Company's accounts receivable increased during the year by $8.5 million.It had a bad debt expense of $3.0 million,and its allowance for uncollectible accounts increased by $1.5 million.What is the amount of cash received from customers if Holly's sales were $50.2 million?

The cash flow on total assets ratio reflects the company's actual cash flows and therefore,is affected by the accounting constraints of recognition and measurement for net income.

The accounting principle that requires significant noncash financing and investing activities be reported on the statement of cash flows is the:

When preparing the operating section of the statement of cash flows using the indirect method,non-cash operating expenses are added back to net income.

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.

A company reported operating cash flows of $57,000 and average total assets of $962,000.Calculate the company's cash flow on total assets ratio.

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

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used.

For each of the following items,indicate whether it would be classified as either an operating activity,an investing activity,a financing activity or a significant,noncash financing and investing activity.

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable.The entire transaction is disclosed to users on the statement of cash flows and/or in its notes.

A company had wage expense of $750,000 during a given period.Compute cash paid for wages during this period given the following data. Beginning Balance Ending Balance Wages Payable \ 100,000 \ 25,500

___________________ activities include those transactions that affect long-term liabilities and equity.

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

When the operating activities section of the statement of cash flows is reported using the direct method,the FASB requires:

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

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