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104) Use the following information to prepare a statement of cash flows for Stable Equipment
Company for the year ended December 31, 2019. Use the indirect method for the operating
activities section of the statement.
Net income for the year 2019 was $5,000. Accounts receivable decreased $2,000, while
inventories increased $4,000, and accounts payable decreased $7,000. Depreciation expense
included in net income was $8,000.
During the year, a piece of land held for future expansion was sold for its book value of $8,000
and a new service truck was purchased for $14,000.
The company borrowed $18,000 on a two-year note from the bank. Dividends of $6,000 were
paid in cash. Preferred stock was issued to retire $7,000 of long-term notes payable.
The beginning cash balance was $22,000 and the ending balance was $32,000.
105) Marissa Company is preparing a statement of cash flows using the indirect method for the
year ended December 31, 2019. The following data are available:
Net income
$30,000
Depreciation expense
18,000
Inventory increase
5,000
Wages payable decrease
10,000
Accounts receivable decrease
10,000
Accounts payable decrease
7,000
Prepare the operating activities section of the statement of cash flows using the indirect method
for the year ended December 31, 2019.
Cash flows from operating activities:
Net income
$30,000
Depreciation expense
Inventory increase
Wages payable decrease
Accounts receivable decrease
Accounts payable decrease
Net cash provided by operating activities
$36,000
106) Hill Company reported net income of $10,000 for the year ended December 31, 2019.
Additional 2019 information is as follows:
Expenditures for productive assets
$6,000
Depreciation expense on productive assets
2,000
Dividends paid on common stock
900
Increase in accounts payable
400
Decrease in inventory
200
Amortization of patent
100
Decrease in accounts receivable
300
Prepare the operating activities section of the statement of cash flows using the indirect method
for the year ended December 31, 2019.
Cash flows from operating activities:
Net income
Depreciation expense
Patent amortization
Increase in accounts payable
Decrease in inventory
Decrease in accounts receivable
Net cash provided by operating activities
107) Brooks Company reported net income of $40,000, which included depreciation expense and
amortization expense of $21,000 and $18,000, respectively. The following changes also occurred
during the year ended December 31, 2019:
Inventory
$10,000
decrease
Accounts payable
5,000
increase
Notes payable (long-term)
15,000
decrease
Income tax payable
7,000
increase
Accounts receivable
10,000
increase
Prepare the operating activities section of the statement of cash flows using the indirect method
for the year ended December 31, 2019.
Cash flows from operating activities:
Net income
Depreciation expense
21,000
Amortization expense
18,000
Inventory decrease
10,000
Accounts payable increase
Income tax payable increase
Accounts receivable increase
Net cash provided by operating activities
108) Sagaworth Inc. reported the following information:
2019 Income Statement:
Net loss
$380,000
Depreciation expense
150,000
Amortization expense
25,000
Balance Sheet:
2019
2018
Accounts receivable
$200,000
$230,000
Inventory
140,000
160,000
Prepaid expenses
40,000
30,000
Accounts payable
190,000
180,000
Accrued liabilities
50,000
45,000
Taxes payable
10,000
20,000
Prepare the operating activities section of the statement of cash flows for the year ended
December 31, 2019 using the indirect method.
Cash flows from operating activities:
Net loss
Depreciation expense
Amortization expense
Decrease in accounts receivable
Decrease in inventory
Increase in prepaid expenses
Increase in accounts payable
Increase in accrued liabilities
Decrease in taxes payable
Net cash used in operating activities
($160,000)
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109) Below is the 2019 income statement for the Critters Corporation.
Critters Corporation
Income Statement
For the Year Ended December 31, 2019
Net sales
$100,000
Cost of goods sold
(40,000)
Gross profit on sales
$60,000
Various operating expenses
$25,000
Depreciation expense
5,000
Interest expense
2,000
Income tax expense
4,000
(36,000)
Net income
$24,000
Accounts receivable increased by $8,000.
Merchandise inventory increased by $4,000.
Accounts payable increased by $6,000.
Prepaid expenses decreased by $2,000.
Accrued liabilities decreased by $5,000.
Interest payable increased by $1,000.
Prepare the operating activities section of the statement of cash flows using the indirect method
for the year ended December 31, 2019.
110) The following information was reported from the statement of cash flows for Landlover’s
Restaurants for the years 2017 through 2019 (in millions of dollars):
2019
2018
2017
Net income
$45
$42
$27
Cash provided/(used) by operations
122
112
89
Cash provided/(used) by investments
(190)
(275)
(105)
Cash provided/(used) by financing
90
146
21
A. Calculate the quality of income ratio for the years 2017 through 2019. Round your answers to
two decimals
places.
B. Interpret the quality of income ratio for Landlover’s for the three-year period.
111) During the year ended December 31, 2019, Blythe Company paid cash of $2.2 million to
purchase stock in another company, $1.0 million to purchase its common stock for treasury
shares, $.5 million to buy short-term investments, and $3.4 million to purchase new equipment.
Blythe also sold used equipment for cash of $.8 million when its book value was $.6 million.
A. Prepare the investing activities section of Blythe’s cash flow statement for the year ended
December 31, 2019.
B. Is the net cash flow for investing activities a net cash inflow, or a net cash outflow? Briefly
describe the reason for your answer.
112) The following information was available from the financial
statements of Collateral, Inc. for the years 2019 and 2018 (in millions of dollars):
2019
2018
Cash flow from operating activities
$5,968
$5,456
Cash paid for purchases of property, plant, and equipment
755
812
Property, plant, and equipment, net
6,091
6,097
Dividends paid
300
300
A. Calculate the capita
acquisitions ratio for each of the two years. Round your answers to two decimals
places.
B. Calculate the free cash flow for each of the two years.
C. Comment on the sufficiency of the capita
acquisitions ratio and free cash flow for the two years and implications for future corporate
strategy.