Statement of Cash Flows
23 – 21
63. Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2021
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, 2021
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, 2021 960,000
Cash, December 31, 2021 $1,368,000
Total assets on the balance sheet at December 31, 2021 are $6,648,000. Accumulated
depreciation on the equipment sold was $336,000.
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.
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 22
64. Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2021
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, 2021
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, 2021 960,000
Cash, December 31, 2021 $1,368,000
Total assets on the balance sheet at December 31, 2021 are $6,648,000. Accumulated
depreciation on the equipment sold was $336,000.
The book value of the buildings and equipment at December 31, 2021 was
a. $3,048,000.
b. $3,120,000.
c. $4,272,000.
d. $3,528,000.
Statement of Cash Flows
23 – 23
65. Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2021
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, 2021
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, 2021 960,000
Cash, December 31, 2021 $1,368,000
Total assets on the balance sheet at December 31, 2021 are $6,648,000. Accumulated
depreciation on the equipment sold was $336,000.
The accounts payable at December 31, 2021 were
a. $264,000.
b. $648,000.
c. $192,000.
d. $888,000.
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 24
66. Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2021
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, 2021
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, 2021 960,000
Cash, December 31, 2021 $1,368,000
Total assets on the balance sheet at December 31, 2021 are $6,648,000. Accumulated
depreciation on the equipment sold was $336,000.
The balance in the Retained Earnings account at December 31, 2021 was
a. $1,080,000.
b. $2,640,000.
c. $2,280,000.
d. $3,000,000.
Statement of Cash Flows
23 – 25
67. Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2021
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, 2021
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, 2021 960,000
Cash, December 31, 2021 $1,368,000
Total assets on the balance sheet at December 31, 2021 are $6,648,000. Accumulated
depreciation on the equipment sold was $336,000.
Capital stock (plus any additional paid-in capital) at December 31, 2021 was
a. $2,400,000.
b. $2,760,000.
c. $1,560,000.
d. $3,720,000.
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 26
68. The balance in retained earnings at December 31, 2020 was $1,440,000 and at
December 31, 2021 was $1,164,000. Net income for 2021 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.
The amount of the cash dividend was
a. $496,000.
b. $556,000.
c. $776,000.
d. $1,276,000.
69. The balance in retained earnings at December 31, 2020 was $1,440,000 and at
December 31, 2021 was $1,164,000. Net income for 2021 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.
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 2021 financial statements of Dunlop
Corporation:
Bonds payable, January 1, 2021 $ 800,000
Bonds payable, December 31, 2021 4,800,000
During 2021
• 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, 2021, 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 2021 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
Statement of Cash Flows
23 – 27
Lindsay’s net cash provided by operating activities for 2021 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 2021 for Spencer Corporation was $450,000.
The following items are reported on the financial statements for 2021:
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 2021 was
a. $462,000.
b. $446,000.
c. $414,000.
d. $406,000.
73. During 2021, 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 2021?
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 12/31/21. 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.
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 28
75. In preparing Titan Inc.’s statement of cash flows for the year ended December 31, 2021,
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, 2021,
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, 2021
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 2021:
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, 2021?
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, 2021
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 2021:
Statement of Cash Flows
23 – 29
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, 2021?
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, 2021.
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 2021:
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, 2021?
a. $2,520,000
b. $2,540,000
c. $3,800,000
d. $ 450,000
80. During 2021, 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 2021?
a. $316,000.
b. $302,500.
c. $212,500.
d. $203,500.
81. Cashman Company reported net income of $530,000 for the year ended 12/31/21.
Included in the computation of net income were: depreciation expense, $90,000;
amortization of a patent, $48,000; income from an investment in common stock of Linda
Inc., accounted for under the equity method, $72,000; and amortization of a bond
premium, $18,000. Cashman also paid a $120,000 dividend during the year. The net cash
provided by operating activities would be reported at
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 30
a. $578,000.
b. $482,000.
c. $458,000.
d. $362,000.
82. Net cash flow from operating activities for 2021 for Graham Corporation was $495,000.
The following items are reported on the financial statements for 2021:
Depreciation and amortization $ 30,000
Cash dividends paid on common stock 18,000
Increase in accounts receivable 36,000
Based only on the information above, Graham’s net income for 2021 was:
a. $429,000.
b. $441,000.
c. $489,000.
d. $501,000.
