Chapter 13 – Statement of Cash Flows
80. Lab Industries, Inc., issued $50,000 of bonds, paid cash dividends of $8,000, sold long-
term investments for $12,000, received $5,000 of dividend revenue, purchased treasury stock
for $15,000, and purchased new equipment for $19,000. What is the net cash flow from
financing activities?
81. Non-cash financing and investing activities
Chapter 13 – Statement of Cash Flows
82. A company acquired some land (independently appraised at $12,000) and paid for it by
issuing 1,000 shares of its common stock (par $10 per share; no market price was quoted).
How should this be reported on the statement of cash flows?
83. Slipper Company sold a productive asset, a machine, for cash. It originally cost $20,000.
The accumulated depreciation at the date of disposal was $15,000. A gain on the disposal of
$2,000 was reported. What was the asset’s selling price?
Chapter 13 – Statement of Cash Flows
84. Halbur Company reported the following for its recent year of operation:
No new equipment was purchased during the year. What was the selling price of the
equipment?
Chapter 13 – Statement of Cash Flows
85. A Company reported net income of $200,000 during 2010. The company reported
depreciation expense of $35,000, patent amortization of $10,000 and a $5,000 loss on the sale
of equipment. Based on the information provided, how much is the company’s cash flow from
operating activities?
86. Which of the following statements does not correctly describe an adjustment to net
income when determining cash flows from operating activities when using the indirect
method?
Chapter 13 – Statement of Cash Flows
87. The following information has been provided to you by RKJ Company:
What is the net cash flow from operating activities?
Chapter 13 – Statement of Cash Flows
88. Which of the following transactions would be reported within the investing section of the
cash flow statement?
89. Which of the following transactions would not be reported within the investing section of
the cash flow statement?
Chapter 13 – Statement of Cash Flows
90. Which of the following statements does not correctly describe an adjustment to net
income when determining cash flows from operating activities when using the indirect
method?
Chapter 13 – Statement of Cash Flows
91. Atkins Corporation has provided the following information for the year ended December
31, 2010:
• The equipment account balance increased $200,000.
• The equipment accumulated depreciation account increased $35,000.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense on the equipment recorded during the year was $65,000.
Which of the following statements is correct with respect to cash flow from operating
activities determination?
Chapter 13 – Statement of Cash Flows
92. Atkins Corporation has provided the following information for the year ended December
31, 2010:
• The equipment account balance increased $200,000.
• The equipment accumulated depreciation account increased $35,000.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense on the equipment recorded during the year was $65,000.
Which of the following statements is correct with respect to cash flow from investing
activities determination? Assume that the equipment purchase and sale resulted in cash flows.
Chapter 13 – Statement of Cash Flows
93. Atkins Corporation has provided the following information for the year ended December
31, 2010:
• The equipment account balance increased $200,000.
• The equipment accumulated depreciation account increased $35,000.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense on the equipment recorded during the year was $65,000.
Which of the following statements is incorrect with respect to preparation of the statement of
cash flows? Assume that the equipment purchase and sale resulted in cash flows.
Chapter 13 – Statement of Cash Flows
94. Atkins Corporation has provided the following information for the year ended December
31, 2010:
• The equipment account balance increased $200,000.
• The equipment accumulated depreciation account increased $35,000.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense on the equipment recorded during the year was $65,000.
How much was the investing activities cash inflow from the sale of the equipment? Assume
that the equipment purchase and sale resulted in cash flows.
Chapter 13 – Statement of Cash Flows
95. A company reported an increase in accounts payable and a decrease in inventory during
2010. Which of the following statements is correct?
Chapter 13 – Statement of Cash Flows
96. A company reported an increase in accounts receivable and an increase in unearned
revenues during 2010. Which of the following statements is correct?
Chapter 13 – Statement of Cash Flows
97. A company reported an increase in prepaid rent and an increase in accrued liabilities
during 2010. Which of the following statements is correct?
Chapter 13 – Statement of Cash Flows
98. A company reported an increase in accrued revenues and a decrease in unearned revenues
during 2010. Which of the following statements is correct?
99. Which of the following transactions increases the quality of income ratio?
Chapter 13 – Statement of Cash Flows
100. Which of the following transactions decreases the quality of income ratio?
Chapter 13 – Statement of Cash Flows
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101. For each of the following items, indicate whether it would appear in the operating,
investing, or financing activities section of the statement of cash flows or is not reported in
one of these three categories. Assume the indirect method is used for reporting.
Chapter 13 – Statement of Cash Flows
Chapter 13 – Statement of Cash Flows
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102. Use the following information to prepare a statement of cash flows for Stable Equipment
Company for the year ended December 31, 2010:
Net income for the year 2010 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 $10,000 and the ending balance was $20,000.
Chapter 13 – Statement of Cash Flows