Statement of Cash Flows Questions Part 3

120. Income tax was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year. Cash payments for income tax reported on the cash flow statement using the direct method is A. $175,000 B. $165,000 C. $205,000 D. $215,000 121. Free cash flow is A. all cash in the bank B. cash from operations C. cash from financing, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends D. cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends 122. Free cash flow is cash from operations, less cash for A. dividends and cash for fixed assets needed to maintain productivity B. dividends and cash to redeem bonds payable C. fixed assets needed to maintain productivity D. fixed assets needed to maintain productivity, and cash to redeem bonds payable 123. The cost of merchandise sold during the year was $45,000. Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total A. $46,000 B. $44,000 C. $50,000 D. $40,000 124. For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. b. c. d. e. f. Receipt of dividends Payment of dividends Purchase of equipment Net income Issuance of the company’s common stock Amortization expense 125. For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. b. c. d. e. f. Purchased buildings Sold Patents Net income Issued Common Stock Paid cash dividends Depreciation expense 126. For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. b. c. d. e. f. Purchased treasury stock Sold equipment at book value Net income Sold long-term investments Issued common stock Depreciation expense 127. Each of the events below may have an effect on the statement of cash flows. Designate how the event should be reported within the statement of cash flows using the codes provided below. Codes may be used more than once, or not at all. Codes I+ IF+ FO+ ONC Investing activity; cash inflow Investing activity; cash outflow Financing activity; cash inflow Financing activity; cash outflow Operating activity; cash inflow Operating activity; cash outflow Noncash investing and financing activity Events _____ 1. Paid the weekly payroll _____ 2. Paid an account payable _____ 3. Issued bonds payable for cash _____ 4. Declared and paid a cash dividend _____ 5. Paid cash for a new piece of equipment _____ 6. Purchased treasury stock for cash _____ 7. Paid cash for stock in another company 8. Received interest on a long-term bond investment _____ 9. Received cash for sales _____ 10. Sold a long-term stock investment for cash at book value 128. Durrand Corporation’s accumulated depreciation increased by $12,000, while patents decreased by $2,200 between consecutive balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $4,300 from sale of land. Reconcile a net income of $65,000 to net cash flow from operating activities. 129. Fortune Corporation’s comparative balance sheet for current assets and liabilities was as follows: Accounts receivable Inventory Accounts payable Dividends payable Dec. 31, 2012 7,500 11,500 4,300 4,000 Dec. 31, 2011 5,200 16,000 5,200 3,000 Adjust 2012 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method. 130. Kennedy, Inc. reported the following data: Net income Depreciation expense Loss on disposal of equipment Gain on sale of building Increase in accounts receivable Decrease in accounts payable $118,000 15,000 10,000 20,000 7,000 (2,000) Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows. 131. Lamar Corporation purchased land for $150,000. Later in the year the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method. 132. Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers. 133. Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $5,000, and the inventory balance increased by $11,000 over the year. Determine the amount of cash paid for merchandise. 134. Sinclair Company’s accumulated depreciation-equipment increased by $6,000, while patents decreased by $2,200 between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a loss of $3,200 from the sale of investments. Required: Reconcile a net income of $92,000 to net cash flow from operating activities. 135. Dorman Company reported the following data: Net income Depreciation expense Gain on disposal of equipment Decrease in accounts receivable Decrease in account payable $225,000 25,000 20,500 14,000 3,600 Prepare the Cash Flows from Operating Activities section of the statement of cash flows using the indirect method. 136. Identify which section the statement of cash flows (using the indirect method) would present information regarding the following activities: (Use O for operating, I for investing, or F for financing): a. Issued common stock b. Redeemed bonds c. Issued preferred stock d. Purchased patents e. Net income f. Paid cash dividends g. Purchased treasury stock h. Sold long-term investment. i. Sold equipment. j. Purchased buildings k. Issued bonds 137. The board of directors declared cash dividends total $168,000 during 2014. The comparative balance sheet indicated dividends payable of $46,000 at the beginning of the year and $42,000 at the end of the year. What was the amount of cash payment to stockholders during the year? 138. Selected data taken from the accounting records of Laser Inc. for the current year ended December 31, are as follows: Accrued operating expenses Accounts payable (merchandise creditors) Inventories Prepaid expenses Balance, December 31 $5,590 41,730 77,350 3,250 Balance, January 1 $6,110 46,020 84,110 3,900 During the current year, the cost of merchandise sold was $448,500, and the operating expenses other than depreciation were $78,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows. Required: Determine the amount reported on the statement of cash flows for: (1) Cash payments for merchandise; and (2) Cash payments for operating expenses. 139. The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amount to $62,500 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows: Cash Accounts receivable (net) Inventories Prepaid expenses Accounts payable (merchandise creditors) Salaries payable Required: (1) (2) End of Year $56,000 71,000 140,000 7,800 62,600 9,000 Beginning of Year $59,500 73,400 126,500 8,400 66,400 8,250 Prepare the Cash flows for Operating Activities section of the statement of cash flows, using the indirect method. If the direct method had been used, would the net cash flow from operating activities have been the same? Explain. 140. The income statement disclosed the following items for 2011: Depreciation expense Gain on disposal of equipment Net income $36,000 21,000 317,500 Balances of the current assets and current liabilities accounts changed between December 31, 2010 and December 31, 2011, as follows: Increase in accounts receivable $5,600 Decrease in inventory 3,200 Decrease in prepaid insurance 1,200 Decrease in account payable 3,800 Increase in income taxes payable 1,200 Increase in dividends payable 850 Required: Prepare the Cash Flows for Operating Activities section of the statement of cash flows, using the indirect method. 141. The following two problems are independent of one another. (1) (2) An analysis of the general ledger accounts indicates that office equipment was sold for $39,600 during the year. The equipment originally cost $68,000 and had accumulated depreciation of $22,500 on the date of sale. Indicate how the elements of this transaction would be reported on the statement of cash flows using the indirect method. An analysis of the general ledger accounts indicates that delivery equipment, which cost $97,000 and on which accumulated depreciation totaled $42,100 on the date of sale, was sold for $57,500 during the year. Using this information, indicate the items to be reported on the statement of cash flows. 142. The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: (1) (2) If sales for the current year were $695,000 and accounts receivable decreased by $43,500 during the year, what was the amount of cash received from customers? If income tax expense for the current year was $56,000 and income tax payable decreased by $5,200 during the year, what was the amount of cash payments of income tax? 143. Master Designs Company has cash flows for operating activities of $350,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain existing capacity. What is the free cash flow for Master Designs? 144. Indicate the section (operating activities, investing activities, financing activities, or none) in which each of the following would be reported on the statement of cash flows prepared by the indirect method: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Gain on sale of fixed assets Net income Retirement of long-term debt Sale of capital stock Distribution of stock dividends Payment of cash dividends Purchase of fixed assets Sale of fixed assets Receipt of interest revenue Payment of interest expense