161.
Alpha Computers reports net income of $44 million. Included in that number are
depreciation expense of $7 million and a loss on the sale of land of $2 million. Records
reveal decreases in Accounts Receivable, Inventory, and Accounts Payable of $4 million,
$3 million, and $2 million, respectively. Calculate Alpha Computers’ net cash flows from
operating activities using the indirect method.
11-102
162.
Portions of the financial statements for Horizon Telecom are provided below.
Revenues
$610,000
Expenses:
Cost of goods sold
370,000
Operating expenses
120,000
Depreciation expense
32,000
Income tax expense
44,000
Total expenses
566,000
Net Income
$44,000
Increase in accounts receivable
$6,000
Increase in inventory
13,000
Decrease in prepaid rent
9,000
Increase in operating expenses payable
5,000
Decrease in accounts payable
8,000
Increase in income tax payable
20,000
Prepare the operating activities section of the statement of cash flows for Horizon
Telecom using the
indirect
method.
Net income
$44,000
11-104
163.
Nathan Herrmann has completed the basic format to be used in preparing the statement
of cash flows (indirect method) for CEO Consultants.
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net
cash flows from operating activities:
Net cash flows from operating activities
Cash Flows from Investing Activities
Net cash flows from investing activities
Cash Flows from Financing Activities
Net cash flows from financing activities
Net increase (decrease) in cash
(50,000)
Cash at the beginning of the period
95,000
Cash at the end of the period
$45,000
Listed below in random order are line items to be included in the statement of cash flows.
Purchase of equipment
$220,000
Increase in inventory
30,000
Increase in prepaid rent
10,000
Payment of dividends
40,000
Depreciation expense
20,000
Increase in accounts receivable
60,000
Increase in accounts payable
10,000
Loss on sale of land
7,000
Net income
70,000
Repayment of notes payable
50,000
Cash received from the sale of land
3,000
Issuance of common stock
250,000
Prepare the statement of cash flows for CEO Consultants using the indirect method.
11-106
164.
Mobile Video Systems sold land, investments, and issued their own common stock for $10
million, $15 million, and $20 million, respectively. Mobile Video also purchased treasury
stock, equipment, and a patent for $2 million, $4 million, and $6 million, respectively. What
amount should the company report as net cash flows from investing activities? What
amount should the company report as net cash flows from financing activities?
165.
Two competitors in the construction supply industry report the following selected financial
data:
Company A
Company B
Sales
$47,220
$66,176
Net income
1,783
2,620
Operating cash
flows
4,054
5,125
Total assets,
beginning
32,625
41,164
Total assets, ending
33,005
40,877
Calculate the cash return on assets, cash flow to sales ratio, and asset turnover ratio for
each company. Which company has the better cash flow to sales ratio and which company
has the better asset turnover ratio?
Company A
($32,625 + $33,005)/2
Company B
($41,164 + $40,877)/2
($ in millions)
÷
=
Cash Flow
166.
The balance sheet of Integrated Systems reports total assets of $890,000 and $950,000 at
the beginning and end of the year, respectively. Sales revenues are $1.6 million, net
income is $185,000, and net cash flows from operating activities are $155,000. Calculate
the cash return on assets, cash flow to sales, and asset turnover for Integrated Systems.
167.
The balance sheet of The Computer Doctor reports total assets of $160,000 and $220,000
at the beginning and end of the year, respectively. The cash return on assets for the year
is 10%. Calculate The Computer Doctor’s net cash flows from operating activities for the
year.
168.
Discount Computers’ accounts receivable increases during the year by $3 million. What is
the amount of cash received from customers during the reporting period if its sales are
$47 million?
169.
Laser Solutions’ inventory decreases during the year by $8 million and its accounts
payable to suppliers increases by $6 million during the same period. What is the amount of
cash paid to suppliers of merchandise during the reporting period if its cost of goods sold
is $81 million?
170.
Freedom Wireless reports operating expenses of $255,000. Operating expenses include
both rent expense and salaries expense. Prepaid rent decreases during the year by
$10,000 and salaries payable increases by $25,000. What is the cash paid for operating
expenses during the year?
171.
Wilson Electric reports income tax expense of $150,000. Income tax payable at the
beginning and end of the year are $20,000 and $25,000, respectively. What is the cash paid
for income taxes during the year?
11-112
172.
Portions of the financial statements for Horizon Telecom are provided below.
Horizon Telecom
Income Statement
For the Year Ended December 31, 2018
Revenues
$610,000
Expenses:
Cost of goods sold
391,000
Operating expenses
120,000
Depreciation expense
32,000
Income tax expense
44,000
Total expenses
566,000
Net Income
$44,000
Horizon Telecom
Selected Balance Sheet Data
December 31, 2018
Increase in accounts receivable
$6,000
Increase in inventory
13,000
Decrease in prepaid rent
9,000
Increase in operating expenses payable
5,000
Decrease in accounts payable
8,000
Increase in income tax payable
20,000
Prepare the operating activities section of the statement of cash flows for Horizon
Telecom using the
direct
method.
Cash received from customers
173.
Listed below are several transactions. For each transaction, indicate by letter whether the
cash effect of each transaction is reported in a statement of cash flows as an operating
(O), investing (I), financing (F), or noncash (NC) activity. Also, indicate whether the
transaction is a cash inflow (CI), cash outflow (CO), or no effect on cash (NE). The first
answer is provided as an example.
Type of
Activity
Cash
Inflow or
Outflow
Transaction
F
CI
1. Issuance of common stock
2. Issuance of bonds
3. Investment in bonds
4. Collection of a note receivable
5. Sale of inventory
6. Repayment of note payable
7. Payment of a cash dividend
8. Purchase of land for cash
9. Reissue of treasury stock
10. Collection of an account receivable
11. Issuance of a note payable
12. Payment of employee salaries
13. Sale of equipment for a note receivable
14. Payment of interest on bonds payable
15. Sale of a building
1. Issuance of common stock
2. Issuance of bonds
11-116
174.
Portions of the financial statements for Security Solutions are provided below.
Security Solutions
Income Statement
For the Year Ended December 31, 2018
Revenues
$960,000
Expenses:
Cost of goods sold
$650,000
Operating expenses
210,000
Depreciation expense
25,000
Income tax expense
20,000
Total expenses
905,000
Net Income
$55,000
Security Solutions
Selected Balance Sheet Data
December 31
Increase in accounts receivable
5,000
Decrease in inventory
10,000
Increase in prepaid rent
4,000
Decrease in salaries payable
6,000
Increase in accounts payable
8,000
Decrease in income tax payable
3,000
Required:
Prepare the operating activities section of the statement of cash flows for Security
Solutions using the
indirect
method.
11-118
175.
Amy Bourne completed the basic format to be used in preparing the statement of cash
flows (indirect method) for Alpha Technologies. All amounts are in thousands (000’s).
Alpha Technologies
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash
flows from operating activities:
Net cash flows from operating activities
Cash Flows from Investing Activities
Net cash flows from investing activities
Cash Flows from Financing Activities
Net cash flows from financing activities
Net increase (decrease) in cash
(40,000)
Cash at the beginning of the period
80,000
Cash at the end of the period
$40,000
Listed below in random order are line items to be included in the statement of cash flows.
Purchase of equipment
$220,000
Payment of dividends
40,000
Net income
80,000
Increase in inventory
30,000
Increase in prepaid rent
10,000
Repayment of notes payable
50,000
Cash received from the sale of land
3,000
Issuance of common stock
250,000
Increase in accounts payable
10,000
Loss on sale of land
7,000
Depreciation expense
20,000
Increase in accounts receivable
60,000
Required: