108. A company reported the following information:
Salaries payable, December 31, 2014
$20,000
Salaries payable, December 31, 2013
15,000
Salaries expense for 2014
80,000
How much cash was paid for salaries during 2014?
109. A company reported the following information:
Interest payable, December 31, 2014
$ 3,200
Interest payable, December 31, 2013
10,200
Interest expense for 2014
22,000
How much cash was paid for interest during 2014?
110. A company reported the following information:
Interest receivable, December 31, 2014
$ 8,000
Interest receivable, December 31, 2013
11,500
Interest revenue for 2014
16,000
How much cash was received for interest during 2014?
111. Metalcrafts Inc.
Selected information from the company’s financial records is presented below:
Equipment, December 31, 2013
$300,000
Equipment, December 31, 2014
400,000
Accumulated depreciation, December 31, 2013
80,000
Accumulated depreciation, December 31, 2014
60,000
During 2014, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the
sale of the equipment. This was the only equipment sale during the year.
Refer to Metalcrafts, Inc. What amount would be reported as the cash proceeds from the sale of equipment?
112. Metalcrafts Inc.
Selected information from the company’s financial records is presented below:
Equipment, December 31, 2013
$300,000
Equipment, December 31, 2014
400,000
Accumulated depreciation, December 31, 2013
80,000
Accumulated depreciation, December 31, 2014
60,000
During 2014, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the
sale of the equipment. This was the only equipment sale during the year.
Refer to Metalcrafts, Inc. What was depreciation expense for 2014?
113. Metalcrafts Inc.
Selected information from the company’s financial records is presented below:
Equipment, December 31, 2013
$300,000
Equipment, December 31, 2014
400,000
Accumulated depreciation, December 31, 2013
80,000
Accumulated depreciation, December 31, 2014
60,000
During 2014, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the
sale of the equipment. This was the only equipment sale during the year.
Refer to Metalcrafts, Inc. Assume that all purchases of equipment were paid with cash. How much cash was paid to purchase equipment during
2014?
114. Which of the following statements is false regarding how the cash flow effects of the changes in the
equipment and accumulated depreciation accounts would be reported on a statement of cash flows if the indirect
method is used to prepare the operating activities section?
115. Memorial Corporation
Information from the financial records is presented below:
Retained earnings, December 31, 2014
$400,000
Retained earnings, December 31, 2013
250,000
Dividends payable, December 31, 2014
20,000
Dividends payable, December 31, 2013
30,000
Net income for 2014
200,000
Refer to Memorial Corporation. Assume that there were no retained earnings transactions other than those dealing with dividends and net income.
Dividends declared during 2014 totaled:
116. Memorial Corporation
Information from the financial records is presented below:
Retained earnings, December 31, 2014
$400,000
Retained earnings, December 31, 2013
250,000
Dividends payable, December 31, 2014
20,000
Dividends payable, December 31, 2013
30,000
Net income for 2014
200,000
Refer to Memorial Corporation. How much cash was paid for dividends during 2014?
117. Medstar Ambulance Service
Information from the company’s financial records is presented below:
Notes payable, December 31, 2013
$1,000,000
Notes payable, December 31, 2014
1,200,000
Loss on Note retirement—2014
45,000
Interest expense on bonds—2014
75,000
At the end of 2014, the company issued notes at par value for $1,200,000 cash. The proceeds were used to retire the $1,000,000 note issue
outstanding at the end of 2013 (before their maturity date). All interest expense was paid in cash during 2014.
Refer to Medstar Ambulance Service. How much was paid to retire the $1,000,000 note issue during 2014?
118. Medstar Ambulance Service
Information from the company’s financial records is presented below:
Notes payable, December 31, 2013
$1,000,000
Notes payable, December 31, 2014
1,200,000
Loss on Note retirement—2014
45,000
Interest expense on bonds—2014
75,000
At the end of 2014, the company issued notes at par value for $1,200,000 cash. The proceeds were used to retire the $1,000,000 note issue
outstanding at the end of 2013 (before their maturity date). All interest expense was paid in cash during 2014.
