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Exam 12: Statement of Cash Flows

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Question 21

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At the beginning of Year 2, Griggs Company had a $64,000 of accounts receivable. During Year 2, Griggs earned revenue on account totaling $336,000. At the end of Year 2, the company had $44,000 of accounts receivable. Required:What was the amount of cash collected from accounts receivable during year 2?

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$356,000
Ending balance of accounts rece...

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Question 22

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Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected. On September 10, Year 1, Howard Company received a check for $250 for dividends on Troxell Corporation stock that Howard holds as an investment. Show the effects of this transaction on Howard's income statement and statement of cash flows.

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(I)(I)(NA)(NA)Cash flows reported as ope...

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Question 23

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On January 1, Year 1, Colgate Corporation decided to switch from the direct method to the indirect method of preparing the statement of cash flows. Assuming a positive net income figure but a decrease in the cash balance, what can be said about the change in method of preparing the statement?

When using the indirect method to prepare the operating activities section of the statement of cash flows, how is a decrease in current liabilities handled?

Anton Company reported a beginning balance of $13,200 and an ending balance of $14,400 in its Unearned Revenue account for the current year. During the year, $36,000 of revenue (previously unearned) was recognized. Considering only this information, how much cash was received in advance from customers during the year?

LePage Corporation reported a beginning balance of $2,200 in its Prepaid Insurance account. During the year, a total of $17,000 was recognized as Insurance Expense and the Prepaid Insurance account had an ending balance of $1,800. How much cash did LePage pay for insurance during the year?

Chisholm Associates uses the indirect method to prepare the operating activities section of the statement of cash flows. The following accounts and balances were drawn from the company's accounting records: Net income for the period was $80,000. What is the net cash flows from operating activities?

Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected. At the beginning of the current year, Howard Company paid cash to purchase equipment costing $80,000. There was $10,000 of depreciation expense recognized during the accounting period. (Show the combined effects of these two events.)

How does the direct method differ from the indirect method? How does the choice of methods impact the amount of net cash flow from operating activities?

What is the purpose of the statement of cash flows?

Which of the following would not be reported in the body of the statement of cash flows?

Under the indirect method, which of the following items would be added to net income to determine the cash flow from operating activities?

Preston Corporation uses the indirect method to prepare the cash flow from operating activities section of the statement of cash flows. The company had the following beginning and ending balances for Year 2: During Year 2, Preston sold equipment for $60,000 that had originally been purchased for $140,000. The old equipment had accumulated depreciation of $120,000 at the time of sale. To replace the equipment, Preston purchased new equipment by making a $30,000 down payment and signing a two-year note for the balance due of $160,000. Required:a)What was the cost of the new equipment purchased during the year?b)What is the gain or loss on the sale of the old equipment?c)How will the gain or loss be reported on the statement of cash flows?d)How will the sale of the equipment be reported in the cash flow from investing activities section of the statement of cash flows?e)How will the purchase of equipment be reported in the cash flow from investing activities section of the statement of cash flows?f)How will the issuance of the two-year note be reported on the statement of cash flows?

Indicate whether each of the following statements regarding the statement of cash flows (SCF)is true or false. a)________ Purchase of merchandise inventory on account would appear in the operating activities section of the SCF.b)________ Sale of treasury stock would appear in the investing activities section of the SCF.c)________ Cash proceeds from the sale of a used truck would appear in the operating activities section of the SCF.d)________ Cash purchases of marketable securities would appear in the investing activities section of the SCF.e)________ Payment of salaries would appear in the operating activities section of the SCF.

Which of the following transactions would be disclosed on a schedule of noncash investing and financing activities?

Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected. Howard Company declared and paid a $1.50 per share cash dividend on the 20,000 shares of its common stock.

On January 1, Year 1, Mayer Corporation signed a contract to perform $25,000 worth of services for Phips Company over the next three years. Which of the following indicates the effects of this event on the Year 1 income statement and statement of cash flows of Mayer Corporation?

The amount of increase in accounts receivable is added to credit sales to calculate the amount of cash inflow from customers when using the direct method to prepare the operating activities section of the statement of cash flows.

Baird Corporation had beginning Accounts Receivable of $254,000 and ending Accounts Receivable of $228,000. Assume total credit sales were $1,440,000. Required:a)What amount of cash was collected from customers?b)How would the information provided in this question be reported on the statement of cash flows using the: 1)Indirect method?2)Direct method?

When using the indirect method to prepare the operating activities section of the statement of cash flows, how is an increase in noncash current assets handled?