Deck 14: The Statement of Cash Flows

Question 1

Which one of the following transactions is an investing activity?

A)Sale of equipment at book value
B)Sale of merchandise on credit
C)Declaration of cash dividend
D)Issuance of bonds payable at a discount

Answer 1

A

Question 2

How will a company classify the exchange of common stock for land on its statement of cash flows?

A)An operating activity
B)An investing activity
C)A financing activity
D)A footnote

Answer 2

D

Question 3

An acquisition of land by signing a 10-year mortgage payable is reported on the statement of cash flows as

A)an operating activity.
B)an investing activity.
C)a financing activity.
D)a footnote.

Answer 3

D

Question 4

How will a company classify the income tax payments on its statement of cash flows?

A)Operating activities
B)Taxing activities
C)Lending activities
D)Financing activities

Question 5

A company uses straight-line instead of the units of production method of depreciation. Assuming a tax rate of zero, which statement is true as a result of its choice of depreciation methods?

A)Cash flows from operations will be less than under the straight-line method
B)Cash flows from operations will be more than under the straight-line method
C)Cash used for investing activities will be more than under the straight-line method
D)Cash flows are the same as if the straight-line method had been used.

Question 6

How will a company classify a payment for the acquisition of land on its statement of cash flows?

A)Cash provided from operations
B)Cash used in financing activities
C)Cash provided from investing activities
D)Cash used for investing activities

Question 7

How will a company classify the sale of treasury stock at an amount equal to its cost on its statement of cash flows?

A)Operating activity
B)Investing activity
C)Extraordinary activity
D)Financing activity

Question 8

A company uses the direct method of preparing the statement of cash flows. Current year depreciation expense can be found on the

A)balance sheet and income statement.
B)income statement and statement of cash flows.
C)income statement only.
D)statement of cash flows only.

Question 9

A company declares cash dividends on the last day of the year. Payment will be made during the following fiscal period. Cash flows

A)from operations will be less than if dividends were not declared.
B)from operations will be more than if dividends were not declared.
C)from financing activities will be less than if dividends were not declared.
D)will be the same as if dividends had not been declared.

Question 10

Which statement is true with respect to the preparation of the cash flows from operating activities' section?

A)It can be calculated by using the direct or indirect methods.
B)Cash flows are calculated as the difference between revenues and expenses.
C)It is always equal to accrual accounting income.
D)Cash payments for depreciation and dividends are reported in the operating activates sections.

Question 11

How will a company classify payments for inventory acquisitions on its statement of cash flows?

A)Cash provided from operations
B)Cash used in operations
C)Cash provided from investing activities
D)Cash used for investing activities

Question 12

If an investor is interested in the solvency of a company, he/she should analyze the

A)balance sheet and income statement.
B)income statement, balance sheet, and statement of cash flows.
C)balance sheet and statement of cash flows.
D)statement of cash flows only.

Question 13

How will a company classify payments to suppliers on its statement of cash flows?

A)Cash provided from operations
B)Cash used in operations
C)Cash provided from investing activities
D)Cash used in financing activities

Question 14

What is reported on the statement of cash flows?

A)Operating, investing, and financing activities of an entity for a period of time
B)All revenues and expense listed by operating, financing, and operating activity
C)Operating, investing, and financing activities of an entity at the balance sheet date
D)A detail of all incoming and outgoing cash flows of a business

Question 15

How will a company classify 'proceeds received from the issuance of long-term bonds' on its statement of cash flows?

A)Cash provided from operations
B)Cash used in operations
C)Cash provided from investing activities
D)Cash provided from financing activities

Question 16

Equipment that cost $10,000 that had a book value of $6,000 was sold for $7,000. Data from the comparative balance sheets are:
$\begin{array}{lrr}&12/31/17&12/31/16\\\hline \text { Equipment } & \$ 420,000 & \$ 310,000 \\\text { Accumulated Depreciation } & 59,000 & 36,000\end{array}$

Equipment purchased during 2017 cost

A)$120,000.
B)$110,000.
C)$145,000.
D)$10,000.

