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Exam 21: The Statement of Cash Flows Revisited

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Question 1

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Determine the amount of cash received from customers for each of the two independent situations below. $\begin{array} { | c | c | c | c | } \hline \text{Situation} & \begin{array} { c } \text { Sales } \\\text { Situation }\end{array} & \begin{array} { c } \text { Accounts } \\\text { receivable } \\\text { revenue }\end{array} & \begin{array} { c } \text { Cash } \\\text { received } \\\text { from } \\\text { customers }\end{array} \\\hline 1 & \$ 300,000 & \$ 10,000 & ? \\\hline 2 & 300,000 & ( 10,000 ) & ? \\\hline\end{array}$

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1) $300,000 - $10,00...

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The accounting records of Unlucky Company provided the data below. $\begin{array} { | l | l |} \hline \text { Net loss } & \$ 40,000 \\\hline \text { Depreciation expense } & 12,000 \\\hline \text { Increase in salaries payable } & 11,000 \\\hline \text { Increase in accounts receivable } & 4,000 \\\hline \text { Decrease in inventory } & 4,800 \\\hline \text { Amortization of patent } & 700 \\\hline \text { Decrease in premium on bonds } & 500 \\\hline\end{array}$ Required: Prepare a reconciliation of net income to net cash flows from operating activities.

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Indicate the reporting classification that would apply to each of the following transactions

Which of the following would not be a component of cash flows from investing activities?

Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Noncash financing and investing activity

Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities?

In its 2018 Annual Report to Shareholders, Henchman & Co. provided the following Statement of Cash Flows: $\begin{array} { | l | r | r | } \hline \text { Years ended December 31 (\$ in millions) } & 2018 & 2017 \\\hline \text { Financing Activities } & & \\\hline \text { Proceeds from issuance of long-term debt } & 1,491 & \\\hline \text { Proceeds from equity security units } & 690 & \\\hline \text { Borrowings under lines of credit } & 1,173 & \\\hline \text { Repayment of borrowings under lines of Credit } & ( 1,306 ) & ( 175 ) \\\hline \text { Principal payments of long-term debt/lease } & & \\\text { agreements } & ( 119 ) & ( 485 ) \\\hline \text { Proceeds from issuance of stock } & { 8 2 5 } & 19 \\\hline \text { Dividends paid } & ( 158 ) & ( 114 ) \\\hline \text { Other financing activities } & \underline{( 64 )} & -\\\hline \text { Net cash provided by (used in) financing } & & \\\text { activities } & { 2 , 5 3 2 } & ( 755 ) \\\hline \text { Increase in cash and cash equivalents } & 145 & 177 \\\hline \text { Cash and cash equivalents at beginning of year } & \underline{319} & \underline{142} \\\hline \text { Cash and cash equivalents at end of year } & \underline{\$ 464} & \$ \underline{319} \\\hline\end{array}$ -(a.) What is the most significant change in operating cash outflow activity in 2018 relative to 2017? (b.) What balance sheet accounts would likely have changed during 2018 in relation to the cash flow change that you identify in (a)?

A decrease in cash dividends payable means that dividends declared were less than dividends paid.

S Company reported net income for 2018 in the amount of $400,000. The company's financial statements also included the following: Increase in accounts receivable $~~~~~~~~~~~\$ 80,000$ Decrease in irventory $~~~~~~~~~~~60,000$ Increase in accourts payable $~~~~~~~~~~~200,000$ Depreciation expense $~~~~~~~~~~104,000$ Gair on sale of lard $~~~~~~~~~~~148,000$ What is net cash provided by operating activities under the indirect method?

Partial balance sheets for ABC Company and additional information are provided below. Required: Prepare the financing activities section of the statement of cash flows for 2018.

Hanson Company had the following account balances for 2018: $\begin{array}{lrcc} & \text { Dec. 31 } & \text { Jan. 1 } \\\text { Inventory } & \$ 40,000 & \$ 35,000 \\\text { Accounts payable } & 40,000 & 55,000\end{array}$ Hanson reported net income of $90,000 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?

Jim Sox Company owns debt securities classified as available for sale which were acquired in 2016 at face value of $17 million. During 2018, the fair value of those securities increased by $220,000. What effect did this increase have on Sox's 2018 statement of cash flows?

Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Operating activity, no adjustment to net income

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

Under U.S. GAAP, cash flows from investing activities do not include:

The amortization of bond discount is included in the statement of cash flows (indirect method) as:

If bond interest expense is $300,000, bond interest payable decreased by $4,000 and bond premium decreased by $1,000, cash paid for bond interest is:

On December 31, 2018, Tiras Company reported net income of $50,000 and sales of $200,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Tiras will report cash collected from customers in its 2018 statement of cash flows (indirect method) in the amount of:

In preparing its cash flow statement for the year ended December 31, 2018, Green Co. gathered the following data: $\begin{array}{lll}\text {Gain on sale of land }&\$12,000\\\text {Proceeds from sale of land }&20,000\\\text {Purchase of Blue, Inc., bonds (facevalue \$ 200,000 ) }&360,000\\\text { Amortization of bond discount}&4,000\\\text {Cash dividends declared }&90,000\\\text { Cash dividends paid}&76,000\\\text { Proceeds from sales of Red Co. common stock}&150,000\\\end{array}$ In its December 31, 2018, statement of cash flows, what amount should Green report as net cash from financing activities?