Exam 21: The Statement of Cash Flows Revisited

In preparation for developing its statement of cash flows for the year just ended, D-Rose Distributors collected the following information: \ in millions) Purchase of treasury bills (considered a cash equivalent) 6 Sale of preferred stock 150 Gain on sale of land 4 Proceeds from sale of land 25 Issuance of bonds payable for cash 140 Purchase of equipment for cash 30 Purchase of GE stock 35 Declaration of cash dividends 134 Payment of cash dividends declared in previous year 130 Purchase of treasury stock 120 Payment for the early extinguishment of long-term notes (carrying (book) value: \1 00 million) 110 Required: 1. Prepare the investing activities section of D-Rose's statement of cash flows. 2. Prepare the financing activities section of D-Rose's statement of cash flows.

Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Financing cash inflow

Do the statement of cash flows and its related disclosure note report only transactions that cause an increase or decrease in cash? Explain.

The following are comparative balance sheets and an income statement for Wentworth Company. Cash dividends of $45,000 were paid in 2018. Required: Prepare a statement of cash flows for 2018 using the direct method.

Partial balance sheets and additional information are listed below for Julius Company. Julius Company Partial Balance Sheets as of December 31 Assets 2018 2017 Cash \ 20,000 \ 40,000 Accounts receivable 90,000 60,000 Inventory 40,000 25,000 Accounts payable \ 72,000 \ 58,000 Additional information for 2018: Net income was $70,000. Depreciation expense was $30,000. Sales totaled $600,000. Cost of goods sold totaled $325,000. Required: Prepare the summary entry for the amount of cash received from customers during 2018.

If sales revenue is $80 million and accounts receivable increased by $12 million, the amount of cash received from customers:

Interest payments on debt are classified as cash outflows from financing activities.

Which of the following is reported as an operating activity in the statement of cash flows?

Sales revenue is $100,000. Accounts receivable increased by $2,000. Cash received from customers is:

An analyst compiled the following information for U Inc. for the year ended December 31, 2018: Net income was $1,700,000. Depreciation expense was $400,000. Interest paid was $200,000. Income taxes paid were $100,000. Common stock was sold for $200,000. Preferred stock (8% annual dividend) was sold at par value of $250,000. Common stock dividends of $50,000 were paid. Preferred stock dividends of $20,000 were paid. Equipment with a book value of $100,000 was sold for $200,000. Using the indirect method, what was U Inc.'s net cash flow from operating activities for the year ended December 31, 2018?

All of the following may qualify as cash equivalents except:

Which of the following would be reported as a cash outflow from investing activities?

Which of the following does not represent a cash flow relating to operating activities?

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Investing cash outflow

In its 2018 Annual Report to Shareholders, Henchman & Co. provided the following Statement of Cash Flows: Years ended December 31 (\ in millions) 2018 2017 Financing Activities Proceeds from issuance of long-term debt 1,491 Proceeds from equity security units 690 Borrowings under lines of credit 1,173 Repayment of borrowings under lines of Credit (1,306) (175) Principal payments of long-term debt/lease agreements (119) (485) Proceeds from issuance of stock 825 19 Dividends paid (158) (114) Other financing activities - Net cash provided by (used in) financing activities 2,532 (755) Increase in cash and cash equivalents 145 177 Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year \ -What method (direct or indirect) does Henchman & Co. use to present its Statement of Cash Flows? Explain how you can determine which method is used.

Ilene South Company owns 40% of the outstanding common stock of Ilene Wright Company. During the year, South received a $150 million cash dividend from Wright. What effect does this dividend have on South's statement of cash flows for the year?

The net income for Howie Doohan Corporation was $280 million for the year ended December 31, 2018. Related information follows: Sale of common stock for cash, $34 million. Amortization of trademark, $2 million. Cash dividends paid, $28 million. Decrease in salaries payable, $2 million. Depreciation expense, $40 million. Increase in accounts payable, $18 million. Increase in bonds payable, $26 million. Net cash flows from operating activities during 2018 should be reported as:

Interest payments and interest received must be reported as operating cash flows using:

When one enters a $50,000 credit entry to the Land account in a spreadsheet for the statement of cash flows, it represents a negative change in that account and probably is due to selling such assets.