Refer to Medstar Ambulance Service. The following statements describe how the company reported the cash flow effects of the items described
above on its 2014 statement of cash flows. The indirect method is used to prepare the operating activities section. Which of the following has been
reported incorrectly?
119. A company reported the following information:
Accounts payable, December 31, 2013
$ 60,000
Accounts payable, December 31, 2014
80,000
Inventory, December 31, 2013
45,000
Inventory, December 31, 2014
60,000
Cost of goods sold—2014
1,000,000
Assuming all merchandise purchases were on account, how much cash was paid to suppliers for merchandise purchases during 2014?
120. A company reported the following information:
2014
2013
Accounts receivable
$50,000
$ 65,000
Inventories
43,000
40,000
Accounts payable
29,000
39,000
Net income
100,000
Depreciation expense
11,000
If the indirect method is used to prepare the operating activities section of the statement of cash flows, what amount will be reported as net cash
inflow from operating activities for 2014?
121. Mercury Corporation reported the following information on its financial statements:
2014
2013
Accounts receivable
$150,000
$120,000
Prepaid expenses
9,000
10,000
Accounts payable
65,000
80,000
Salaries payable
12,000
5,000
Net income
200,000
Depreciation expense
14,000
Gain on sale of equipment
6,000
If the company uses the indirect method to prepare the operating activities section of the statement of cash flows, what amount will be reported as net
cash inflow from operating activities for 2014?
122. A company completed the following transactions involving investments during 2014.
Purchased money market funds for
$50,000
Sold available-for-sale securities (cost $60,000) for
$70,000
Purchased trading securities for
$55,000
The company uses the indirect method to prepare the operating activities section of the statement of cash flows. The following statements describe
how the company reported the cash flow effects of the above transactions. Which of the following has been reported incorrectly?
123. A company reported the following information in its 2014 annual report:
Cash flows from operating activities
$295,000
Additions to property, plant and equipment
110,000
Proceeds from disposals of property, plant and equipment
57,000
Total payments expected to retire long-term debt over the next 5 years
250,000
What is the cash flow adequacy ratio for 2014?
124. A company reported the following information in its annual report for 2014.
Cash flows from operating activities
$1,000,000
Additions to property, plant and equipment
450,000
Total payments expected to retire long-term debt over the next 5 years
500,000
Compute the cash flow adequacy ratio for 2014.
125. Which of the following measures can be used to evaluate a company’s ability to meet future debt
obligations after paying operating expenses, dividends and making capital expenditures?
126. When using the indirect method to determine operating cash flows, how is depreciation expense recorded
on the Statement of Cash Flows?
127. When using the indirect method to determine operating cash flows, how is the issuance of stock to retire a
long-term debt shown on a statement of cash flows?
128. When using the indirect method to determine operating cash flows, how is the purchase of equipment for
cash shown on the Statement of Cash Flows?
129. When using the indirect method to determine operating cash flows, how is the issuing of stock for cash
shown on the Statement of Cash Flows?
130. When using the indirect method to determine operating cash flows, how is the receipt of cash from the sale
of long-term investments treated on the statement of cash flows?
131. When using the indirect method to determine operating cash flows, how is an increase in accounts
receivable during the year shown on the Statement of Cash Flows?
132. When using the indirect method to determine operating cash flows, how would the retirement of bonds
payable at their maturity date be shown on the Statement of Cash Flows?
133. When using the indirect method to determine operating cash flows, how would the declaration and
payment of cash dividends be shown on the Statement of Cash Flows?
134. When using the indirect method to determine operating cash flows, how is the decrease in accounts
payable shown on the Statement of Cash Flows?
135. When using the direct method to determine operating cash flows, how is depreciation expense recorded on
the Statement of Cash Flows?
136. When using the direct method to determine operating cash flows, how is the purchase of equipment for
cash shown on the Statement of Cash Flows?
137. When using the direct method to determine operating cash flows, how is the retirement of bonds payable at
their maturity date shown on the Statement of Cash Flows?
138. When using the direct method to determine operating cash flows, how is the payment of a cash dividend
shown on the Statement of Cash Flows?
