27) Parmesan Company uses the direct method for its statement of cash flow. It reports the following information
regarding the year 2013:
From the income statement:
Revenues: $240,000
Cost of goods sold: $190,000
Operating expenses: $25,000
From the balance sheet: Beginning balance Ending balance
Accounts receivable: $12,000 $15,000
Inventory: $22,000 $18,000
Accounts payable: $7,000 $12,000
Accrued liabilities: $3,000 $1,200
On the statement of cash flows, what amount will be shown for payments to suppliers for operating expenses?
(Please assume that accounts payable are for purchases of inventory only.)
A) $26,800
B) $23,200
C) $30,000
D) $18,600
28) Parmesan Company uses the direct method for its statement of cash flow. It reports the following information
regarding the year 2013:
From the income statement:
Revenues: $240,000
Cost of goods sold: $190,000
Operating expenses: $25,000
Net income $25,000
From the balance sheet: Beginning balance Ending balance
Accounts receivable: $12,000 $15,000
Inventory: $22,000 $18,000
Accounts payable: $7,000 $12,000
Accrued liabilities: $3,000 $1,200
Assume that there were no sales of long-term assets, no interest revenue, and no expenses other than the expenses
shown above. Please also assume that accounts payable are for purchases of inventory only.
On the statement of cash flows, what amount will be shown for cash flow from operating activities?
A) $26,800
B) $29,200
C) $23,000
D) $18,600
63
29) Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following
financial statement information for the year 2014:
Please prepare the operating activities section of the statement of cash flows, using the direct method. Please use the
following format:
Operating activities:
Receipts
Collections from customers
Interest received
Total cash receipts
Payments
To suppliers
To employees
For interest
For income tax
Total cash payments
Net cash from operating activities
Operating activities:
Receipts
Collections from customers
Interest received
Total cash receipts
Payments
To suppliers
To employees
For interest
For income tax
Total cash payments
Net cash from operating activities
65
30) Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following
financial statement information for the year 2014:
Please prepare the operating activities section of the statement of cash flows, using the direct method. Please use the
following format:
Operating activities:
Net cash from operating activities
Operating activities:
Receipts
Payments
Net cash from operating activities
67
1) Avatar Company uses the direct method to prepare its statement of cash flows. Please refer to the following
financial statement information for the year 2014:
68
Additional information provided:
• Equipment costing $52,000 was purchased for cash.
• Equipment with a net asset value of $10,000 was sold for $14,000
• Depreciation expense of $12,000 was recorded during the year.
• During 2014, the company repaid $40,000 of long–term notes payable.
• During 2014, the company borrowed $34,000 on a new note payable
• There were no stock retirements during the year.
• There were no sales of treasury stock during the year.
Please prepare a complete statement of cash flows using the direct method, in the following format:
Operating activities:
Receipts
Collections from customers
Interest received
Total cash receipts
Payments
To suppliers
To employees
For interest
For income tax
Total cash payments
Net cash from operating activities
Investing activities:
Proceeds from sale of assets
Acquisition of assets
Net cash from investing activities
Financing activities:
Issuance of stock
Purchase of treasury stock
Borrowing on notes payable
Repayments of notes payable
Payment of dividends
Net cash from financing activities
Net change in cash
Cash balance, December 31, 2013
Cash balance, December 31, 2014
32) The income statement and a partial balance sheet for Jefferson Company is presented below. Prepare the
operating activities section of the statement of cash flows using the direct method.
Jefferson Company
Income Statement
For the Year Ended December 31, 2013
Sales
$500,000
Cost of goods sold
390,000
Gross profit
$110,000
Operating expenses:
Salaries
$70,000
Depreciation expense
20,000
Miscellaneous
10,000
100,000
Net income
$ 10,000
Jefferson Company
Partial Balance Sheet
December 31, 2013
2013
2012
Cash
$ 80,000
$ 65,000
Accounts receivable (net)
57,000
50,000
Inventories
102,000
86,000
Accrued liabilities
4,500
5,000
Accounts payable (inventory)
58,000
51,000
Salaries payable
7,500
6,000
Cash flow from operating activities:
Receipts:
Collections from customers
Payments:
To merchandise suppliers
To employees
To other suppliers
Net cash provided by operating activities
33) Parmesan Company uses the direct method for its statement of cash flow. It reports the following information
regarding the year 2013:
From the income statement:
Revenues: $240,000
Cost of goods sold: $190,000
Operating expenses; $25,000
Net income $25,000
From the balance sheet: Beginning balance Ending balance
Accounts receivable: $12,000 $15,000
Inventory: $22,000 $18,000
Accounts payable: $7,000 $12,000
Accrued liabilities: $3,000 $1,200
Assume that there were no sales of long-term assets, no interest revenue, and no expenses other than the expenses
shown above. Please also assume that accounts payable are for purchases of inventory only.
Please prepare the operating activities section of the statement of cash flows using the format below:
Operating activities:
Receipts
Collections from customers
Total cash receipts
Payments
To suppliers
Total cash payments
Net cash from operating activities
Operating activities:
Receipts
Collections from customers
Total cash receipts
Payments
To suppliers
Total cash payments
Net cash from operating activities
72
Learning Objective 14-7
1) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown
below, please enter the adjustments needed to record net income for the year of 2014 of $49,000.
2) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown
below, please enter the adjustments needed to record depreciation expense for the year of 2014 of $12,000.