56. During 2018, Stout Inc. had the following activities related to its financial operations:
Carrying value of convertible preferred stock in Stout,
converted into common shares of Stout $ 540,000
Payment in 2018 of cash dividend declared in 2017 to
preferred shareholders 279,000
Payment for the early retirement of long-term bonds payable
(carrying amount $3,930,000) 3,975,000
Proceeds from the sale of treasury stock (on books at cost of $387,000) 450,000
The amount of net cash used in financing activities to appear in Stout's statement of cash flows for 2018 should be
a. $2,985,000.
b. $3,264,000.
c. $3,804,000.
d. $3,822,000.
57. Hager Company sold some of its plant assets during 2018. The original cost of the plant assets was $900,000 and the accumulated depreciation at date of sale was $840,000. The proceeds from the sale of the plant assets were $90,000. The information concerning the sale of the plant assets should be shown on Hager's statement of cash flows (indirect method) for the year ended December 31, 2018, as a(n)
a. subtraction from net income of $30,000 and a $60,000 increase in cash flows from financing activities.
b. addition to net income of $30,000 and a $90,000 increase in cash flows from investing activities.
c. subtraction from net income of $30,000 and a $90,000 increase in cash flows from investing activities.
d. addition of $90,000 to net income.
58. An analysis of the machinery accounts of Noller Company for 2018 is as follows:
Machinery, Net of
Accumulated Accumulated
Machinery Depreciation Depreciation
Balance at January 1, 2018 $500,000 $125,000 $375,000
Purchases of new machinery in 2018
for cash 200,000 — 200,000
Depreciation in 2018 — 100,000 (100,000)
Balance at Dec. 31, 2018 $700,000 $225,000 $475,000
The information concerning Noller's machinery accounts should be shown in Noller's statement of cash flows (indirect method) for the year ended December 31, 2018, as a(n)
a. subtraction from net income of $100,000 and a $200,000 decrease in cash flows from financing activities.
b. addition to net income of $100,000 and a $200,000 decrease in cash flows from investing activities.
c. $100,000 increase in cash flows from financing activities.
d. $200,000 decrease in cash flows from investing activities.
59. Equipment which cost $426,000 and had accumulated depreciation of $228,000 was sold for $222,000. This transaction should be shown on the statement of cash flows (indirect method) as a(n)
a. addition to net income of $24,000 and a $222,000 cash inflow from financing activities.
b. deduction from net income of $24,000 and a $198,000 cash inflow from investing activities.
c. deduction from net income of $24,000 and a $222,000 cash inflow from investing activities.
d. addition to net income of $24,000 and a $198,000 cash inflow from financing activities.
60. During 2018, equipment was sold for $468,000. The equipment cost $786,000 and had a book value of $432,000. Accumulated Depreciation—Equipment was $2,061,000 at 12/31/17 and $2,205,000 at 12/31/18. Depreciation expense for 2018 was
a. $144,000.
b. $288,000.
c. $498,000.
d. $576,000.
Equipment that cost $875,000 and had a book value of $390,000 was sold for $450,000. Data from the comparative balance sheets are:
12/31/18 12/31/17
Equipment $5,400,000 $4,875,000
Accumulated Depreciation 1,650,000 1,425,000
61. Depreciation expense for 2018 was
a. $770,000.
b. $710,000.
c. $135,000.
d. $90,000.
Equipment that cost $875,000 and had a book value of $390,000 was sold for $450,000. Data from the comparative balance sheets are:
12/31/18 12/31/17
Equipment $5,400,000 $4,875,000
Accumulated Depreciation 1,650,000 1,425,000
62. Equipment purchased during 2018 was
a. $1,400,000.
b. $825,000.
c. $525,000.
