Deck 12: Statement of Cash Flows

Question 1

Ashford Company has an accrual basis net income of $270,000 in 2019 and the following related items:

How much is Ashford's net cash flow from operating activities in 2019?

A) $261,000
B) $303,000
C) $186,000
D) $318,000

Answer 1

$318,000

Question 2

Baxa Company has an accrual basis net income of $360,000 in 2019 and the following related items:

How much is Baxa's net cash flow from operating activities in 2019?

A) $348,000
B) $416,000
C) $472,000
D) $424,000

Answer 2

$424,000

Question 3

Demi, Inc. has an accrual basis net loss of $60,000 in 2019 and the following related items:

How much is Demi's net cash flow from operating activities in 2019?

A) $105,000
B) $ (12,000)
C) $ 3,000
D) $(39,000)

Answer 3

$ 3,000

Question 4

Luna, Inc. has an accrual basis net loss of $80,000 in 2019 and the following related items:

How much is Lunas' net cash flow from operating activities in 2019?

A) $140,000
B) $(16,000)
C) $ 4,000
D) $ (52,000)

Question 5

Tina's Art Supplies has an accrual basis net income of $156,000 in 2019 and the following related items:

What is Tina's Art Supplies' net cash flow from operating activities in 2019?

A) $249,000
B) $141,000
C) $111,000
D) $243,000

Question 6

Bruder's Office Supplies, Inc. has an accrual basis net income of $208,000 in 2019 and the following related items:

What is Bruder's Office Supplies, Inc.'s net cash flow from operating activities in 2019?

A) $332,000
B) $280,000
C) $236,000
D) $328,000

Question 7

Billy Corporation had the following data for 2019:
Billy's operating-cash-flow-to-current-liabilities ratio for 2019 is:

A) 0.76
B) 0.61
C) 1.02
D) 0.87

Question 8

Cooper Corporation had the following data for 2019:
Cooper's operating-cash-flow-to-current-liabilities ratio for 2019 is:

A) 0.69
B) 0.58
C) 0.87
D) 0.74

Question 9

Edmonds Corporation had the following data for 2019:
Redman's operating-cash-flow-to-current-liabilities ratio for 2019 is:

A) 0.87
B) 0.60
C) 0.57
D) 0.50

Question 10

Bauer Corporation had the following data for 2019:
Eddie's operating-cash-flow-to-current-liabilities ratio for 2019 is:

A) 0.43
B) 0.55
C) 0.48
D) 0.77

Question 11

Use the following information to answer:
Van Beek Corporation reported the following transactions for 2019:
1. Sold equipment for $21,000. The original cost was $45,000; the book value is $18,000
2. Issued 2,000 shares of $15 par value common stock for $36 per share
3. Paid $9,000 for an Insurance policy which goes into effect in January 2020
4. Recognized $6,000 in Interest expense on Dec 31, 2019 - to be paid on April 30, 2020
5. Received $24,000 as collections from customers for 2018 sales, and $54,000 for 2019 sales
6. Reacquired 300 shares of its own common stock at $60 per share
7. Received $6,000 in dividends on stock held as available for sale
8. Recorded depreciation expense for $15,000
9. Paid $3,000 of dividends to common stockholders
10. Purchased equipment costing $195,000, by making a cash down payment of $60,000 and signing a note for the remaining $135,000.
11. Acquired a building with a market value of $750,000 by issuing 20,000 shares of common stock.
12. Paid salaries of $54,000
13. Cash received from sale of available for sale securities $18,000
14. Repaid a loan, which included $15,000 of the principal and $3,000 in interest
Van Beek Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

-The net cash flow from operating activities is:

A) $(24,000)
B) $ 3,000
C) $ 18,000
D) $ 12,000

Question 12

Use the following information to answer:
Van Beek Corporation reported the following transactions for 2019:
1. Sold equipment for $21,000. The original cost was $45,000; the book value is $18,000
2. Issued 2,000 shares of $15 par value common stock for $36 per share
3. Paid $9,000 for an Insurance policy which goes into effect in January 2020
4. Recognized $6,000 in Interest expense on Dec 31, 2019 - to be paid on April 30, 2020
5. Received $24,000 as collections from customers for 2018 sales, and $54,000 for 2019 sales
6. Reacquired 300 shares of its own common stock at $60 per share
7. Received $6,000 in dividends on stock held as available for sale
8. Recorded depreciation expense for $15,000
9. Paid $3,000 of dividends to common stockholders
10. Purchased equipment costing $195,000, by making a cash down payment of $60,000 and signing a note for the remaining $135,000.
11. Acquired a building with a market value of $750,000 by issuing 20,000 shares of common stock.
12. Paid salaries of $54,000
13. Cash received from sale of available for sale securities $18,000
14. Repaid a loan, which included $15,000 of the principal and $3,000 in interest
Van Beek Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