Question 17

An investor is interested in assessing the effectiveness of a company's cash management. Where will the investor look to evaluate this?

A)Statement of cash flows
B)Income statement
C)Balance sheet
D)Company's bank statements

Question 18

Payments for purchases of property, plant, and equipment and other productive assets are classified as cash outflows from

A)operating activities.
B)financing activities.
C)investing activities.
D)selling activities.

Question 19

How will a company classify cash receipts from selling equipment no longer used in operations on its statement of cash flows?

A)Cash provided from operations
B)Cash provided from financing activities
C)Cash provided from investing activities
D)Cash used for investing activities

Question 20

A company uses the indirect method of preparing the statement of cash flows. Current year depreciation expense can be found on the

A)income statement and statement of cash flows.
B)balance sheet and income statement.
C)statement of cash flows and balance sheet.
D)income statement and statement of comprehensive income.

Question 21

When preparing a statement of cash flows using the indirect method, an increase in inventory will result in an adjustment to reported net income because

A)cost of goods sold on an accrual basis is less than on a cash basis.
B)inventory was paid for with cash, but is still on hand at the end of the period.
C)acquisition of inventory is an investment activity.
D)inventory purchased created smaller cash outflows than cash inflows received from inventory sales.

Question 22

Which one of the following is subtracted from net income when using the indirect method to determine cash flows from operations?

A)Loss from sale of land
B)Depreciation expense
C)Stock dividends declared and distributed
D)Gain from sale of equipment

Question 23

Selected information from Hsu Inc. is provided below for the years ending December 31, 2017 and 2016.
$\begin{array}{lrr}&2017&2016\\\hline\text { Accumulated depreciation } & \$ 32,000 & \$ 29,000 \\\text { Equipment } & 60,000 & 55,000\end{array}$

During 2017, depreciation expense was recorded. New equipment was acquired for cash. Old equipment which was 70% depreciated with an original cost of $26,000 was sold for a gain of $4,000. For how much was the equipment sold?

A)$11,800
B)$5,000
C)$3,800
D)$31,000

Question 24

Which one of the following would you expect to find as part of cash flows from investing activities?

A)The issuance of common stock in exchange for a factory
B)Cash dividends paid
C)Cash inflows from the proceeds of a sale of a building
D)The write-off of accounts receivable

Question 25

Which one of the following is consistent with a company recording a large operating loss but still having healthy cash flows from operations?

A)A large amount of depreciation and/or amortization expense
B)An increase in accounts receivable and inventory
C)A decrease in accounts payable
D)All sales are on a cash basis.

Question 26

Which one of the following is subtracted from net income when using the indirect method to determine cash flows from operations?

A)Increase in prepaid insurance
B)Increase in accounts payable
C)Decrease in accounts receivable
D)Decrease in prepaid insurance

Question 27

Which of the following is added to net income when using the indirect method to determine cash flows from operations?

A)Cash dividends paid
B)Increase in accounts payable and decrease in accounts receivable
C)Decrease in accounts receivable and cash dividends declared
D)Increase in prepaid expenses

Question 28

Which one of the following is added to net income when using the indirect method to determine cash flows from operations?

A)Amortization of intangibles
B)Decrease in accounts payable
C)Increase in accounts receivable
D)A gain on the sale of plant assets

Question 29

In determining cash flow from operating activities, which of the following adjustments will be made as a result of an increase in accounts receivable during a period?

A)An addition to net income when the direct method is used
B)An addition to net income when the indirect method is used
C)A deduction from net income when the direct method is used
D)A deduction from net income when the indirect method is used

Question 30

Relevant account balances for Martinez Corporation are:
$\begin{array}{lrr}&12/31/17&1/01/17\\\text { Accounts receivable } & \$ 18,000 & \$ 14,000 \\\text { Inventory } & 24,000 & 26,000 \\\text { Prepaid insurance } & 1,500 & 2,100 \\\text { Accounts payable } & 25,000 & 26,000\end{array}$

$\underline{\text { Income information for } 2017}$
$\begin{array}{l}\text { Revenue } &&\$120,000\\\text { Cost of goods sold } & \$ 60,000 \\\text { Insurance expense } & 6,000 \\\text { Operating expenses } & 18,000 \\\text { Depreciation } &\underline{ 10,000}&\underline{94,0000} \\\text { Net income }&&\underline{\$26,000}\end{array}$
How much cash was paid to suppliers for inventory during 2017?