139. When using the direct method to determine operating cash flows, how is the collection of cash from
customers shown on the Statement of Cash Flows?
140. When using the direct method to determine operating cash flows, how is the issuance of stock for cash
shown on the Statement of Cash Flows?
141. When using the direct method to determine operating cash flows, how are salaries paid to employees
reported on the Statement of Cash Flows?
142. When using the direct method to determine operating cash flows, how is the purchase of equipment for
cash shown on the Statement of Cash Flows?
143. Maytag Corporation’s balance sheets for the last two years are provided below:
Balance Sheets
2013
2012
Cash
$ 82
$ 40
Accounts Receivable
180
150
Inventory
170
200
Equipment
200
140
Accum. Depreciation
(72)
(60)
Total Assets
$560
$470
Accounts Payable
$100
$ 80
L/T Notes Payable
100
50
Common Stock
250
250
Retained Earnings
110
90
Total Liabilities &
Stockholder Equity
$560
$470
The company’s income statement for 2013 is provided below:
Income Statement
2013
Sales
$345
Expenses:
Cost of Goods Sold
$120
Operating Expenses
58
Depreciation Expense
20
Interest Expense
2
200
Operating Income
145
Gain on Sale—Equipment*
5
Income before Taxes
150
Tax Expense
30
Net Income
$120
*The company sold equipment for $57 which had a cost of $60.
A) Prepare the company’s Statement of Cash flows for 2013. Use the direct method of computing cash flows from operating activities.
B) Prepare the Cash Flows from Operating Activities section of the cash flow statement using the indirect method.
A)
144. Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented below:
Balance Sheet Data
2014
2013
Cash
$235,000
246,000
Accounts receivable
$120,000
$150,000
Inventories
56,000
50,000
Accounts payable
38,000
70,000
Salaries payable
10,000
5,000
Equipment
110,000
70,000
Accumulated depreciation
28,000
32,000
Bonds payable
100,000
200,000
Common stock
300,000
200,000
Retained earnings
76,000
40,000
Income Statement Data
2014
Net sales
$920,000
Cost of goods sold
700,000
Operating expenses (excluding depreciation expense)
160,000
Net income (Includes depreciation expense and gain)
56,000
Gain on sale of equipment
4,000
Additional information:
1.
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 2014.
2.
Common stock was issued to retire bonds payable during 2014.
3.
The only items affecting retained earnings in 2014 were net income and dividends declared and paid.
Refer to Mary Kay Cosmetics. What amount of cash was collected from customers during 2014?
145. Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented below:
Balance Sheet Data
2014
2013
Cash
$235,000
246,000
Accounts receivable
$120,000
$150,000
Inventories
56,000
50,000
Accounts payable
38,000
70,000
Salaries payable
10,000
5,000
Equipment
110,000
70,000
Accumulated depreciation
28,000
32,000
Bonds payable
100,000
200,000
Common stock
300,000
200,000
Retained earnings
76,000
40,000
Income Statement Data
2014
Net sales
$920,000
Cost of goods sold
700,000
Operating expenses (excluding depreciation expense)
160,000
Net income (Includes depreciation expense and gain)
56,000
Gain on sale of equipment
4,000
Additional information:
1.
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 2014.
2.
Common stock was issued to retire bonds payable during 2014.
3.
The only items affecting retained earnings in 2014 were net income and dividends declared and paid.
Refer to Mary Kay Cosmetics. What is the amount paid to suppliers for purchases of merchandise during 2014?
146. Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented below:
Balance Sheet Data
2014
2013
Cash
$235,000
246,000
Accounts receivable
$120,000
$150,000
Inventories
56,000
50,000
Accounts payable
38,000
70,000
Salaries payable
10,000
5,000
Equipment
110,000
70,000
Accumulated depreciation
28,000
32,000
Bonds payable
100,000
200,000
Common stock
300,000
200,000
Retained earnings
76,000
40,000
Income Statement Data
2014
Net sales
$920,000
Cost of goods sold
700,000
Operating expenses (excluding depreciation expense)
160,000
Net income (Includes depreciation expense and gain)
56,000
Gain on sale of equipment
4,000
Additional information:
1.
