Intermediate Accounting Kieso 16e Test Bank 23.3
81. Cashman Company reported net income of $530,000 for the year ended 12/31/18.
Included in the computation of net income were: depreciation expense, $90,000; amortization of a patent, $48,000; income from an investment in common stock of Linda Inc., accounted for under the equity method, $72,000; and amortization of a bond premium, $18,000. Cashman also paid a $120,000 dividend during the year. The net cash provided by operating activities would be reported at
a. $578,000.
b. $482,000.
c. $458,000.
d. $362,000.
82. Net cash flow from operating activities for 2018 for Graham Corporation was $495,000. The following items are reported on the financial statements for 2018:
Depreciation and amortization $ 30,000
Cash dividends paid on common stock 18,000
Increase in accounts receivable 36,000
Based only on the information above, Graham’s net income for 2018 was:
a. $429,000.
b. $441,000.
c. $489,000.
d. $501,000.
Napier Co. provided the following information on selected transactions during 2018:
Purchase of land by issuing bonds $1,000,000
Proceeds from issuing bonds 3,000,000
Purchases of inventory 3,800,000
Purchases of treasury stock 600,000
Loans made to affiliated corporations 1,400,000
Dividends paid to preferred stockholders 400,000
Proceeds from issuing preferred stock 1,600,000
Proceeds from sale of equipment 300,000
83. The net cash provided (used) by investing activities during 2018 is
a. $300,000.
b. $(1,100,000).
c. $(2,100,000).
d. $(4,500,000).
Napier Co. provided the following information on selected transactions during 2018:
Purchase of land by issuing bonds $1,000,000
Proceeds from issuing bonds 3,000,000
Purchases of inventory 3,800,000
Purchases of treasury stock 600,000
Loans made to affiliated corporations 1,400,000
Dividends paid to preferred stockholders 400,000
Proceeds from issuing preferred stock 1,600,000
Proceeds from sale of equipment 300,000
84. The net cash provided by financing activities during 2018 is
a. $3,200,000.
b. $3,600,000.
c. $4,200,000.
d. $4,600,000.
The balance sheet data of Kohler Company at the end of 2018 and 2017 follow:
2018 2017
Cash $ 100,000 $ 140,000
Accounts receivable (net) 240,000 180,000
Inventory 280,000 180,000
Prepaid expenses 40,000 100,000
Buildings and equipment 360,000 300,000
Accumulated depreciation—buildings and equipment (72,000) (32,000)
Land 360,000 160,000
Totals $1,308,000 $1,028,000
Accounts payable $272,000 $220,000
Accrued expenses 48,000 72,000
Notes payable—bank, long-term 160,000
Mortgage payable 120,000
Common stock, $10 par 836,000 636,000
Retained earnings (deficit) 32,000 (60,000)
$1,308,000 $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $30,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2018, for Naley Company:
85. The net cash provided by operating activities was
a. $94,000.
b. $122,000.
c. $102,000.
d. $86,000.
The balance sheet data of Kohler Company at the end of 2018 and 2017 follow:
2018 2017
Cash $ 100,000 $ 140,000
Accounts receivable (net) 240,000 180,000
Inventory 280,000 180,000
Prepaid expenses 40,000 100,000
Buildings and equipment 360,000 300,000
Accumulated depreciation—buildings and equipment (72,000) (32,000)
Land 360,000 160,000
Totals $1,308,000 $1,028,000
Accounts payable $272,000 $220,000
Accrued expenses 48,000 72,000
Notes payable—bank, long-term 160,000
Mortgage payable 120,000
Common stock, $10 par 836,000 636,000
Retained earnings (deficit) 32,000 (60,000)
$1,308,000 $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $30,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2018, for Naley Company:
86. The net cash provided (used) by investing activities was
a. $52,000.
b. $(80,000).
c. $(272,000).
d. $(72,000).