A)$2,000
B)$59,000
C)$63,000
D)$61,000

Question 31

Calvin Company provided the following information during 2017:
$\begin{array}{lr}\text { Purchase of land by issuing bonds } & \$ 550,000 \\\text { Proceeds from issuing long-term debt } & 300,000 \\\text { Dividends paid to shareholders } & 120,000 \\\text { Proceeds from issuing stock } & 300,000 \\\text { Proceeds from sale of building } & 360,000 \\\text { Purchases of inventories } & 800,000 \\\text { Purchase of treasury stock } & 430,000\end{array}$

How much is 'net cash provided (used) by investing activities' during 2017?

A)$790,000
B)$360,000
C)$910,000
D)$(120,000)

Question 32

Calvin Company provided the following information during 2017:
$\begin{array}{lr}\text { Purchase of land by issuing bonds } & \$ 550,000 \\\text { Proceeds from issuing long-term debt } & 300,000 \\\text { Dividends paid to shareholders } & 120,000 \\\text { Proceeds from issuing stock } & 300,000 \\\text { Proceeds from sale of building } & 360,000 \\\text { Purchases of inventories } & 800,000 \\\text { Purchase of treasury stock } & 430,000\end{array}$

How much is 'net cash provided by financing activities' during 2017?

A)$(500,000)
B)$550,000
C)$50,000
D)$600,000

Question 33

An increase in inventory is reported in a statement of cash flows using the indirect method as a(n)

A)addition to net income in arriving at net cash flows from operating activities.
B)deduction from net income in arriving at net cash flows from operating activities.
C)cash outflow from investing activities.
D)cash outflow from financing activities.

Question 34

How much cash was received from customers during 2017?

A)$120,000
B)$116,000
C)$138,000
D)$124,000

Question 35

The statement of cash flows is designed to highlight

A)the revenues and expenses of an entity's operations during a period.
B)the predicted future cash flows.
C)the operating, investing, and financing activities of an entity during a period.
D)the future cash balance

Question 36

Which one of the following is added to net income when using the indirect method to determine cash flows from operations?

A)Increase in inventory
B)Decrease in wages payable
C)Loss from sale of land
D)Gain from selling treasury stock above its original cost

Question 37

Which of the following is subtracted from income when using the indirect method to determine cash flows from operations?

A)Decrease in accounts payable
B)Depreciation
C)Cash dividends declared and distributed
D)Amounts due from customers at yearend

Question 38

Which one of the following is consistent with a company recording a large operating income but having a net cash outflow from operations?

A)A great amount of depreciation expense
B)An increase in accounts receivable and inventory
C)An increase in accounts payable
D)Acquisition of new plant assets for cash

Question 39

In determining net cash flows from operating activities, a decrease in salaries payable during a period

A)means that income on an accrual basis is equal to income on a cash basis.
B)must be added to net income under the indirect method.
C)creates a cash outflow to pay for salaries that were previously accrued.
D)creates a cash inflow from employees.

Question 40

Which one of the following is added to net income when using the indirect method to determine cash flows from operations?

A)Decrease in amounts paid to reduce long-term notes
B)Decrease in accounts payable
C)Depreciation or amortization
D)Cash received from selling treasury stock

Question 41

The comparative balance sheets of Shad Inc. contain prepaid insurance of $48,000 on January 1, 2017 and $37,000 on December 31, 2017. Shad's 2017 income statement contains insurance expense of $15,000. Calculate the amount of cash paid for insurance premiums during 2017.

Question 42

Selected information from Cooke Inc. is provided below for the years ending December 31, 2017 and 2016.
$\begin{array}{lrr} & 2017 & 2016 \\\hline \text { Accumulated depreciation } & \$ 32,000 & \$ 29,000 \\\text { Equipment } & 60,000 & 55,000\end{array}$
During 2017, depreciation expense was recorded. New equipment was acquired for cash. Old equipment which was 70% depreciated with an original cost of $26,000 was sold for a gain of $4,000. What is the cost of the new equipment acquired?