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 2014.
2.
Common stock was issued to retire bonds payable during 2014.
3.
The only items affecting retained earnings in 2014 were net income and dividends declared and paid.
Refer to Mary Kay Cosmetics. What is the amount paid for operating expenses during 2014?
147. Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented below:
Balance Sheet Data
2014
2013
Cash
$235,000
246,000
Accounts receivable
$120,000
$150,000
Inventories
56,000
50,000
Accounts payable
38,000
70,000
Salaries payable
10,000
5,000
Equipment
110,000
70,000
Accumulated depreciation
28,000
32,000
Bonds payable
100,000
200,000
Common stock
300,000
200,000
Retained earnings
76,000
40,000
Income Statement Data
2014
Net sales
$920,000
Cost of goods sold
700,000
Operating expenses (excluding depreciation expense)
160,000
Net income (Includes depreciation expense and gain)
56,000
Gain on sale of equipment
4,000
Additional information:
1.
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 2014.
2.
Common stock was issued to retire bonds payable during 2014.
3.
The only items affecting retained earnings in 2014 were net income and dividends declared and paid.
Refer to Mary Kay Cosmetics. What amount was paid to acquire equipment during 2014?
148. Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented below:
Balance Sheet Data
2014
2013
Cash
$235,000
246,000
Accounts receivable
$120,000
$150,000
Inventories
56,000
50,000
Accounts payable
38,000
70,000
Salaries payable
10,000
5,000
Equipment
110,000
70,000
Accumulated depreciation
28,000
32,000
Bonds payable
100,000
200,000
Common stock
300,000
200,000
Retained earnings
76,000
40,000
Income Statement Data
2014
Net sales
$920,000
Cost of goods sold
700,000
Operating expenses (excluding depreciation expense)
160,000
Net income (Includes depreciation expense and gain)
56,000
Gain on sale of equipment
4,000
Additional information:
1.
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 2014.
2.
Common stock was issued to retire bonds payable during 2014.
3.
The only items affecting retained earnings in 2014 were net income and dividends declared and paid.
Refer to Mary Kay Cosmetics. What amount was recorded as depreciation expense during 2014?
149. Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented below:
Balance Sheet Data
2014
2013
Cash
$235,000
246,000
Accounts receivable
$120,000
$150,000
Inventories
56,000
50,000
Accounts payable
38,000
70,000
Salaries payable
10,000
5,000
Equipment
110,000
70,000
Accumulated depreciation
28,000
32,000
Bonds payable
100,000
200,000
Common stock
300,000
200,000
Retained earnings
76,000
40,000
Income Statement Data
2014
Net sales
$920,000
Cost of goods sold
700,000
Operating expenses (excluding depreciation expense)
160,000
Net income (Includes depreciation expense and gain)
56,000
Gain on sale of equipment
4,000
Additional information:
1.
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 2014.
2.
Common stock was issued to retire bonds payable during 2014.
3.
The only items affecting retained earnings in 2014 were net income and dividends declared and paid.
Refer to Mary Kay Cosmetics. What amount was declared and paid for dividends during 2014?
150. Mary Kay Cosmetics
Selected data and additional information from the company’s records are presented below:
Balance Sheet Data
2014
2013
Cash
$235,000
246,000
Accounts receivable
$120,000
$150,000
Inventories
56,000
50,000
Accounts payable
38,000
70,000
Salaries payable
10,000
5,000
Equipment
110,000
70,000
Accumulated depreciation
28,000
32,000
Bonds payable
100,000
200,000
Common stock
300,000
200,000
Retained earnings
76,000
40,000
Income Statement Data
2014
Net sales
$920,000
Cost of goods sold
700,000
Operating expenses (excluding depreciation expense)
160,000
Net income (Includes depreciation expense and gain)
56,000
Gain on sale of equipment
4,000
Additional information:
1.
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 2014.
2.
Common stock was issued to retire bonds payable during 2014.
3.
The only items affecting retained earnings in 2014 were net income and dividends declared and paid.
Refer to Mary Kay Cosmetics. What amount was paid to retire bonds payable during 2014?