-The net cash flow from investing activities is:

A) $(21,000)
B) $(63,000)
C) $ (3,000)
D) $(36,000)

Question 13

Use the following information to answer:
Van Beek Corporation reported the following transactions for 2019:
1. Sold equipment for $21,000. The original cost was $45,000; the book value is $18,000
2. Issued 2,000 shares of $15 par value common stock for $36 per share
3. Paid $9,000 for an Insurance policy which goes into effect in January 2020
4. Recognized $6,000 in Interest expense on Dec 31, 2019 - to be paid on April 30, 2020
5. Received $24,000 as collections from customers for 2018 sales, and $54,000 for 2019 sales
6. Reacquired 300 shares of its own common stock at $60 per share
7. Received $6,000 in dividends on stock held as available for sale
8. Recorded depreciation expense for $15,000
9. Paid $3,000 of dividends to common stockholders
10. Purchased equipment costing $195,000, by making a cash down payment of $60,000 and signing a note for the remaining $135,000.
11. Acquired a building with a market value of $750,000 by issuing 20,000 shares of common stock.
12. Paid salaries of $54,000
13. Cash received from sale of available for sale securities $18,000
14. Repaid a loan, which included $15,000 of the principal and $3,000 in interest
Van Beek Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

-The net cash flow from financing activities is:

A) $51,000
B) $36,000
C) $ 9,000
D) $54,000

Question 14

Use the following information to answer:
Herman Corporation reported the following transactions for 2019:
1. Sold equipment for $28,000. The original cost was $60,000; the book value is $24,000
2. Issued 2,000 shares of $20 par value common stock for $48 per share
3. Paid $12,000 for an Insurance policy which goes into effect in January 2020
4. Recognized $8,000 in Interest expense on Dec 31, 2019 - to be paid on April 30, 2020
5. Received $32,000 as collections from customers for 2018 sales, and $72,000 for 2019 sales
6. Reacquired 300 shares of its own common stock at $80 per share
7. Received $8,000 in dividends on stock held as available for sale
8. Recorded depreciation expense for $20,000
9. Paid $4,000 of dividends to common stockholders
10. Purchased equipment costing $260,000, by making a cash down payment of $80,000 and signing a note for the remaining $180,000.
11. Acquired a building with a market value of $1,000,000 by issuing 20,000 shares of common stock.
12. Paid salaries of $72,000
13. Cash received from sale of available for sale securities $24,000
14. Repaid a loan, which included $20,000 of the principal and $4,000 in interest
Herman Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

-The net cash flow from operating activities is:

A) $(32,000)
B) $ 4,000
C) $24,000
D) $16,000

Question 15

Use the following information to answer:
Herman Corporation reported the following transactions for 2019:
1. Sold equipment for $28,000. The original cost was $60,000; the book value is $24,000
2. Issued 2,000 shares of $20 par value common stock for $48 per share
3. Paid $12,000 for an Insurance policy which goes into effect in January 2020
4. Recognized $8,000 in Interest expense on Dec 31, 2019 - to be paid on April 30, 2020
5. Received $32,000 as collections from customers for 2018 sales, and $72,000 for 2019 sales
6. Reacquired 300 shares of its own common stock at $80 per share
7. Received $8,000 in dividends on stock held as available for sale
8. Recorded depreciation expense for $20,000
9. Paid $4,000 of dividends to common stockholders
10. Purchased equipment costing $260,000, by making a cash down payment of $80,000 and signing a note for the remaining $180,000.
11. Acquired a building with a market value of $1,000,000 by issuing 20,000 shares of common stock.
12. Paid salaries of $72,000
13. Cash received from sale of available for sale securities $24,000
14. Repaid a loan, which included $20,000 of the principal and $4,000 in interest
Herman Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