83. Napier Co. provided the following information on selected transactions during 2021:
Purchase of land by issuing bonds $1,000,000
Proceeds from issuing bonds 3,000,000
Purchases of inventory 3,800,000
Purchases of treasury stock 600,000
Loans made to affiliated corporations 1,400,000
Dividends paid to preferred stockholders 400,000
Proceeds from issuing preferred stock 1,600,000
Proceeds from sale of equipment 300,000
The net cash provided (used) by investing activities during 2021 is
a. $300,000.
b. $(1,100,000).
c. $(2,100,000).
d. $(4,500,000).
84. Napier Co. provided the following information on selected transactions during 2021:
Purchase of land by issuing bonds $1,000,000
Proceeds from issuing bonds 3,000,000
Purchases of inventory 3,800,000
Purchases of treasury stock 600,000
Loans made to affiliated corporations 1,400,000
Dividends paid to preferred stockholders 400,000
Proceeds from issuing preferred stock 1,600,000
Proceeds from sale of equipment 300,000
The net cash provided by financing activities during 2021 is
Statement of Cash Flows
23 – 31
a. $3,200,000.
b. $3,600,000.
c. $4,200,000.
d. $4,600,000.
85. The balance sheet data of Kohler Company at the end of 2021 and 2020 follow:
2021 2020
Cash $ 100,000 $ 140,000
Accounts receivable (net) 240,000 180,000
Inventory 280,000 180,000
Prepaid expenses 40,000 100,000
Buildings and equipment 360,000 300,000
Accumulated depreciation—buildings and equipment (72,000) (32,000)
Land 360,000 160,000
Totals $1,308,000 $1,028,000
Accounts payable $272,000 $220,000
Accrued expenses 48,000 72,000
Notes payable—bank, long–term 160,000
Mortgage payable 120,000
Common stock, $10 par 836,000 636,000
Retained earnings (deficit) 32,000 (60,000)
$1,308,000 $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year;
all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book
value of the equipment was $16,000 and the loss was reported as an ordinary item in net income.
Cash dividends of $30,000 were charged to retained earnings and paid during the year; the
transfer of net income to retained earnings was the only other entry in the Retained Earnings
account. In the statement of cash flows for the year ended December 31, 2021, for Kohler
Company:
The net cash provided by operating activities was
a. $94,000.
b. $122,000.
c. $102,000.
d. $86,000.
86. The balance sheet data of Kohler Company at the end of 2021 and 2020 follow:
2021 2020
Cash $ 100,000 $ 140,000
Accounts receivable (net) 240,000 180,000
Inventory 280,000 180,000
Prepaid expenses 40,000 100,000
Buildings and equipment 360,000 300,000
Accumulated depreciation—buildings and equipment (72,000) (32,000)
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 32
Land 360,000 160,000
Totals $1,308,000 $1,028,000
Accounts payable $272,000 $220,000
Accrued expenses 48,000 72,000
Notes payable—bank, long–term 160,000
Mortgage payable 120,000
Common stock, $10 par 836,000 636,000
Retained earnings (deficit) 32,000 (60,000)
$1,308,000 $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year;
all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book
value of the equipment was $16,000 and the loss was reported as an ordinary item in net income.
Cash dividends of $30,000 were charged to retained earnings and paid during the year; the
transfer of net income to retained earnings was the only other entry in the Retained Earnings
account. In the statement of cash flows for the year ended December 31, 2021, for Kohler
Company:
The net cash provided (used) by investing activities was
a. $52,000.
b. $(80,000).
c. $(272,000).
d. $(72,000).
87. The balance sheet data of Kohler Company at the end of 2021 and 2020 follow:
2021 2020
Cash $ 100,000 $ 140,000
Accounts receivable (net) 240,000 180,000
Inventory 280,000 180,000
Prepaid expenses 40,000 100,000
Buildings and equipment 360,000 300,000
Accumulated depreciation—buildings and equipment (72,000) (32,000)
Land 360,000 160,000
Totals $1,308,000 $1,028,000
Accounts payable $272,000 $220,000
Accrued expenses 48,000 72,000
Notes payable—bank, long-term 160,000
Mortgage payable 120,000
Common stock, $10 par 836,000 636,000
Retained earnings (deficit) 32,000 (60,000)
$1,308,000 $1,028,000
Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year;
all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book
value of the equipment was $16,000 and the loss was reported as an ordinary item in net income.
Cash dividends of $30,000 were charged to retained earnings and paid during the year; the
transfer of net income to retained earnings was the only other entry in the Retained Earnings
account. In the statement of cash flows for the year ended December 31, 2021, for Kohler
Company:
Statement of Cash Flows
23 – 33
The net cash provided (used) by financing activities was
a. $ -0-.
b. $(30,000).
c. $(70,000).
d. $120,000.
