96. The amount to be shown on the cash flow statement as net cash provided by investing activities would total what amount?
a. $450,000.
b. $1,500,000.
c. $1,590,000.
d. $1,950,000.
Putnam, Inc.
Comparative Balance Sheets
December 31,
2019 2018
Assets:
Current Assets:
Cash $ 1,380,000 $1,080,000
Accounts Receivable (net) 3,120,000 2,160,000
Inventory 3,900,000 2,520,000
Prepaid Expenses 702,000 630,000
Total Current Assets 9,102,000 6,390,000
Long-Term Investments 450,000
Plant Assets:
Property, Plant & Equipment 4,380,000 2,880,000
Accumulated Depreciation (900,000) (540,000)
Total Plant Assets 3,480,000 2,340,000
Total Assets $13,032,000 $8,730,000
Equities:
Current Liabilities:
Accounts Payable $ 2,550,000 $2,190,000
Accrued Expenses 618,000 564,000
Dividends Payable 402,000
Total Current Liabilities 3,570,000 2,754,000
Long-Term Notes Payable 1,650,000
Stockholders' Equity:
Common Stock 6,000,000 4,800,000
Retained Earnings 1,812,000 1,176,000
Total Equities $13,032,000 $8,730,000
Putnam, Inc.
Comparative Income Statements
December 31,
2019 2018
Net Credit Sales $14,040,000 $7,506,000
Cost of Goods Sold 7,830,000 3,762,000
Gross Profit 6,210,000 3,744,000
Operating Expenses (including Income Tax) 5,172,000 2,748,000
Net Income $1,038,000 $ 996,000
Additional Information:
a. Accounts receivable and accounts payable relate to merchandise held for sale in the normal course of business. The allowance for bad debts was the same at the end of 2019 and 2018, and no receivables were charged against the allowance. Accounts payable are recorded net of any discount and are always paid within the discount period.
b. The proceeds from the note payable were used to finance the acquisition of property, plant, and equipment. Capital stock was sold to provide additional working capital.
97. The amount to be shown on the cash flow statement as net cash provided by financing activities would total what amount?
a. $2,850,000.
b. $1,650,000.
c. $1,200,000.
d. $816,000.
Fleming Company provided the following information on selected transactions during 2018:
Dividends paid to preferred stockholders $ 500,000
Loans made to affiliated corporations 1,400,000
Proceeds from issuing bonds 1,600,000
Proceeds from issuing preferred stock 2,100,000
Proceeds from sale of equipment 800,000
Purchases of inventories 2,400,000
Purchase of land by issuing bonds 600,000
Purchases of treasury stock 1,200,000
98. The net cash provided (used) by investing activities during 2018 is
a. $(1,200,000).
b. $(600,000).
c. $200,000.
d. $800,000.
Fleming Company provided the following information on selected transactions during 2018:
Dividends paid to preferred stockholders $ 500,000
Loans made to affiliated corporations 1,400,000
Proceeds from issuing bonds 1,600,000
Proceeds from issuing preferred stock 2,100,000
Proceeds from sale of equipment 800,000
Purchases of inventories 2,400,000
Purchase of land by issuing bonds 600,000
Purchases of treasury stock 1,200,000
99. The net cash provided (used) by financing activities during 2018 is
a. $(3,300,000).
b. $1,110,000.
c. $2,600,000.
d. $2,000,000.
100. The net cash provided by operating activities in Sosa Company's statement of cash flows for 2018 was $310,000. For 2018, depreciation on plant assets was $90,000, amortization of patent was $16,000, and cash dividends paid on common stock was $108,000. Based only on the information given above, Sosa’s net income for 2018 was
a. $310,000.
b. $204,000.
c. $16,000.
d. $312,000.
101. During 2018, Oldham Corporation, which uses the allowance method of accounting for doubtful accounts, recorded a provision for bad debt expense of $45,000 and in addition it wrote off, as uncollectible, accounts receivable of $10,000. As a result of these transactions, net cash flows from operating activities would be calculated (indirect method) by adjusting net income with a
a. $45,000 increase.
b. $10,000 increase.
c. $35,000 increase.
d. $35,000 decrease.
A flood damaged a building and contents. The receipts from insurance companies totaled $600,000, which was $180,000 less than the book values. The tax rate is 30%.
102. On the statement of cash flows (indirect method), the receipts from insurance companies should
a. be shown as an addition to net income of $420,000.
b. be shown as an inflow from investing activities of $420,000.
c. be shown as an inflow from investing activities of $600,000.
d. not be shown.
A flood damaged a building and contents. The receipts from insurance companies totaled $600,000, which was $180,000 less than the book values. The tax rate is 30%.
103. On the statement of cash flows (indirect method), the flood loss should
a. be shown as an addition to net income of $126,000.
b. be shown as an addition to net income of $180,000.
c. be shown as an inflow from investing activities of $126,000.
d. not be shown.
