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Exam 21: The Statement of Cash Flows Revisited

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Question 21

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In a statement of cash flows:

A) Operating activities are the same activities as reported in the income statement.
B) The two primary reporting classifications of cash flows are inflows and outflows.
C) No noncash transactions are reported in the statement itself or the related footnote.
D) Inflows and outflows for cash equivalents are reported as operating activities.

E) C) and D)
F) A) and D)

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Question 22

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Dooling Corporation reported balances in the following accounts for the current year: $\begin{array}{llr}&\text { Beginning } & {\text { Ending }} \\Inventories&\$ 600 & \$ 300 \\Accounts ~payable&300 & 500\end{array}$ Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?

A) $7,000.
B) $7,200.
C) $7,300.
D) $7,500.

E) None of the above
F) A) and D)

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Question 23

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When a transfer is made between cash and cash equivalents with no gain or loss, how is the transaction treated in the statement of cash flows?

Which of the following financial statements is prepared as of a particular point in time rather than for a period of time?

A statement of cash flows and its related disclosure note typically do not report:

Alpha Company had the following account balances for 2018: $\begin{array} { l c c }& \text { Dec. 31 } & \text { Jar. 1 } \\ Accourts~ receivable&\$ 44,000 & \$ 35,000 \\ Accourts ~payable& 55,000 & 60,000 \end{array}$ Alpha reported net income of $210,000 for 2018. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2018 reported in the statement of cash flows?

A 10% stock dividend is reported in connection with a statement of cash flows as:

Which of the following would not be a cash inflow from financing activities?

In its 2018 Annual Report to Shareholders, Sisters Corporation included the following information on cash flows from operations: -Did accounts receivable increase or decrease during 2018? Explain.

Hemmer Company reported net income for 2018 in the amount of $40,000. The company's financial statements also included the following: Decrease iry accounts receivable $~~~~\$ 6,000$ Increase in inventory $~~~~~~~~~~1,000$ Depreciation expense $~~~~~~~~~3,000$ What is net cash provided by operating activities?

Cost of goods sold is $100,000. Accounts payable increased by $2,000. Inventory increased by $5,000. Cash paid to suppliers is:

Partial balance sheets and additional information are listed below for Monaco Company. Monaco Company Partial Balance Sheets as of December 31 $\begin{array}{|l|r|r|}\hline \text { Assets } & 2018 & 2017 \\\hline \text { Cash } & \$ 40,000 & \$ 20,000 \\\hline \text { Accounts } & & \\ \text { Invecivable } & 60,000 & 90,000 \\\hline\text { Inventory } & 25,000 & 40,000\\\hline \mathbf { { Liabilities }}\\\hline \text { Accounts } & & \\\text { payable } & \$ 60,000 & \$ 72,000 \\\hline\end{array}$ Additional information for 2018: Net income was $270,000. Depreciation expense was $30,000. Sales totaled $800,000. Cost of goods sold totaled $305,000. Required: Prepare the summary entry for the amount of cash paid to merchandise suppliers during 2018.

In a statement of cash flows:

Partial balance sheets for Yarborough Company and additional information are found below. $\begin{array} {c } \text {Yarborough Company }\\ \text {Partial Balance Sheets }\\ \text { as of December 31}\\\begin{array}{|l|l|l|}\hline\text { Assets } & 2018 & 2017 \\\hline\text { Equipment } & \$ 100,000 & \$ 75,000 \\\hline \text { Accumulated } & & \\\text { depreciation } & (25,000) & (20,000) \\\hline \text { Shareholders' equity } & & \\\hline \text { Common stock, \$5 par } & \$ 150,000 & \$ 100,000 \\\hline \text { Paid-in capital-excess of } & & \\\text { par } & 20,000 & 0 \\\hline \text { Retained earnings } & 40,000 & 30,000\\\hline\end{array}\end{array}$ $\begin{array}{l}\text { Additional information for } 2018 \text { : }\\\begin{array} { | l | l | } \hline \text { Tuly 1: } & \text { Issued } 10,000 \text { shares of common stock for cash. } \\\hline \text { July 1: } & \text { Purchased new equipment for cash. } \\\hline \text { Dec. 31 } & \text { Paid cash dividends of } \$ 30,000\\\hline\end{array}\end{array}$ Required: Prepare the investing activities section of the statement of cash flows for 2018.

Acquiring land with a long-term note is:

The purchase of treasury stock is an investing cash outflow.

Ludwig Company's prepaid rent was $9,000 at December 31, 2017, and $13,000 at December 31, 2018. Ludwig reported rent expense of $19,000 on the 2018 income statement. What amount would be reported in the statement of cash flows as rent paid using the direct method?

Each year, White Mountain Enterprises (WME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2018 income statement, WME reported $695,000 for service revenue from membership fees. WME received $681,000 cash in advance from members during 2018. In its reconciliation schedule, WME should:

Partial balance sheets and additional information are listed below for Ensign Company. Ensign Company Partial Balance Sheets as of December 31 $\begin{array}{|l|r|r|}\hline \text { Assets } & 2018 & 2017 \\\hline \text { Cash } & \$ 20,000 & \$ 40,000 \\\hline \text { Accounts receivable } & 90,000 & 60,000 \\\hline \text { Inventory } & 20,000 & 25,000 \\\hline \mathbf { Liabilities } & & \\\hline \text { Accounts payable } & \$ 72,000 & \$ 58,000\\\hline\end{array}$ Additional information for 2018: Net income was $170,000. Depreciation expense was $30,000. Sales totaled $400,000. Cost of goods sold totaled $145,000. Required: Prepare the summary entry for the amount of cash paid to merchandise suppliers during 2018.

Which of the following is reported as an investing activity in the statement of cash flows?