88. The following information on selected cash transactions for 2021 has been provided by
Mancuso Company:
Proceeds from sale of land $315,000
Proceeds from long-term borrowings 600,000
Purchases of plant assets 216,000
Purchases of inventories 1,020,000
Proceeds from sale of Mancuso common stock 360,000
What is the cash provided (used) by investing activities for the year ended December 31,
2021, as a result of the above information?
a. $99,000
b. $384,000.
c. $315,000.
d. $1,275,000.
89. Selected information from Dinkel Company’s 2021 accounting records is as follows:
Proceeds from issuance of common stock $ 800,000
Proceeds from issuance of bonds 2,400,000
Cash dividends on common stock paid 290,000
Cash dividends on preferred stock paid 120,000
Purchases of treasury stock 240,000
Sale of stock to officers and employees not included above 200,000
Dinkel‘s statement of cash flows for the year ended December 31, 2021, would show net
cash provided (used) by financing activities of
a. $120,000.
b. $(470,000).
c. $290,000.
d. $2,750,000.
90. Donnegan Company reported operating expenses of $375,000 for 2021. The following
data were extracted from the company’s financial records:
12/31/20 12/31/21
Prepaid Expenses $ 60,000 $69,000
Accrued Expenses 210,000 255,000
On a statement of cash flows for 2021, using the direct method, cash payments for
operating expenses should be
a. $429,000.
b. $411,000.
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 34
c. $339,000.
d. $321,000.
91. The following information was taken from the 2021 financial statements of Jenny Gardner
Corporation:
Inventory, January 1, 2021 $ 180,000
Inventory, December 31, 2021 240,000
Accounts payable, January 1, 2021 150,000
Accounts payable, December 31, 2021 240,000
Sales revenue 1,200,000
Cost of goods sold 800,000
If the direct method is used in the 2021 statement of cash flows, what amount should
Jenny Gardner report as cash payments to suppliers?
a. $770,000
b. $830,000
c. $890,000
d. $950,000
92. Alex Company prepares its statement of cash flows using the direct method for operating
activities. For the year ended December 31, 2021, Alex Company reports the following
activity:
Sales on account $2,100,000
Cash sales 1,110,000
Decrease in accounts receivable 915,000
Increase in accounts payable 108,000
Increase in inventory 72,000
Cost of goods sold 1,575,000
What is the amount of cash collections from customers reported by Alex Company for the
year ended December 31, 2021?
a. $3,210,000
b. $3,015,000
c. $4,125,000
d. $2,295,000
93. Alex Company prepares its statement of cash flows using the direct method for operating
activities. For the year ended December 31, 2021, Alex Company reports the following
activity:
Sales on account $2,100,000
Cash sales 1,110,000
Decrease in accounts receivable 915,000
Increase in accounts payable 108,000
Increase in inventory 72,000
Cost of goods sold 1,575,000
What is the amount of cash payments to suppliers reported by Alex Company for the year
ended December 31, 2021?
Statement of Cash Flows
23 – 35
a. $1,539,000
b. $1,611,000
c. $1,755,000
d. $1,395,000
94. Putnam, Inc.
Comparative Balance Sheets
December 31,
2022 2021
Assets:
Current Assets:
Cash $ 1,380,000 $1,080,000
Accounts Receivable (net) 3,120,000 2,160,000
Inventory 3,900,000 2,520,000
Prepaid Expenses 702,000 630,000
Total Current Assets 9,102,000 6,390,000
Long-Term Investments 450,000
Plant Assets:
Property, Plant & Equipment 4,380,000 2,880,000
Accumulated Depreciation (900,000) (540,000)
Total Plant Assets 3,480,000 2,340,000
Total Assets $13,032,000 $8,730,000
Equities:
Current Liabilities:
Accounts Payable $ 2,550,000 $2,190,000
Accrued Expenses 618,000 564,000
Dividends Payable 402,000
Total Current Liabilities 3,570,000 2,754,000
Long-Term Notes Payable 1,650,000
Stockholders’ Equity:
Common Stock 6,000,000 4,800,000
Retained Earnings 1,812,000 1,176,000
Total Equities $13,032,000 $8,730,000
Putnam, Inc.
