70) Kansas Company uses the indirect method to prepare its statement of cash flows. Refer to the
following portion of the comparative balance sheet:
Kansas Company
Comparative Balance Sheet
December 31, 2019 and 2018
2019 2018 Increase (Decrease)
Accounts Payable $6,000 $9,000 $(3,000)
Accrued Liabilities 3,000 1,500 1,500
Long-term Notes Payable 126,000 135,000 (9,000)
Total liabilities $135,000 $145,500 $(10,500)
Additional information provided by the company includes the following:
During 2019, the company repaid $60,000 of long-term notes payable.
During 2019, the company borrowed $51,000 on a new long-term note payable.
Use the T-account format to evaluate the transactions affecting the long-term notes payable account.
71) Nashville Records Company uses the indirect method to prepare its statement of cash flows. Refer to
the following sections of the comparative balance sheet:
Nashville Records Company
Comparative Balance Sheet
December 31, 2018 and 2017
2018 2017 Increase (Decrease)
Accounts Payable $ 6,000 $ 9,000 $(3,000)
Accrued Liabilities 3,000 1,500 1,500
Long-term Notes Payable 126,000 135,000 (9,000)
Total Liabilities $135,000 $145,500 $(10,500)
Common Stock 45,000 3,000 42,000
Retained Earnings 169,500 111,000 58,500
Treasury Stock (12,000) (7,500) (4,500)
Total Equity 202,500 106,500 96,000
Total Liabilities and Stockholders’ Equity $337,500 $252,000 $85,500
Additional information for 2018:
• No stock was retired.
• No treasury stock was sold.
• The company repaid $60,000 of long-term notes payable.
• The company borrowed $51,000 on a new long-term note payable.
• Net income for the year was $68,000.
Prepare the financing section of the statement of cash flows for the year ended December 31, 2018.
72) To complete the statement of cash flows, the net change in cash and its effects on the beginning cash
balance must be shown.
73) The total change in cash for the period reconciles the statement of cash flows.
74) The total change in cash should equal the net income for the period.
75) For the year ended December 31, 2019, the Statement of Cash Flows for Mississippi Family Auto
Supply shows the following information: Net Cash Used by Operating Activities, $(70,000); Net Cash
Provided by Investing Activities, $48,000; and Net Cash Provided by Financing Activities, $42,000. Cash
has increased by $169,000.
76) Delaware Coatings Company uses the indirect method to prepare its statement of cash flows. Refer to
the following information for the year 2019:
Net cash provided by operating activities: $45,000
Net cash used for investing activities: $(29,000)
Net cash provided by financing activities: $2000
What is the net change in cash during the year?
A) $(18,000)
B) $43,000
C) $18,000
D) $(16,000)
77) Trinity Coatings Company uses the indirect method to prepare its statement of cash flows. Refer to
the following information for 2018:
The beginning balance in the Cash account was $2700.
Net cash provided by operating activities: $41,000
Net cash used for investing activities: $(28,000)
Net cash provided by financing activities: $1800
The statement of cash flows will show ________.
A) ending cash of $14,800
B) net cash provided by operating activities $42,900
C) net cash provided by investing and financing activities $(23,800)
D) ending cash of $17,500
78) Specialty Auto Parts Company uses the indirect method to prepare its statement of cash flows. Refer
to the following information for 2018:
Net cash provided by operating activities: $108,000
Net cash used for investing activities: $(118,500)
Net cash provided by financing activities: $16,000
If the cash balance at the beginning of the year was $13,200, what is the ending cash balance?
A) $18,700
B) $5500
C) $13,200
D) $10,500
57
79) Diamond Corp. has provided the following information for the year ended December 31, 2018.
Diamond Corp
Comparative Balance Sheet
December 31, 2018 and 2017
Increase
2018 2017 (Decrease)
Cash $33,000 $13,000 $20,000
Accounts Receivable 29,000 36,000 (7,000)
Merchandise Inventory 56,000 29,000 27,000
Plant Assets, net 126,000 92,000 34,000
Total Assets $244,000 $170,000 $74,000
Accounts Payable $9,000 $13,000 $(4,000)
Accrued Liabilities 7,000 3,000 4,000
Long-term Notes Payable 70,000 79,000 (9,000)
Total Liabilities 86,000 95,000 (9,000)
Common Stock 55,000 3,000 52,000
Retained Earnings 115,000 78,000 37,000
Treasury Stock (12,000) (6,000) (6,000)
Total Stockholders‘ Equity 158,000 75,000 83,000
Total Liabilities and Stockholders’ Equity $244,000 $170,000 $74,000
Diamond Corp
Income Statement
Year ended December 31, 2018
Sales Revenue $291,300
Interest Revenue 1,000
Gain on Sale of Plant Assets 6,000
Total Revenues and Gains $298,300
Cost of Goods Sold 145,000
Salaries and Wages Expense 49,000
Depreciation Expense—Plant Assets 16,000
Other Operating Expense 25,000
Interest Expense 3,500
Income Tax Expense 7,800
Total Expenses 246,300
Net Income $52,000
Additional information provided by the company includes the following:
Equipment costing $60,000 was purchased for cash.
Equipment with a net book value of $10,000 was sold for $16,000.
Depreciation expense of $16,000 was recorded during the year.
During 2018, the company repaid $43,000 of long-term notes payable.
During 2018, the company borrowed $34,000 on a new long-term note payable.
There were no stock retirements during the year.
There were no sales of treasury stock during the year.
All sales are on credit.
Prepare the 2018 statement of cash flows, using the indirect method.
80) The third section presented on the statement of cash flows is the non-cash operating activities section.
81) A debtor of Adams Company owes $500,000 but does not have enough cash to repay the debt.
Following lengthy negotiations, the parties agreed that the debtor will issue 200,000 shares of common
stock to settle the debt. This transaction will be reported in the investing activities section of the statement
of cash flows for Adams Company.
82) Nevada Sales purchased some equipment for $12,000 by issuing a five-year note payable. This will
appear in the non-cash investing and financing activities section of the statement of cash flows.
83) Arizona Company plans to purchase a property to build its corporate headquarters. An investor is
willing to exchange land with a market value of $500,000 for common stock. This transaction would be
shown in the financing activities section of the statement of cash flows.
84) The non-cash investing and financing activities section of the statement of cash flows appears as a
separate schedule of the statement of cash flows or in the notes to the financial statements.
85) Companies sometimes obtain financing and do not receive cash. Although such transactions do not
directly involve cash, they still must be reported in the financing section of the statement of cash flows.
86) Wisconsin, Inc. owed one of its creditors $350,000, but it did not have enough cash to repay the debt.
Following lengthy negotiations, the parties agreed that Wisconsin, Inc. would issue 50,000 shares of
common stock to settle the debt. On the statement of cash flows, this transaction is shown in the
________.
A) investing activities section
B) financing activities section
C) operating activities section
D) non-cash investing and financing activities section
87) Green Bay Sales purchased equipment for $50,000 by issuing a three-year note payable. On the
statement of cash flows, this transaction would be shown in the ________.
A) non-cash financing and investing activities section
B) investing activities section
C) operating activities section
D) financing activities section