A)$11,800
B)$ 5,000
C)$21,000
D)$31,000

Question 43

The following are from Forman's comparative balance sheet and 2017 income statement:
$$\begin{array} { | l | r | r | } \hline & \text { December 31,2017 } & \text { January 1, 2017 } \\\hline \text { Accounts receivable } &\$ 2 2 , 0 0 0 & \$ 19 , 0 0 0 \\\text { Unearned revenue } &3 , 0 0 0 & 4,000 \\\text { Salaries payable } & 8 , 0 0 0 &5 , 0 0 0\\\text { Sales revenue } & 154,000 & \\\text { Salaries expense } &8 8 , 0 0 0 &\end{array}$$

Determine the amount of cash that Forman Incorporated paid for salaries during 2017.

A)$91,000
B)$88,000
C)$85,000
D)$80,000

Question 44

During 2017, equipment was sold for $57,000. This equipment cost $90,000 and had a book value of $47,000. Accumulated depreciation for equipment was $184,000 at 12/31/17 and $147,000 at 12/31/16. Show how the results of the three items will appear on the statement of cash flows using the indirect method from this information.

Question 45

The following are from Forman's comparative balance sheet and 2017 income statement:
$$\begin{array} { | l | r | r | } \hline & \text { December 31,2017 } & \text { January 1, 2017 } \\\hline \text { Accounts receivable } &\$ 2 2 , 0 0 0 & \$ 19 , 0 0 0 \\\text { Unearned revenue } &3 , 0 0 0 & 4,000 \\\text { Salaries payable } & 8 , 0 0 0 &5 , 0 0 0\\\text { Sales revenue } & 154,000 & \\\text { Salaries expense } &8 8 , 0 0 0 &\end{array}$$
Determine the amount of cash that Forman collected from customers during 2017.

A)$150,000
B)$158,000
C)$151,000
D)$156,000

Question 46

List two distinct examples of significant noncash transactions and two distinct examples of transactions not reported in connection with a statement of cash flows

Question 47

Relevant account balances for Martinez Corporation are:
$\begin{array}{lrr}&12/31/17&1/01/17\\\text { Accounts receivable } & \$ 18,000 & \$ 14,000 \\\text { Inventory } & 24,000 & 26,000 \\\text { Prepaid insurance } & 1,500 & 2,100 \\\text { Accounts payable } & 25,000 & 26,000\end{array}$

$\underline{\text { Income information for } 2017}$
$\begin{array}{l}\text { Revenue } &&\$120,000\\\text { Cost of goods sold } & \$ 60,000 \\\text { Insurance expense } & 6,000 \\\text { Operating expenses } & 18,000 \\\text { Depreciation } &\underline{ 10,000}&\underline{94,0000} \\\text { Net income }&&\underline{\$26,000}\end{array}$
How much is Martinez's cash flows from operations for 2017?

A)$28,400
B)$38,400
C)$23,600
D)$33,600

Question 48

During the current year, Martini Foods reported sales of $250,000, and wrote off $7,000 of accounts receivable as uncollectible under the direct write-off method. On January 1 and December 31 of the current year, Richard Young had accounts receivable of $26,000 and $14,000, respectively. Determine the amount of cash collected from customers during the current year.

Question 49

Beginning and ending balances for selected accounts are as follows:
$$\begin{array} { l r r r } & 12 / 31 / 17 & 1 / 01 / 17 \\\hline \text { Accounts receivable } & \$ 14,000 & \$ 19,000 \\\text { Revenue received in advance } & 6,000 & 3,000\end{array}$$
During 2017, sales revenue is $110,000. Calculate the cash collected from customers.

