Question

7/ In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available:

Net income for the year was	$	54,000
Accounts payable decreased by		20,000
Accounts receivable increased by		27,000
Inventories increased by		7,000
Cash dividends paid were		14,400
Depreciation expense was		22,000

Net cash provided by operating activities was:  

Multiple Choice

$46,000.

$71,600.

$22,000.

$126,000.

$32,000.

8/ Mercury Company reports depreciation expense of $41,000 for Year 2. Also, equipment costing $143,000 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 Mercury Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

At December 31	Year 2			Year 1
Equipment	$	615,000		$	758,000
Accumulated Depreciation-Equipment		432,000			505,000

Multiple Choice

$29,000.

$70,000.

$41,000.

$36,500.

$73,000.

9/ Bagwell's net income for the year ended December 31, Year 2 was $192,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2.

At December 31	Year 2			Year 1
Common Stock, $5 par value	$	507,000		$	456,300
Paid-in capital in excess of par		955,000			859,300
Retained earnings		695,000			588,300

Multiple Choice

$106,700.

$146,400.

$85,300.

$50,700.

$95,700.

10/ Fernwood 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	$	243,000
Cash dividends declared for the year		52,500
Proceeds from the sale of equipment		89,400
Gain on the sale of equipment		4,800
Cash dividends payable at the beginning of the year		23,100
Cash dividends payable at the end of the year		31,000
Net income for the year		115,500

The amount of cash paid for dividends was:

Multiple Choice

$52,500.

$54,100.

$61,400.

$44,600.

$63,000.

Answer 1

1.

Net income for the year was	$   54,000
Accounts payable decreased by	$ (20,000)
Accounts receivable increased by	$ (27,000)
Inventories increased by	$   (7,000)
Depreciation expense was	$   22,000
Net cash provided by operating activities was	$   22,000

Answer is C. $22,000

2.

Cost of equipment sold	$   143,000
Less: Accumulated depreciation ($505,000+$41,000-$432,000)	$ (114,000)
Cash received from sale of equipment	$      29,000

Answer is A. $29,000

3.

Cash paid for dividends ($588,300+$192,000-$695,000)

$      85,300

Answer is C. $85,300

4.

Cash dividends declared for the year	$      52,500
Add: Cash dividends payable at the beginning of the year	$      23,100
Less: Cash dividends payable at the end of the year	$   (31,000)
The amount of cash paid for dividends was	$      44,600

Answer is D. $44,600

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