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Multiple Choice Question 95 For the past two years, Monroe Corporation’s statement of cash flows has...

Multiple Choice Question 95

For the past two years, Monroe Corporation’s statement of cash flows has shown net cash provided by financing activities. Which of the following choices could explain this result?

Receipt of cash dividends from investments in other company’s stock.
Collection of accounts receivable balances.
Sales of factory equipment.
Issuance of long-term debt

Multiple Choice Question 100

On July 31st of the current year Bridges Industries issued $80,000 of bonds payable. The $80,000 was used to purchase $30,000 of equipment and $50,000 to purchase stock in another company. How will these transactions be reported in the statement of cash flows?

Operating Section Investing Section Financing Section
$50,000 use $30,000 use $80,000 source
$0 $30,000 use $80,000 source/$50,000 use
$0 $30,000 use/$50,000 use $80,000 source
$0 $30,000 use

$80,000 source/$50,000 use

Multiple Choice Question 108

Burton Company purchased a new crane costing $47,000 from Heavy Equipment Corporation. To pay for the crane, Burton traded in an old piece of machinery worth $10,000 and took a note for the balance of $37,000. How will this transaction be reported on the statement of cash flows?

As a non-cash investing and financing transaction.
As a use of cash in the investing section and a source of cash in the financing section.
As a use of cash in the operating section and a source of cash in the financing section.
As a source of cash in the investing section and a source of cash in the financing section.

Multiple Choice Question 110

Myers Real Estate Company exchanged an acre of land in exchange for five hundred shares of stock in the Midland Corporation. The land is worth $22,000 and the stock is worth $40 per share. How will this transaction be reported on the statement of cash flows?

As a use of cash in the investing section and a source of cash in the financing section.
As a source of cash in the investing section, a use of cash in the financing section, and an adjustment to net income in the operating section for the loss.
As a source of cash in the investing section and a use of cash in the financing section.
As a non-cash investing and financing transaction.

Solutions

Expert Solution

Question 95

Issuance of long-term debt results in cash provided by financing activities hence correct answer is option d. Issuance of long-term debt

Question 100

Bridges Industries issued $80,000 of bonds payable is shown under finance section whereas purchase $30,000 of equipment and $50,000 to purchase stock in another company is shown as investing activity

Hence correct answer is option c

Operating Section Investing Section   Financing Section

$0 $30,000 use/$50,000 use $80,000 source

Question 108

The purchase of new crane will be disclosed as a non-cash investing and financing transaction since no cash inflow or outflow was involved. Hence correct answer is option a. As a non-cash investing and financing transaction

Question 110

The purchase of land will be disclosed as a non-cash investing and financing transaction since no cash inflow or outflow was involved. Hence correct answer is option d. As a non-cash investing and financing transaction


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