104. Zook Incorporated, had net income for 2018 of $5,400,000. Additional information is as follows:
Amortization of patents $ 45,000
Depreciation on plant assets 1,650,000
Long-term debt:
Bond premium amortization 65,000
Interest paid 900,000
Provision for doubtful accounts:
Current receivables 80,000
Long-term nontrade receivables 30,000
What should be the net cash provided by operating activities in the statement of cash flows for the year ended December 31, 2018, based solely on the above information?
a. $7,220,000.
b. $7,270,000.
c. $7,140,000.
d. $7,240,000.
105. The net income for the year ended December 31, 2018, for Oliva Company was $2,900,000. Additional information is as follows:
Depreciation on plant assets $600,000
Amortization of leasehold improvements 340,000
Provision for doubtful accounts on short-term receivables 120,000
Provision for doubtful accounts on long-term receivables 100,000
Interest paid on short-term borrowings 80,000
Interest paid on long-term borrowings 60,000
Based solely on the information given above, what should be the net cash provided by operating activities in the statement of cash flows for the year ended December 31, 2018?
a. $3,960,000.
b. $4,060,000.
c. $4,040,000.
d. $4,200,000.
MULTIPLE CHOICE—CPA Adapted
Jamison Corp.'s balance sheet accounts as of December 31, 2018 and 2017 and information relating to 2018 activities are presented below.
December 31,
2018 2017
Assets
Cash $ 440,000 $ 200,000
Short-term investments 600,000 —
Accounts receivable (net) 1,020,000 1,020,000
Inventory 1,380,000 1,200,000
Long-term investments 400,000 600,000
Plant assets 3,400,000 2,000,000
Accumulated depreciation (900,000) (900,000)
Patent 180,000 200,000
Total assets $6,520,000 $4,320,000
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $1,660,000 $1,440,000
Notes payable (nontrade) 580,000 —
Common stock, $10 par 1,600,000 1,400,000
Additional paid-in capital 800,000 500,000
Retained earnings 1,880,000 980,000
Total liabilities and stockholders' equity $6,520,000 $4,320,000
Information relating to 2018 activities:
• Net income for 2018 was $1,500,000.
• Cash dividends of $600,000 were declared and paid in 2018.
• Equipment costing $1,000,000 and having a carrying amount of $320,000 was sold in 2018 for $360,000.
• A long-term investment was sold in 2018 for $320,000. There were no other transactions affecting long-term investments in 2018.
• 20,000 shares of common stock were issued in 2018 for $25 a share.
• Short-term investments consist of treasury bills maturing on 6/30/19.
106. Net cash provided by Jamison’s 2018 operating activities was
a. $1,500,000.
b. $2,120,000.
c. $2,080,000.
d. $2,160,000.
Jamison Corp.'s balance sheet accounts as of December 31, 2018 and 2017 and information relating to 2018 activities are presented below.
December 31,
2018 2017
Assets
Cash $ 440,000 $ 200,000
Short-term investments 600,000 —
Accounts receivable (net) 1,020,000 1,020,000
Inventory 1,380,000 1,200,000
Long-term investments 400,000 600,000
Plant assets 3,400,000 2,000,000
Accumulated depreciation (900,000) (900,000)
Patent 180,000 200,000
Total assets $6,520,000 $4,320,000
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $1,660,000 $1,440,000
Notes payable (nontrade) 580,000 —
Common stock, $10 par 1,600,000 1,400,000
Additional paid-in capital 800,000 500,000
Retained earnings 1,880,000 980,000
Total liabilities and stockholders' equity $6,520,000 $4,320,000
Information relating to 2018 activities:
• Net income for 2018 was $1,500,000.
• Cash dividends of $600,000 were declared and paid in 2018.
• Equipment costing $1,000,000 and having a carrying amount of $320,000 was sold in 2018 for $360,000.
• A long-term investment was sold in 2018 for $320,000. There were no other transactions affecting long-term investments in 2018.
• 20,000 shares of common stock were issued in 2018 for $25 a share.
• Short-term investments consist of treasury bills maturing on 6/30/19.
107. Net cash used in Jamison’s 2018 investing activities was
a. $2,320,000.
b. $1,820,000.
c. $1,680,000.
d. $1,720,000.
Jamison Corp.'s balance sheet accounts as of December 31, 2018 and 2017 and information relating to 2018 activities are presented below.
