Chapter 14 – Statement of Cash Flows
96. Which of the following is correct regarding the operating activities section of the
statement of cash flows?
Chapter 14 – Statement of Cash Flows
97. Which of the following is correct regarding the operating activities section of the
statement of cash flows?
Chapter 14 – Statement of Cash Flows
14–83
98. Which of the following is correct regarding the operating activities section of the
statement of cash flows?
Essay Questions
Chapter 14 – Statement of Cash Flows
14–84
99. Hannah Corporation’s comparative balance sheet appears below:
The company’s net income (loss) for the year was $0 and its cash dividends were $2,000. It
did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase
any of its own common stock during the year.
Required:
Compute the change in each balance sheet account denoted with an asterisk (*). Indicate
whether the change in each balance will be recorded in the operating, investing, or financing
activities section of the statement of cash flows. For items recorded in the operating activities
section, also indicate whether the change will be added to or subtracted from net income. For
all other items, indicate whether the change will be added as a cash inflow or subtracted as a
cash outflow.
Chapter 14 – Statement of Cash Flows
Chapter 14 – Statement of Cash Flows
14–86
100. The ending and beginning balances of Parma Corporation’s balance sheet accounts for
the most recent year are listed below:
The company’s net income (loss) for the year was $0 and its cash dividends were $4,000. It
did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase
any of its own common stock during the year.
Required:
Compute the change in each noncash balance sheet account. Indicate whether the change in
each balance will be recorded in the operating, investing, or financing activities section of the
statement of cash flows. For items recorded in the operating activities section, also indicate
whether the change will be added to or subtracted from net income. For all other items,
indicate whether the change will be added as a cash inflow or subtracted as a cash outflow.
Chapter 14 – Statement of Cash Flows
Chapter 14 – Statement of Cash Flows
14–88
101. Charlotte Company’s net income last year was $91,000. Changes in the company’s
balance sheet accounts for the year appear below:
The company did not dispose of any property, plant, and equipment, sell any long-term
investments, issue any bonds payable, or repurchase any of its own common stock during the
year. The company declared and paid a cash dividend.
Required:
a. Construct in good form the operating activities section of the company’s statement of cash
flows for the year. (Use the indirect method.)
b. Construct in good form the investing activities section of the company’s statement of cash
flows for the year.
c. Construct in good form the financing activities section of the company’s statement of cash
flows for the year.
Chapter 14 – Statement of Cash Flows
Chapter 14 – Statement of Cash Flows
14–90
102. Bonner Corporation’s balance sheet and income statement appear below:
Chapter 14 – Statement of Cash Flows
The company sold equipment for $10 that was originally purchased for $4 and that had
accumulated depreciation of $4. It paid a cash dividend during the year and did not issue any
bonds payable or repurchase any of its own common stock.
Required:
Prepare a statement of cash flows for the year using the indirect method.