d. $915,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
Assets Equities
Cash $ 960,000 Accounts payable $ 456,000
Accounts receivable 864,000
Buildings and equipment 3,600,000
Accumulated depreciation—
buildings and equipment (1,200,000) Common stock 2,760,000
Patents 432,000 Retained earnings 1,440,000
$4,656,000 $4,656,000
Kiner Company
Statement of Cash Flows
For the Year Ended December 31, 2018
Increase (Decrease) in Cash
Cash flows from operating activities
Net income $1,200,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts receivable $(384,000)
Increase in accounts payable 192,000
Depreciation—buildings and equipment 360,000
Gain on sale of equipment (144,000)
Amortization of patents 48,000 72,000
Net cash provided by operating activities 1,272,000
Cash flows from investing activities
Sale of equipment 288,000
Purchase of land (600,000)
Purchase of buildings and equipment (1,152,000)
Net cash used by investing activities (1,464,000)
Cash flows from financing activities
Payment of cash dividend (360,000)
Sale of common stock 960,000
Net cash provided by financing activities 600,000
Net increase in cash 408,000
Cash, January 1, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-tion on the equipment sold was $336,000.
63. When the equipment was sold, the Buildings and Equipment account received a credit of
a. $288,000.
b. $624,000.
c. $480,000.
d. $336,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
Assets Equities
Cash $ 960,000 Accounts payable $ 456,000
Accounts receivable 864,000
Buildings and equipment 3,600,000
Accumulated depreciation—
buildings and equipment (1,200,000) Common stock 2,760,000
Patents 432,000 Retained earnings 1,440,000
$4,656,000 $4,656,000
Kiner Company
Statement of Cash Flows
For the Year Ended December 31, 2018
Increase (Decrease) in Cash
Cash flows from operating activities
Net income $1,200,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts receivable $(384,000)
Increase in accounts payable 192,000
Depreciation—buildings and equipment 360,000
Gain on sale of equipment (144,000)
Amortization of patents 48,000 72,000
Net cash provided by operating activities 1,272,000
Cash flows from investing activities
Sale of equipment 288,000
Purchase of land (600,000)
Purchase of buildings and equipment (1,152,000)
Net cash used by investing activities (1,464,000)
Cash flows from financing activities
Payment of cash dividend (360,000)
Sale of common stock 960,000
Net cash provided by financing activities 600,000
Net increase in cash 408,000
Cash, January 1, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-tion on the equipment sold was $336,000.
64. The book value of the buildings and equipment at December 31, 2018 was
a. $3,048,000.
b. $3,120,000.
c. $4,272,000.
d. $3,528,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
Assets Equities
Cash $ 960,000 Accounts payable $ 456,000
Accounts receivable 864,000
Buildings and equipment 3,600,000
Accumulated depreciation—
buildings and equipment (1,200,000) Common stock 2,760,000
Patents 432,000 Retained earnings 1,440,000
$4,656,000 $4,656,000
Kiner Company
Statement of Cash Flows
For the Year Ended December 31, 2018
Increase (Decrease) in Cash
Cash flows from operating activities
Net income $1,200,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts receivable $(384,000)
Increase in accounts payable 192,000
Depreciation—buildings and equipment 360,000
Gain on sale of equipment (144,000)
Amortization of patents 48,000 72,000
Net cash provided by operating activities 1,272,000
Cash flows from investing activities
Sale of equipment 288,000
Purchase of land (600,000)
Purchase of buildings and equipment (1,152,000)
Net cash used by investing activities (1,464,000)
Cash flows from financing activities
Payment of cash dividend (360,000)
Sale of common stock 960,000
Net cash provided by financing activities 600,000
Net increase in cash 408,000
Cash, January 1, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-tion on the equipment sold was $336,000.
65. The accounts payable at December 31, 2018 were
a. $264,000.
b. $648,000.
c. $192,000.
d. $888,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
Assets Equities
Cash $ 960,000 Accounts payable $ 456,000
Accounts receivable 864,000
Buildings and equipment 3,600,000
Accumulated depreciation—
buildings and equipment (1,200,000) Common stock 2,760,000
Patents 432,000 Retained earnings 1,440,000
$4,656,000 $4,656,000
Kiner Company
Statement of Cash Flows
For the Year Ended December 31, 2018
Increase (Decrease) in Cash
Cash flows from operating activities
Net income $1,200,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts receivable $(384,000)
Increase in accounts payable 192,000
Depreciation—buildings and equipment 360,000
Gain on sale of equipment (144,000)
Amortization of patents 48,000 72,000
Net cash provided by operating activities 1,272,000
Cash flows from investing activities
Sale of equipment 288,000
Purchase of land (600,000)
Purchase of buildings and equipment (1,152,000)
Net cash used by investing activities (1,464,000)
Cash flows from financing activities
Payment of cash dividend (360,000)
Sale of common stock 960,000
Net cash provided by financing activities 600,000
Net increase in cash 408,000
Cash, January 1, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-tion on the equipment sold was $336,000.