December 31,
2018 2017
Assets
Cash $ 440,000 $ 200,000
Short-term investments 600,000 —
Accounts receivable (net) 1,020,000 1,020,000
Inventory 1,380,000 1,200,000
Long-term investments 400,000 600,000
Plant assets 3,400,000 2,000,000
Accumulated depreciation (900,000) (900,000)
Patent 180,000 200,000
Total assets $6,520,000 $4,320,000
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $1,660,000 $1,440,000
Notes payable (nontrade) 580,000 —
Common stock, $10 par 1,600,000 1,400,000
Additional paid-in capital 800,000 500,000
Retained earnings 1,880,000 980,000
Total liabilities and stockholders' equity $6,520,000 $4,320,000
Information relating to 2018 activities:
• Net income for 2018 was $1,500,000.
• Cash dividends of $600,000 were declared and paid in 2018.
• Equipment costing $1,000,000 and having a carrying amount of $320,000 was sold in 2018 for $360,000.
• A long-term investment was sold in 2018 for $320,000. There were no other transactions affecting long-term investments in 2018.
• 20,000 shares of common stock were issued in 2018 for $25 a share.
• Short-term investments consist of treasury bills maturing on 6/30/19.
108. Net cash provided by Jamison’s 2018 financing activities was
a. $480,000.
b. $520,000.
c. $1,080,000.
d. $1,680,000.
109. Foxx Corp.'s comparative balance sheet at December 31, 2018 and 2017 reported accumulated depreciation balances of $1,245,000 and $900,000, respectively. Property with a cost of $75,000 and a carrying amount of $57,000 was the only property sold in 2018. Depreciation charged to operations in 2018 was
a. $327,000.
b. $345,000.
c. $363,000.
d. $402,000.
110. Nagel Co.'s prepaid insurance was $190,000 at December 31, 2018 and $90,000 at December 31, 2017. Insurance expense was $62,000 for 2018 and $54,000 for 2017. What amount of cash disbursements for insurance would be reported in Nagel's 2018 net cash provided by operating activities presented on a direct basis?
a. $198,000.
b. $162,000.
c. $128,000.
d. $62,000.
A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.
111. In a statement of cash flows, what amount is included in investing activities for the above transaction?
a. Cash payment
b. Acquisition price
c. Zero
d. Mortgage amount
A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.
112. In a statement of cash flows, what amount is included in financing activities for the above transaction?
a. Cash payment
b. Acquisition price
c. Zero
d. Mortgage amount
Smiley Corp.'s transactions for the year ended December 31, 2018 included the following:
• Purchased real estate for $1,250,000 cash which was borrowed from a bank.
• Sold available-for-sale securities for $1,000,000.
• Paid dividends of $1,200,000.
• Issued 500 shares of common stock for $500,000.
• Purchased machinery and equipment for $250,000 cash.
• Paid $900,000 toward a bank loan.
• Reduced accounts receivable by $200,000.
• Increased accounts payable $400,000.
113. Smiley's net cash used in investing activities for 2018 was
a. $1,500,000.
b. $750,000.
c. $500,000.
d. $250,000.
Smiley Corp.'s transactions for the year ended December 31, 2018 included the following:
• Purchased real estate for $1,250,000 cash which was borrowed from a bank.
• Sold available-for-sale securities for $1,000,000.
• Paid dividends of $1,200,000.
• Issued 500 shares of common stock for $500,000.
• Purchased machinery and equipment for $250,000 cash.
• Paid $900,000 toward a bank loan.
• Reduced accounts receivable by $200,000.
• Increased accounts payable $400,000.
114. Smiley's net cash used in financing activities for 2018 was
a. $450,000.
b. $350,000.
c. $900,000.
d. $850,000.
Peavy Corp.'s transactions for the year ended December 31, 2018 included the following:
• Acquired 50% of Gant Corp.'s common stock for $300,000 cash which was borrowed from a bank.
• Issued 5,000 shares of its preferred stock for land having a fair value of $480,000.
• Issued 600 of its 11% debenture bonds, due 2023, for $588,000 cash.
• Purchased a patent for $330,000 cash.
• Paid $180,000 toward a bank loan.
• Sold available-for-sale securities for $1,194,000.
• Had a net increase in returnable customer deposits (long-term) of $132,000.
115. Peavy’s net cash provided by investing activities for 2018 was
a. $414,000.
b. $564,000.
c. $864,000.
d. $894,000.
Peavy Corp.'s transactions for the year ended December 31, 2018 included the following:
• Acquired 50% of Gant Corp.'s common stock for $300,000 cash which was borrowed from a bank.
• Issued 5,000 shares of its preferred stock for land having a fair value of $480,000.
• Issued 600 of its 11% debenture bonds, due 2023, for $588,000 cash.
• Purchased a patent for $330,000 cash.
• Paid $180,000 toward a bank loan.
• Sold available-for-sale securities for $1,194,000.
• Had a net increase in returnable customer deposits (long-term) of $132,000.
116. Peavy’s net cash provided by financing activities for 2015 was
a. $708,000.
b. $840,000.
c. $888,000.
d. $1,020,000.