The balance sheet data of Kohler Company at the end of 2018 and 2017 follow:
2018 2017
Cash $ 100,000 $ 140,000
Accounts receivable (net) 240,000 180,000
Inventory 280,000 180,000
Prepaid expenses 40,000 100,000
Buildings and equipment 360,000 300,000
Accumulated depreciation—buildings and equipment (72,000) (32,000)
Land 360,000 160,000
Totals $1,308,000 $1,028,000
Accounts payable $272,000 $220,000
Accrued expenses 48,000 72,000
Notes payable—bank, long-term 160,000
Mortgage payable 120,000
Common stock, $10 par 836,000 636,000
Retained earnings (deficit) 32,000 (60,000)
$1,308,000 $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was $16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $30,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2018, for Naley Company:
87. The net cash provided (used) by financing activities was
a. $ -0-.
b. $(30,000).
c. $(70,000).
d. $120,000.
88. The following information on selected cash transactions for 2018 has been provided by
Mancuso Company:
Proceeds from sale of land $315,000
Proceeds from long-term borrowings 600,000
Purchases of plant assets 216,000
Purchases of inventories 1,020,000
Proceeds from sale of Mancuso common stock 360,000
What is the cash provided (used) by investing activities for the year ended December 31, 2018, as a result of the above information?
a. $99,000
b. $384,000.
c. $315,000.
d. $1,275,000.
89. Selected information from Dinkel Company's 2018 accounting records is as follows:
Proceeds from issuance of common stock $ 800,000
Proceeds from issuance of bonds 2,400,000
Cash dividends on common stock paid 290,000
Cash dividends on preferred stock paid 120,000
Purchases of treasury stock 240,000
Sale of stock to officers and employees not included above 200,000
Dinkel's statement of cash flows for the year ended December 31, 2018, would show net cash provided (used) by financing activities of
a. $120,000.
b. $(470,000).
c. $290,000.
d. $2,750,000.
90. Donnegan Company reported operating expenses of $375,000 for 2018. The following data were extracted from the company’s financial records:
12/31/17 12/31/18
Prepaid Expenses $ 60,000 $69,000
Accrued Expenses 210,000 255,000
On a statement of cash flows for 2018, using the direct method, cash payments for operating expenses should be
a. $429,000.
b. $411,000.
c. $339,000.
d. $321,000.
91. The following information was taken from the 2018 financial statements of Jenny Gardner
Corporation:
Inventory, January 1, 2018 $ 180,000
Inventory, December 31, 2018 240,000
Accounts payable, January 1, 2018 150,000
Accounts payable, December 31, 2018 240,000
Sales revenue 1,200,000
Cost of goods sold 800,000
If the direct method is used in the 2018 statement of cash flows, what amount should Jenny Gardner report as cash payments to suppliers?
a. $770,000
b. $830,000
c. $890,000
d. $950,000
92. Alex Company prepares its statement of cash flows using the direct method for operating activities. For the year ended December 31, 2018, Alex Company reports the following activity:
Sales on account $2,100,000
Cash sales 1,110,000
Decrease in accounts receivable 915,000
Increase in accounts payable 108,000
Increase in inventory 72,000
Cost of good sold 1,575,000
What is the amount of cash collections from customers reported by Alex Company for the year ended December 31, 2018?
a. $3,210,000
b. $3,015,000
c. $4,125,000
d. $2,295,000
93. Alex Company prepares its statement of cash flows using the direct method for operating activities. For the year ended December 31, 2018, Alex Company reports the following activity:
Sales on account $2,100,000
Cash sales 1,110,000
Decrease in accounts receivable 915,000
Increase in accounts payable 108,000
Increase in inventory 72,000
Cost of goods sold 1,575,000
What is the amount of cash payments to suppliers reported by Alex Company for the year ended December 31, 2018?
a. $1,539,000
b. $1,611,000
c. $1,755,000
d. $1,395,000
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.
94. What amount of cash was collected from 2019 accounts receivable?
a. $15,000,000.
b. $14,040,000.
c. $13,080,000.
d. $6,540,000.
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.
95. What amount of cash was paid on accounts payable to suppliers during 2019?
a. $9,210,000.
b. $8,850,000.
c. $8,190,000.
d. $7,470,000.
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.