66. The balance in the Retained Earnings account at December 31, 2018 was
a. $1,080,000.
b. $2,640,000.
c. $2,280,000.
d. $3,000,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
Assets Equities
Cash $ 960,000 Accounts payable $ 456,000
Accounts receivable 864,000
Buildings and equipment 3,600,000
Accumulated depreciation—
buildings and equipment (1,200,000) Common stock 2,760,000
Patents 432,000 Retained earnings 1,440,000
$4,656,000 $4,656,000
Kiner Company
Statement of Cash Flows
For the Year Ended December 31, 2018
Increase (Decrease) in Cash
Cash flows from operating activities
Net income $1,200,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts receivable $(384,000)
Increase in accounts payable 192,000
Depreciation—buildings and equipment 360,000
Gain on sale of equipment (144,000)
Amortization of patents 48,000 72,000
Net cash provided by operating activities 1,272,000
Cash flows from investing activities
Sale of equipment 288,000
Purchase of land (600,000)
Purchase of buildings and equipment (1,152,000)
Net cash used by investing activities (1,464,000)
Cash flows from financing activities
Payment of cash dividend (360,000)
Sale of common stock 960,000
Net cash provided by financing activities 600,000
Net increase in cash 408,000
Cash, January 1, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-tion on the equipment sold was $336,000.
67. Capital stock (plus any additional paid-in capital) at December 31, 2018 was
a. $2,400,000.
b. $2,760,000.
c. $1,560,000.
d. $3,720,000.
The balance in retained earnings at December 31, 2017 was $1,440,000 and at December 31, 2018 was $1,164,000. Net income for 2018 was $1,000,000. A stock dividend was declared and distributed which increased common stock $500,000 and paid-in capital $220,000. A cash dividend was declared and paid.
68. The amount of the cash dividend was
a. $496,000.
b. $556,000.
c. $776,000.
d. $1,276,000.
The balance in retained earnings at December 31, 2017 was $1,440,000 and at December 31, 2018 was $1,164,000. Net income for 2018 was $1,000,000. A stock dividend was declared and distributed which increased common stock $500,000 and paid-in capital $220,000. A cash dividend was declared and paid.
69. The stock dividend should be reported on the statement of cash flows (indirect method) as
a. an outflow from financing activities of $500,000.
b. an outflow from financing activities of $720,000.
c. an outflow from investing activities of $720,000.
d. Stock dividends are not shown on a statement of cash flows.
70. The following information was taken from the 2018 financial statements of Dunlop Corporation:
Bonds payable, January 1, 2018 $ 800,000
Bonds payable, December 31, 2018 4,800,000
During 2018
• A $720,000 payment was made to retire bonds payable with a face amount of $800,000.
• Bonds payable with a face amount of $320,000 were issued in exchange for equipment.
In its statement of cash flows for the year ended December 31, 2018, what amount should Dunlop report as proceeds from issuance of bonds payable?
a. $4,000,000
b. $4,400,000
c. $4,480,000
d. $5,120,000
71. Lindsay Corporation had net income for 2018 of $3,000,000. Additional information is as follows:
Depreciation of plant assets $1,200,000
Amortization of intangibles 240,000
Increase in accounts receivable 420,000
Increase in accounts payable 540,000
Lindsay's net cash provided by operating activities for 2018 was
a. $4,560,000.
b. $4,440,000.
c. $4,320,000.
d. $2,680,000.