Question 50

Selected information from Thompson Corporation is provided below for the years ending December 31, 2017 and 2016.
$\begin{array}{lrr}&2017&2016\\\text { Accumulated depreciation } & \$ 41,000 & \$ 35,000 \\\text { Accounts payable } & 39,000 & 25,000\\\\\text { Equipment }&55,000&49,000\end{array}$
During 2017 depreciation expense was recorded. New equipment was acquired for cash. Old equipment which was 60% depreciated with an original cost of $26,000 was sold for a loss of $4,000. Prepare the investing activities section of the statement of cash flows.

Question 51

The May 1 and May 31 balances in accounts receivable are $35,000 and $36,000, respectively. During May, the company reported sales totaling $235,000 from its customers. The company incurred $211,000 of expenses, although $12,000 was not paid as of May 31. How much is cash flows from operations for May?

A)$24,000
B)$37,000
C)$11,000
D)$35,000

Question 52

List two distinct examples of investing activities and two distinct examples of financing activities.

Question 53

Relevant account balances for Martinez Corporation are:
$\begin{array}{lrr}&12/31/17&1/01/17\\\text { Accounts receivable } & \$ 18,000 & \$ 14,000 \\\text { Inventory } & 24,000 & 26,000 \\\text { Prepaid insurance } & 1,500 & 2,100 \\\text { Accounts payable } & 25,000 & 26,000\end{array}$

$\underline{\text { Income information for } 2017}$
$\begin{array}{l}\text { Revenue } &&\$120,000\\\text { Cost of goods sold } & \$ 60,000 \\\text { Insurance expense } & 6,000 \\\text { Operating expenses } & 18,000 \\\text { Depreciation } &\underline{ 10,000}&\underline{94,0000} \\\text { Net income }&&\underline{\$26,000}\end{array}$

How much cash was paid for insurance during 2017?

A)$5,400
B)$6,000
C)$6,600
D)$ 600

Question 54

Parton Inc.. reported accounting service revenue of $450,000 for 2017. On January 1, 2017, Parton Inc. had $38,000 of accounts receivable and $0 of cash deposits received from customers. On December 31, 2017, accounts receivable and deposits received were $49,000 and $6,000, respectively. Calculate the amount of cash collected from clients during 2017.

Question 55

The August 1 and August 31 balances in accounts receivable are $21,000 and $18,000, respectively. During August, the company collected $56,000 from its customers and incurred $37,000 of expenses, all paid in cash. Calculate the amount of cash flows from operations for August.

Question 56

Beginning and ending balances for relevant balance sheet accounts are as follows:
$$\begin{array} { | l | r | r | } \hline & 12 / 31 / 17 & 1 / 01 / 17 \\\hline \text { Merchandise inventary } & \$ 32,000 & \$ 18,000 \\\hline \text { Accaunts payalale } & 13,000 & 20,000 \\\hline\end{array}$$
During 2017, cost of goods sold was $148,000. Calculate the amount of cash paid to suppliers of merchandise inventory.

Question 57

The accounts receivable balances on January 1 and December 31 are $22,000 and $18,000, respectively. The income statement for the year included sales revenue of $120,000. Determine the amount of cash collected from customers during the year.

Question 58

Net income was $49,000.
Prepare a statement of cash flows (indirect method) for 2017. Omit the heading.

Question 59

How does depreciation appear on the statement of cash flows under the direct method?

A)Added in the operating activities section
B)Subtracted in the operating activities section
C)In the investing activities section since it relates to plant assets
D)It will not be reported since it is not a cash flow.

Question 60

Wilson Corporation reported cost of goods sold of $100,000. On January 1, Wilson Corporation had inventory and accounts payable of $21,000 and $33,000, respectively. On December 31, inventory and accounts payable were $28,000 and $20,000, respectively. Calculate cash payments to suppliers of inventory.

Question 61

The following are relevant account balances from Hampton's comparative balance sheet and 2017 income statement. Hampton's balance sheets:

Other information:
No equipment was sold or retired during 2017. Hampton's net income for 2017 was $33,000.
Determine the cost of the equipment purchased during 2017.

Question 62

How does the direct method of preparing the statement of cash flows differ from the indirect method?

Question 63

In the operating activities section of a statement of cash flows prepared using the indirect method certain items are added to net income. Why is depreciation added?