Comparative Income Statements
December 31,
2022 2021
Net Credit Sales $14,040,000 $7,506,000
Cost of Goods Sold 7,830,000 3,762,000
Gross Profit 6,210,000 3,744,000
Operating Expenses (including Income Tax) 5,172,000 2,748,000
Net Income $1,038,000 $ 996,000
Additional Information:
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 36
a. Accounts receivable and accounts payable relate to merchandise held for sale in the
normal course of business. The allowance for bad debts was the same at the end of
2022 and 2021, and no receivables were charged against the allowance. Accounts
payable are recorded net of any discount and are always paid within the discount
period.
b. The proceeds from the note payable were used to finance the acquisition of property,
plant, and equipment. Capital stock was sold to provide additional working capital.
What amount of cash was collected from 2022 accounts receivable?
a. $15,000,000.
b. $14,040,000.
c. $13,080,000.
d. $6,540,000.
95. Putnam, Inc.
Comparative Balance Sheets
December 31,
2022 2021
Assets:
Current Assets:
Cash $ 1,380,000 $1,080,000
Accounts Receivable (net) 3,120,000 2,160,000
Inventory 3,900,000 2,520,000
Prepaid Expenses 702,000 630,000
Total Current Assets 9,102,000 6,390,000
Long-Term Investments 450,000
Plant Assets:
Property, Plant & Equipment 4,380,000 2,880,000
Accumulated Depreciation (900,000) (540,000)
Total Plant Assets 3,480,000 2,340,000
Total Assets $13,032,000 $8,730,000
Equities:
Current Liabilities:
Accounts Payable $ 2,550,000 $2,190,000
Accrued Expenses 618,000 564,000
Dividends Payable 402,000
Total Current Liabilities 3,570,000 2,754,000
Long-Term Notes Payable 1,650,000
Stockholders’ Equity:
Common Stock 6,000,000 4,800,000
Retained Earnings 1,812,000 1,176,000
Total Equities $13,032,000 $8,730,000
Statement of Cash Flows
23 – 37
Putnam, Inc.
Comparative Income Statements
December 31,
2022 2021
Net Credit Sales $14,040,000 $7,506,000
Cost of Goods Sold 7,830,000 3,762,000
Gross Profit 6,210,000 3,744,000
Operating Expenses (including Income Tax) 5,172,000 2,748,000
Net Income $1,038,000 $ 996,000
Additional Information:
a. Accounts receivable and accounts payable relate to merchandise held for sale in the
normal course of business. The allowance for bad debts was the same at the end of
2022 and 2021, and no receivables were charged against the allowance. Accounts
payable are recorded net of any discount and are always paid within the discount
period.
b. The proceeds from the note payable were used to finance the acquisition of property,
plant, and equipment. Capital stock was sold to provide additional working capital.
What amount of cash was paid on accounts payable to suppliers during 2022?
a. $9,210,000.
b. $8,850,000.
c. $8,190,000.
d. $7,470,000.
96. Putnam, Inc.
Comparative Balance Sheets
December 31,
2022 2021
Assets:
Current Assets:
Cash $ 1,380,000 $1,080,000
Accounts Receivable (net) 3,120,000 2,160,000
Inventory 3,900,000 2,520,000
Prepaid Expenses 702,000 630,000
Total Current Assets 9,102,000 6,390,000
Long-Term Investments 450,000
Plant Assets:
Property, Plant & Equipment 4,380,000 2,880,000
Accumulated Depreciation (900,000) (540,000)
Total Plant Assets 3,480,000 2,340,000
Total Assets $13,032,000 $8,730,000
Equities:
Current Liabilities:
Accounts Payable $ 2,550,000 $2,190,000
Accrued Expenses 618,000 564,000
Dividends Payable 402,000
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 38
Total Current Liabilities 3,570,000 2,754,000
Long-Term Notes Payable 1,650,000
Stockholders’ Equity:
Common Stock 6,000,000 4,800,000
Retained Earnings 1,812,000 1,176,000
Total Equities $13,032,000 $8,730,000
Putnam, Inc.
Comparative Income Statements
December 31,
2022 2021
Net Credit Sales $14,040,000 $7,506,000
Cost of Goods Sold 7,830,000 3,762,000
Gross Profit 6,210,000 3,744,000
Operating Expenses (including Income Tax) 5,172,000 2,748,000
Net Income $1,038,000 $ 996,000
Additional Information:
a. Accounts receivable and accounts payable relate to merchandise held for sale in the
normal course of business. The allowance for bad debts was the same at the end of
2022 and 2021, and no receivables were charged against the allowance. Accounts
payable are recorded net of any discount and are always paid within the discount
period.
b. The proceeds from the note payable were used to finance the acquisition of property,
plant, and equipment. Capital stock was sold to provide additional working capital.
