Question

A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on sale of plant assets, $10,000. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $10,600; merchandise inventory increased $24,000; prepaid expenses increased $7,400; accounts payable increased $4,600. Calculate the net cash provided or used by operating activities.

Multiple Choice

• $176,600.

• $155,400.

• $148,600.

• $150,600.

• $135,800.

In preparing a company's statement of cash flows using the indirect method, the following information is available:

Net income	$	53,000
Accounts payable increased by		18,100
Accounts receivable decreased by		25,100
Inventories increased by		5,200
Depreciation expense		30,300

Net cash provided by operating activities was:

Multiple Choice

• $81,500.

• $71,100.

• $121,300.

• $131,700.

• $60,700.

A company's income statement showed the following: net income, $126,000; depreciation expense, $36,000; and gain on sale of plant assets, $10,000. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $10,600; merchandise inventory increased $24,000; prepaid expenses increased $7,400; accounts payable increased $4,600. Calculate the net cash provided or used by operating activities.

Multiple Choice

• $176,600.

• $155,400.

• $148,600.

• $150,600.

• $135,800.

The accountant for Walter Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:

Retained earnings balance at the beginning of the year	$	132,000
Cash dividends declared for the year		52,000
Proceeds from the sale of equipment		87,000
Gain on the sale of equipment		8,200
Cash dividends payable at the beginning of the year		24,000
Cash dividends payable at the end of the year		27,200
Net income for the year		98,000

The amount of cash dividends paid during the year would be:

Multiple Choice

• $260,000.

• $186,000.

• $264,800.

• $288,000.

• $48,800.

A machine with a cost of $152,000 and accumulated depreciation of $96,000 is sold for $48,800 cash. The total amount related to this machine that should be reported in the operating section of the statement of cash flows under the indirect method is:

Multiple Choice

• $4,880.

• $17,700.

• $7,200.

• $71,300.

• $22,500

Ford Company reports depreciation expense of $51,000 for Year 2. Also, equipment costing $174,000 was sold for its book value in Year 2. There were no other equipment purchases or sales during the year. The following selected information is available for Ford Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

At December 31	Year 2			Year 1
Equipment	$	665,000		$	839,000
Accumulated Depreciation-Equipment		472,000			555,000

Multiple Choice

• $91,000.

• $83,000.

• $51,000.

• $41,500.

• $40,000.

Favre Company reports depreciation expense of $49,000 for Year 2. Also, equipment costing $167,000 was sold for a $10,900 loss in Year 2. The following selected information is available for Favre Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

At December 31	Year 2			Year 1
Equipment	$	655,000		$	822,000
Accumulated Depreciation-Equipment		464,000			545,000

Multiple Choice

• $37,000.

• $47,900.

• $49,000.

• $70,100.

• $26,100.

Answer 1

1.

net income	126000
depreciation expense	36000
gain on sale of plant assets	-10000
decrease in accounts receivable	10600
increase in merchandise inventory	-24000
increase in prepaid expense	-7400
increase in accounts payable	4600
Net income from operating activities	135800

Thus, correct answer is e.

2.

net income	53000
depreciation expense	30300
increase in accounts payable	18100
decrease in accounts receivable	25100
increase in inventory	-5200
Net income from operating activities	121300

Thus, correct answer is c.

3.

net income	126000
depreciation expense	36000
gain on sale of plant assets	-10000
decrease in accounts receivable	10600
increase in merchandise inventory	-24000
increase in prepaid expense	-7400
increase in accounts payable	4600
Net income from operating activities	135800

Thus, correct answer is e.

4.

Cash dividends paid during the year = Beginning cash dividends payable + cash dividends declared - Ending cash dividends payable

Cash dividends paid during the year = 24000 + 52000 - 27200

Cash dividends paid during the year = $ 48800

Thus, correct answer is e.

5.

Only loss on sale of machine will be reported to operating section of cash flows.

Loss on sale of machine = book value - sale value

Loss on sale of machine = 152000 - 96000 - 48800

Loss on sale of machine = 7200

Thus, correct answer is c.

6.

	Equipment
Particulars	Dr	Particulars	Cr
Opening balance	839000	Opening accumulated dep	555000
Closing accumulated dep	472000	depreciation expense	51000
		Closing balance	665000
		sale of equipment	40000
	1311000		1311000

Thus, correct answer e.

7.

Cash received from sale of equipment = equipment value - opening accumulated depreciation - depreciation expense - closing equipment value + closing accumulated depreciation - loss on sale

Cash received from sale of equipment = 822000 - 545000 - 49000 - 655000 + 464000 -10900

Cash received from sale of equipment = 26100

Thus, correct answer is e.