Question 64

In the operating activities section of a statement of cash flows prepared using the indirect method certain items are added to, or subtracted from, net income. Why are changes in current accounts added or subtracted?

Question 65

Information from the 2016 and 2017 accounting records of Roman Corp. follows:
$\begin{array}{lrr}&12/31/17&12/31/16\\\text { Net cash provided by operations } & \$ 38,000 & \$ 7,000 \\\text { Net cash provided (used) by investing activities } & (19,000) & 16,000 \\\text { Net cash provided (used) by financing activities } & 43,000 & (9,000) \\\text { Cash balance } & ? & 23,000\end{array}$
Calculate the December 31, 2017 ending cash balance.

Question 66

How is the statement of cash flows linked to the other financial statements?

Question 67

Relevant account balances for Jeremy Supply Co. are:
$\begin{array}{lrr}\text { Accounts } & 12 / 31 / 17 & 1 / 01 / 17 \\\hline \text { Accounts receivable } & \$ 16,000 & \$ 9,000 \\\text { Inventory } & 6,000 & 3,000 \\\text { Accounts payable } & 11,000 & 20,000\\\\\\\text { Income information: }\\ \text { Revenue } & & \$ 48,000 \\ \text { Cost of goods sold } & \$ 27,000 & \\ \text { Operating expenses } & 18,000 & \\ \text { Depreciation } &\underline{ 5,000} &\underline{ 50,000} \\\text { Net loss }&&\underline{\$(2,000)}\end{array}$
Determine the amount of cash provided (used) by operations for 2017.

Question 68

Lawson Co. sold equipment that cost $40,000 and a current book value of $18,000, for $20,000 cash. Lawson purchased additional equipment during the year. Data from the company's balance sheets at December 31, 2017 and 2016 are:
$\begin{array}{lrr}&12/31/17&12/31/16\\\text { Equipment } & \$ 650,000 & \$ 520,000 \\\text { Accumulated depreciation } & 106,000 & 82,000\end{array}$

Show how the results of the transactions will appear on the statement of cash flows using the indirect method.

Question 69

Presented below is a partial statement of cash flows for Santiago Company for 2017.
$\begin{array}{lr}\text { Net income}&\$44.000\\\text { Adjustments to net income:}&\\\text { Add: Depreciation } & 7,000 \\\text { Decrease in accounts receivable } & 12,000 \\\text { Increase in salaries payable } & 5,000 \\\text { Less: Gain on sale of equipment } & (1,000 \\\text { Increase in inventories } & (2,000 \\\text { Decrease in accounts payable } & \underline{(5,000)}\\\text { Net cash inflows from operating activities } & \underline{\$ 60,000}\end{array}$
Mr. Santiago, the president of the company, is puzzled by why the cash from operating activities in the statement presented above is $60,000, as compared to the company's income statement for the same period that shows net income of $44,000. Provide justification why the two amounts might not be equal.

Question 70

The following are relevant account balances from Winthrop Company's comparative balance sheet and 2017 income statement.
$$\begin{array} { | l | c | r | } \hline & \text { December } 31,2017 & \text { January } 1,2017 \\\hline \text { Accounts receivable } & \$ 15,000 & \$ 19,000 \\\text { Prepaidinsurance } & 5,000 &3 , 0 0 0 \\\text { Unearned revenue } & 8 , 0 0 0 & 11,000 \\\text { Salaries payable } & 9 , 0 0 0& 5 , 0 0 0 \end{array}$$
Winthrop's 2017 income statement includes the following:
$\begin{array}{lr}\text { Sales revenue } & \$ 89,000 \\\text { Insurance expense } & 4,000 \\\text { Salaries expense } & 31,000\end{array}$

Determine the amount of cash paid for insurance during 2017.

Question 71

Benton Company reported insurance expense of $301,000 during the current year. On January 1 and December 31 of the current year, prepaid insurance was $28,000 and $41,000, respectively. Calculate cash paid for insurance premiums for the current year.

Question 72

Why is cash generated from operating activities more important than cash generated from other sources?