-The net cash flow from investing activities is:

A) $(28,000)
B) $(84,000)
C) $ (4,000)
D) $(48,000)

Question 16

Use the following information to answer:
Herman Corporation reported the following transactions for 2019:
1. Sold equipment for $28,000. The original cost was $60,000; the book value is $24,000
2. Issued 2,000 shares of $20 par value common stock for $48 per share
3. Paid $12,000 for an Insurance policy which goes into effect in January 2020
4. Recognized $8,000 in Interest expense on Dec 31, 2019 - to be paid on April 30, 2020
5. Received $32,000 as collections from customers for 2018 sales, and $72,000 for 2019 sales
6. Reacquired 300 shares of its own common stock at $80 per share
7. Received $8,000 in dividends on stock held as available for sale
8. Recorded depreciation expense for $20,000
9. Paid $4,000 of dividends to common stockholders
10. Purchased equipment costing $260,000, by making a cash down payment of $80,000 and signing a note for the remaining $180,000.
11. Acquired a building with a market value of $1,000,000 by issuing 20,000 shares of common stock.
12. Paid salaries of $72,000
13. Cash received from sale of available for sale securities $24,000
14. Repaid a loan, which included $20,000 of the principal and $4,000 in interest
Herman Corporation uses the direct method for preparing the 2019 Statement of Cash Flows.

-The net cash flow from financing activities is:

A) $68,000
B) $48,000
C) $12,000
D) $72,000

Question 17

Consider the following:
•Net income, $285,000
•Depreciation Expense $33,000
•Increase in accounts receivable, $12,000
•Decrease in merchandise inventory, $60,000
•Decrease in accounts payable, $24,000
•Increase in income taxes payable, $9,000
Using the Indirect Method, the Net Cash provided by Operating Activities was:

A) $270,000
B) $318,000
C) $303,000
D) $351,000

Question 18

Consider the following:
•Net income, $380,000
•Depreciation Expense $44,000
•Increase in accounts receivable, $16,000
•Decrease in merchandise inventory, $80,000
•Decrease in accounts payable, $32,000
•Increase in income taxes payable, $12,000
Using the Indirect Method, the Net Cash provided by Operating Activities was:

A) $336,000
B) $424,000
C) $404,000
D) $468,000

Question 19

A company had net income of $1,395,000 in 2019. Depreciation expense is $156,000. During the year, Accounts Receivable and Inventory increased $90,000 and $240,000, respectively. Prepaid Expenses and Accounts Payable decreased $12,000 and $24,000, respectively. There was also a loss on the sale of equipment of $18,000.
How much cash was provided by operating activities in 2019?

A) $1,176,000
B) $1,227,000
C) $1,656,000
D) $1,728,000

Question 20

A company had net income of $1,860,000 in 2019. Depreciation expense is $208,000. During the year, Accounts Receivable and Inventory increased $120,000 and $320,000, respectively. Prepaid Expenses and Accounts Payable decreased $16,000 and $32,000, respectively. There was also a loss on the sale of equipment of $24,000.
How much cash was provided by operating activities in 2019?

A) $1,568,000
B) $1,636,000
C) $2,208,000
D) $2,476,000

Question 21

Andrew Company's financial statements show a net income of $756,000 in 2019. The following items also appear on Wang's balance sheet:
Using the indirect method, what is Wang's net cash flow from operating activities in 2019?

A) $ 884,000
B) $ 544,000
C) $ 948,000
D) $1,088,000

Question 22

Consider the following:
Calculate the net cash provided (or used) by operating activities using the indirect method:

A) $ 77,700
B) $ 71,700
C) $107,700
D) $ 38,100

Question 23

Consider the following:
Calculate the net cash provided (or used) by operating activities using the indirect method:

A) $103,600
B) $ 75,600
C) $163,600
D) $ 50,800

Question 24

Consider the following:
The cost of goods sold was $1,470,000.
What was the amount of cash paid for merchandise?

A) $1,470,000
B) $1,479,000
C) $1,521,000
D) $1,461,000

Question 25

Consider the following:
The cost of goods sold was $1,960,000.
What was the amount of cash paid for merchandise?