The amount to be shown on the cash flow statement as net cash provided by investing
activities would total what amount?
a. $450,000.
b. $1,500,000.
c. $1,590,000.
d. $1,950,000.
97. Putnam, Inc.
Comparative Balance Sheets
December 31,
2022 2021
Assets:
Current Assets:
Cash $ 1,380,000 $1,080,000
Accounts Receivable (net) 3,120,000 2,160,000
Inventory 3,900,000 2,520,000
Prepaid Expenses 702,000 630,000
Total Current Assets 9,102,000 6,390,000
Long-Term Investments 450,000
Plant Assets:
Property, Plant & Equipment 4,380,000 2,880,000
Accumulated Depreciation (900,000) (540,000)
Statement of Cash Flows
23 – 39
Total Plant Assets 3,480,000 2,340,000
Total Assets $13,032,000 $8,730,000
Equities:
Current Liabilities:
Accounts Payable $ 2,550,000 $2,190,000
Accrued Expenses 618,000 564,000
Dividends Payable 402,000
Total Current Liabilities 3,570,000 2,754,000
Long-Term Notes Payable 1,650,000
Stockholders’ Equity:
Common Stock 6,000,000 4,800,000
Retained Earnings 1,812,000 1,176,000
Total Equities $13,032,000 $8,730,000
Putnam, Inc.
Comparative Income Statements
December 31,
2022 2021
Net Credit Sales $14,040,000 $7,506,000
Cost of Goods Sold 7,830,000 3,762,000
Gross Profit 6,210,000 3,744,000
Operating Expenses (including Income Tax) 5,172,000 2,748,000
Net Income $1,038,000 $ 996,000
Additional Information:
a. Accounts receivable and accounts payable relate to merchandise held for sale in the
normal course of business. The allowance for bad debts was the same at the end of
2022 and 2021, and no receivables were charged against the allowance. Accounts
payable are recorded net of any discount and are always paid within the discount
period.
b. The proceeds from the note payable were used to finance the acquisition of property,
plant, and equipment. Capital stock was sold to provide additional working capital.
The amount to be shown on the cash flow statement as net cash provided by financing
activities would total what amount?
a. $2,850,000.
b. $1,650,000.
c. $1,200,000.
d. $816,000.
98. Fleming Company provided the following information on selected transactions during
2021:
Dividends paid to preferred stockholders $ 500,000
Loans made to affiliated corporations 1,400,000
Proceeds from issuing bonds 1,600,000
Proceeds from issuing preferred stock 2,100,000
Proceeds from sale of equipment 800,000
Purchases of inventories 2,400,000
Purchase of land by issuing bonds 600,000
Test Bank for Intermediate Accounting, Seventeenth Edition
23 – 40
Purchases of treasury stock 1,200,000
The net cash provided (used) by investing activities during 2021 is
a. $(1,200,000).
b. $(600,000).
c. $200,000.
d. $800,000.
99. Fleming Company provided the following information on selected transactions during
2021:
Dividends paid to preferred stockholders $ 500,000
Loans made to affiliated corporations 1,400,000
Proceeds from issuing bonds 1,600,000
Proceeds from issuing preferred stock 2,100,000
Proceeds from sale of equipment 800,000
Purchases of inventories 2,400,000
Purchase of land by issuing bonds 600,000
Purchases of treasury stock 1,200,000
The net cash provided (used) by financing activities during 2021 is
a. $(3,300,000).
b. $1,110,000.
c. $2,600,000.
d. $2,000,000.
100. The net cash provided by operating activities in Sosa Company’s statement of cash flows
for 2021 was $310,000. For 2021, depreciation on plant assets was $90,000, amortization
of patent was $16,000, and cash dividends paid on common stock was $108,000. Based
only on the information given above, Sosa’s net income for 2021 was
a. $310,000.
b. $204,000.
c. $16,000.
d. $312,000.
101. During 2021, Oldham Corporation, which uses the allowance method of accounting for
doubtful accounts, recorded a provision for bad debt expense of $45,000 and in addition it
wrote off, as uncollectible, accounts receivable of $10,000. As a result of these
transactions, net cash flows from operating activities would be calculated (indirect
method) by adjusting net income with a
a. $45,000 increase.
b. $10,000 increase.
c. $35,000 increase.
d. $35,000 decrease.