Question 73

The following are relevant account balances from Winthrop Company's comparative balance sheet and 2017 income statement.
$$\begin{array} { | l | c | r | } \hline & \text { December } 31,2017 & \text { January } 1,2017 \\\hline \text { Accounts receivable } & \$ 15,000 & \$ 19,000 \\\text { Prepaidinsurance } & 5,000 & 3 , 0 0 0 \\\text { Unearned revenue } & 8 , 0 0 0 & 11,000 \\\text { Salaries payable } & 9 , 0 0 0 &6 , 0 0 0 \end{array}$$
Winthrop's 2017 income statement includes the following:
$$\begin{array} { l r } \text { Sales revenue } & \$ 89,000 \\\text { Insurance expense } & 4,000 \\\text { Salaries expense } & 31,000\end{array}$$
Determine the amount of cash collected from customers during 2017.

Question 74

International financial reporting standards require a statement of cash flows. Why is this and what are some of the unique issues that multinational companies must understand when interpreting these statements?

Question 75

The following are relevant account balances from Hampton's comparative balance sheet and 2017 income statement. Hampton's balance sheets:

Other information:
No equipment was sold or retired during 2017. Hampton's net income for 2017 was $33,000.
Calculate the amount of dividends paid during 2017.

Question 76

The following are relevant account balances from Hampton's comparative balance sheet and 2017 income statement. Hampton's balance sheets:

Other information:
No equipment was sold or retired during 2017. Hampton's net income for 2017 was $33,000.
Calculate the cash proceeds from the issuance of common stock during 2017.

Question 77

How do 'cash equivalents' fit into the statement of cash flows?

Question 78

The following are relevant account balances from Hampton's comparative balance sheet and 2017 income statement. Hampton's balance sheets:
$$\begin{array}{l}\begin{array} { l r r } \hline &\text { December } 31,2017 & \text { January } 1,2017 \\\hline\text { Cash } & \$ 6,000 & \$ 9,000 \\\text { Accounts receivable } & 8,000 & 12,000 \\\text { Merchandise irventory } & 29,000 & 18,000 \\\text { Prepaid rent } & 6,000 & 4,000 \\\text { Equipment } & 100,000 & 8000 \\\text { Accumulated depreciation } & \underline{( 28,000 )} & \underline{ ( 13,000 ) }\\\text { Tatal assets } & \underline{\$ 121,000} & \underline{ \$ 110,000 }\\& & \\\text { Accounts payable } & \$ , 000 & \$ 25,000 \\\text { Dividends payable } & 6,000 & 4,000 \\\text { Cammon stock } & 38,000 & 32,000 \\\text { Retained earnings } & \underline{ 68,000 }& \underline{49,000 }\\\text { Total liabilities and shareholders' equity } & \underline{\$ 121,000} & \underline{\$ 110,000}\end{array}\end{array}$$
Other information:
No equipment was sold or retired during 2017. Hampton's net income for 2017 was $33,000.
Calculate depreciation expense for 2017.

Question 79

The following are relevant account balances from Winthrop Company's comparative balance sheet and 2017 income statement.
$$\begin{array} { | l | c | r | } \hline & \text { December } 31,2017 & \text { January } 1,2017 \\\hline \text { Accounts receivable } & \$ 15,000 & \$ 19,000 \\\text { Prepaidinsurance } & 5,000 & 3 , 0 0 0 \\\text { Unearned revenue } & 8 , 0 0 0 & 11,000 \\\text { Salaries payable } & 9 , 0 0 0 & 5 , 0 0 0 \end{array}$$
Winthrop's 2017 income statement includes the following:
$\begin{array}{lr}\text { Sales revenue } & \$ 89,000 \\\text { Insurance expense } & 4,000 \\\text { Salaries expense } & 31,000\end{array}$
Determine the amount of cash paid for salaries during 2017.

Question 80

During 2017, Bacon Co. reported a net operating loss of $19,000. The only asset or liability changes during 2017 were a decrease in accounts receivable of $11,000 and an increase in accumulated depreciation of $42,000. Calculate cash flows from operations during 2017 (indicate outflow or inflow).