A) $1,960,000
B) $1,972,000
C) $1,932,000
D) $1,948,000

Question 26

Crater Company reports a $90,000 increase in inventory and a $30,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $900,000.
The cash payments made to suppliers were:

A) $ 900,000
B) $1,020,000
C) $ 960,000
D) $ 840,000

Question 27

Salt Company reports a $120,000 increase in inventory and a $40,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $1,200,000.
The cash payments made to suppliers were:

A) $1,200,000
B) $1,040,000
C) $1,280,000
D) $1,120,000

Question 28

Kane, Inc. had cash sales of $750,000 and credit sales of $1,500,000. The accounts receivable balance increased $30,000 during the year.
How much cash did Will receive from its customers during the year?

A) $2,220,000
B) $2,280,000
C) $1,620,000
D) $1,680,000

Question 29

Buffet, Inc. had cash sales of $1,000,000 and credit sales of $2,000,000. The accounts receivable balance increased $40,000 during the year.
How much cash did Buffet receive from its customers during the year?

A) $2,960,000
B) $3,040,000
C) $2,160,000
D) $2,040,000

Question 30

The beginning balance of Prepaid Interest was $5,400 and the ending balance was $7,800. The Interest Expense account for the year was $25,800.
How much cash was paid for interest?

A) $23,400
B) $28,200
C) $24,300
D) $25,800

Question 31

The beginning balance of Prepaid Interest was $7,200 and the ending balance was $10,400. The Interest Expense account for the year was $34,400.
How much cash was paid for interest?

A) $33,200
B) $37,600
C) $31,400
D) $34,400

Question 32

The beginning balance of Unearned Rent was $24,300 and the ending balance was $33,600. The Rent Earned for the year was $176,100.
How much cash was received for rent?

A) $234,000
B) $118,200
C) $166,800
D) $185,400

Question 33

The beginning balance of Unearned Rent was $32,400 and the ending balance was $44,800. The Rent Earned for the year was $234,800.
How much cash was received for rent?

A) $312,000
B) $157,600
C) $222,400
D) $247,200

Question 34

The financial statements of Dunwoody Townhomes show the following:
Cash collected from tenants during 2020 is:

A) $2,277,000
B) $2,289,000
C) $2,265,000
D) $2,253,000

Question 35

The financial statements of Oak Brook Townhomes show the following:
Cash collected from tenants during 2020 is:

A) $3,036,000
B) $3,052,000
C) $3,020,000
D) $3,004,000

Question 36

If wages expense is $270,000 and the beginning and ending Wages Payable balances are $30,000 and $45,000, respectively, cash paid to employees for wages is:

A) $225,000
B) $285,000
C) $255,000
D) Not determinable from the information given

Question 37

If wages expense is $360,000 and the beginning and ending Wages Payable balances are $40,000 and $60,000, respectively, cash paid to employees for wages is:

A) $300,000
B) $380,000
C) $340,000
D) Not determinable from the information given

Question 38

If insurance expense is $27,000 and the beginning and ending Prepaid Insurance balances are $3,000 and $4,500, respectively, cash paid for insurance is:

A) $25,500
B) $27,000
C) $28,500
D) Not determinable from the information given

Question 39

If insurance expense is $36,000 and the beginning and ending Prepaid Insurance balances are $4,000 and $6,000, respectively, cash paid for insurance is:

A) $34,000
B) $36,000
C) $38,000
D) Not determinable from the information given

Question 40

The 2019 financial statements for Farmingdale Company show the following:
Cash paid for merchandise is:

A) $372,000
B) $366,000
C) $360,000
D) $354,000

Question 41

The 2019 financial statements for Champaign Company show the following:
Cash paid for merchandise is:

A) $496,000
B) $488,000
C) $480,000
D) $472,000

Question 42

Sam's Sports had the following income statement for the current year:
Additional information about the company follows:

Calculate Sam's Sports' net cash flow provided by operating activities for the current year using the direct method. Show a separate cash flow for each revenue and expense.

Question 43

The information below was provided by Tucson Company for 2019 and 2018:
During 2019, Tucson sold equipment with a cost of $50,000 and accumulated depreciation of $38,000. A loss of $2,000 was recognized on the sale of the equipment.
Prepare the investing activities section of the statement of cash flows for 2019.