72. Net cash flow from operating activities for 2018 for Spencer Corporation was $450,000.
The following items are reported on the financial statements for 2018:
Cash dividends paid on common stock $20,000
Depreciation and amortization 12,000
Increase in accounts receivable 24,000
Based on the information above, Spencer’s net income for 2018 was
a. $462,000.
b. $446,000.
c. $414,000.
d. $406,000.
73. During 2018, Orton Company earned net income of $494,000 which included deprecia-tion expense of $78,000. In addition, the company experienced the following changes in the account balances listed below:
Increases Decreases
Accounts payable $45,000 Accounts receivable $12,000
Inventory 36,000 Accrued liabilities 24,000
Prepaid insurance 33,000
Based upon this information what amount will be shown for net cash provided by operating activities for 2018?
a. $602,000
b. $575,000
c. $395,000
d. $377,000
74. Minear Company reported net income of $480,000 for the year ended 12/31/18. Included in the computation of net income were: depreciation expense, $60,000; amortization of a patent, $32,000; income from an investment in common stock of Brett Inc., accounted for under the equity method, $48,000; and amortization of a bond discount, $12,000. Minear also paid an $80,000 dividend during the year. The net cash provided by operating activities would be reported at
a. $536,000.
b. $456,000.
c. $424,000.
d. $344,000.
75. In preparing Titan Inc.’s statement of cash flows for the year ended December 31, 2018,
the following amounts were available:
Collect note receivable $615,000
Issue bonds payable 639,000
Purchase treasury stock 300,000
What amount should be reported on Titan, Inc.’s statement of cash flows for investing activities?
a. $615,000
b. $315,000
c. $1,254,000
d. $339,000
76. In preparing Titan Inc.’s statement of cash flows for the year ended December 31, 2018, the following amounts were available:
Collect note receivable $615,000
Issue bonds payable 639,000
Purchase treasury stock 300,000
What amount should be reported on Titan, Inc’s statement of cash flows for financing activities?
a. $ 24,000
b. $1,254,000
c. $339,000
d. $315,000
77. Jarvis, Inc. reported net income of $59,000 for the year ended December 31, 2018 Included in net income were depreciation expense of $8,400 and a gain on sale of equipment of $1,700. Each of the following accounts increased during 2018:
Accounts receivable $2,200
Inventory $4,500
Prepaid rent $6,800
Available-for-sale securities $1,000
Accounts payable $5,000
What is the amount of cash provided by operating activities for Jarvis, Inc. for the year ended December 31, 2018?
a. $56,200
b. $58,900
c. $47,200
d. $57,200
78. Howell, Inc. reported net income of $88,000 for the year ended December 31, 2018
Included in net income were depreciation expense of $16,800 and a gain on sale of equipment of $3,400. The equipment had an historical cost of $80,000 and accumulated depreciation of $48,000. Each of the following accounts increased during 2018:
Land $11,000
Prepaid rent $13,600
Available-for-sale securities $2,000
Bonds payable $10,000
What is the amount of cash provided by or used by investing activities for Jarvis, Inc. for the year ended December 31, 2018?
a. ( $ 9,600)
b. $33,400
c. $22,400
d. $24,400
79. Howell, Inc. reported net income of $88,000 for the year ended December 31, 2018. Included in net income was a gain on early extinguishment of debt of $120,000 related to bonds payable with a book value of $2,400,000. Each of the following accounts increased during 2018:
Notes receivable $90,000
Deferred tax liability $20,000
Treasury stock $240,000
What is the amount of cash used by financing activities for Jarvis, Inc. for the year ended December 31, 2018?
a. $2,520,000
b. $2,540,000
c. $3,800,000
d. $ 450,000
80. During 2018, Greta Company earned net income of $262,000 which included depreciation expense of $39,000. In addition, the company experienced the following changes in the account balances listed below:
Decreases Increases
Accounts receivable $ 6,000 Accounts payable…... $22,500
Prepaid expenses 16,500 Inventory……………. ..18,000
Accrued liabilities 12,000
Based upon this information what amount will be shown for net cash provided by operating activities for 2018?
a. $316,000.
b. $302,500.
c. $212,500.
d. $203,500.
