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Exam 12: Reporting and Analyzing Cash Flows

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Question 21

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Based on the information provided below,complete the following worksheet to be used to prepare the statement of cash flows. (a)Net income for the year was $30,000. (b)Dividends of $10,000 were declared and paid. (c)Stylish's only noncash expense was depreciation,which totaled $50,000. (d)The company purchased plant assets for $70,000. (e)Notes payable in the amount of $40,000 were issued during the year for cash. (f)Merchandise inventory increased $30,000 (g)Accounts payable decreased $10,000

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Question 22

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Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the direct method. Selected beginning and ending balances of current asset and current liability accounts,all of which relate to operating activities,are as follows:

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Question 23

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Water Girl Corp.'s 2010 income statement follows: The company also experienced the following during 2010: Required: Calculate the company's net cash provided or used by operating activities using the direct method.

A noncash investing transaction should be disclosed as either a footnote or small schedule attached to the statement of cash flows.

Explain how the cash flows from operating activities section of the statement of cash flows is prepared when using the direct method.

Fabulous Furniture's inventory increased during the year by $6.0 million.Its' accounts payable increased by $4.0 million during the same period.What is the summary journal entry for this event assuming Fabulous Furniture had cost of goods sold for the period of $26.0 million?

___________________ activities generally include those transactions and events that affect long-term assets.

Terri's accounts receivable increased during the year by $5.9 million.It had a bad debt expense of $1.4 million,and its allowance for uncollectible accounts increased by $2.4 million.What is the amount of cash Terri received from customers during the reporting period if its sales were $45.0 million?

Use the following information to calculate cash received from dividends: $\begin{array} { |l | r| } \hline \text { Dividends revenuse } & \$ 29,800 \\\hline \text { Dividends receivable, January 1 } & 2,600 \\\hline \text { Dividends receivable, Decermber } 31 & 3,400 \\\hline\end{array}$

The cash flow on total assets ratio is calculated by:

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

Explain the value that separating cash flows into operating activities,investing activities and financing activities has to financial statement users when it comes analyzing cash flows and the company's financial condition.

_____________ activities include the cash effects of transactions and events that determine net income.

Spirit Company,a merchandiser,recently completed its 2010 calendar year.For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory,and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses.The company's balance sheet and income statement follow: Additional Information on Year 2010 Transactions a. The loss on the cash sale of equipment was $\$ 5,875$ (details in $b$ ) . b. Sold equipment costing $\$ 46,500$ , for a loss of $\$ 5,875$ . c. Purchased equipment costing $\$ 99,000$ by paying $\$ 35,000$ cash and signing a long-term note payable for the balance. d. Borrowed $\$ 2,000$ cash by signing a short-term note payable. e. Paid $\$ 47,500$ cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for $\$ 20$ cash per share. g. Net income and dividends were the only items that affected retained earnings. What is the net cash flows provided (used) by investing activities?

Based on the following information provided about a company's operations,calculate its cost of goods purchased and its cash paid for merchandise. $\begin{array}{|l|r|}\hline \text { Cost of goods sold } & \$ 413,000 \\\hline \text { Merchandise inventory, beginning year } & 70,000 \\\hline \text { Accounts payable, beginning year } & 52,000 \\\hline \text { Merchandise inventory, end-of-year } & 67,000 \\\hline \text { Accounts payable, end-of-year } & 48,000\\\hline \end{array}$

Explain the purpose and format of the statement of cash flows.Also,describe its use to decision makers.

The statement of cash flows is divided into three sections called the _____________,_____________ and _______________ sections.

The use of a spreadsheet for analysis is especially useful when preparing the statement of cash flows using the _____________ method.

Selected information from Doodle Company's for 2010 is below (in millions) : What is the amount of cash received from Doodle's customers during 2010?

Cash flows from interest received are reported in the statement of cash flows as part of: