Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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40. The net cash provided by (used in) investing activities for the year was:
41. The net cash provided by (used in) financing activities for the year was:
Essay Questions
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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42. Carston Company’s comparative balance sheet and income statement for last year appear
below:
The company declared and paid $27,000 in cash dividends during the year. It did not dispose
of any property, plant, and equipment during the year.
Required:
Construct in good form the operating activities section of the company’s statement of cash
flows for the year using the direct method.
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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43. The changes in each balance sheet account for Bryan Company during the year just
completed are as follows:
Bryan Company’s income statement for the year just ended shows the following:
The company did not dispose of any property, plant, and equipment, buy any long-term
investments, issue any bonds payable, or repurchase any of its own common stock during the
year. Bryan Company uses the direct method to construct its statement of cash flows.
Required:
a. Determine the sales adjusted to the cash basis.
b. Determine the cost of goods sold adjusted to the cash basis.
c. Determine the selling and administrative expenses adjusted to a cash basis.
d. Determine the net cash provided (used) by operating activities.
e. Determine the net cash provided (used) by investing activities.
f. Determine the net cash provided (used) by financing activities.
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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44. Milton Corporation’s balance sheet and income statement appear below:
Cash dividends were $2. The company did not dispose of any property, plant, and equipment
during the year.
Required:
Prepare the operating activities section of the statement of cash flows using the direct
method.
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
45. Kren Corporation’s balance sheet and income statement appear below:
Cash dividends were $35. The company did not dispose of any property, plant, and equipment
during the year.
Required:
Prepare the operating activities section of the statement of cash flows in good form using the
direct method.
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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46. Sawyer Corporation’s balance sheet and income statement appear below:
Cash dividends were $7. The company sold equipment for $13 that was originally purchased
for $3 and that had accumulated depreciation of $2.
Required:
Using the direct method, determine the net cash provided by operating activities.
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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47. The following information is taken from the operating activities section of the statement
of cash flows for the Parks Company for the year just ended:
The following information is taken from the company’s income statement for the year just
ended:
Required:
a. For each of the adjustments to convert net income to the cash basis, indicate whether the
account increased or decreased.
b. Determine the net cash provided by operating activities using the direct method. You need
not prepare the formal operating activities section of the statement of cash flows but you
should show the adjustments that must be made to sales, expenses, and so forth and the cash
flow balances of sales, expenses, etc.
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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48. Cavett Company’s comparative balance sheet and income statement for last year appear
below:
The following additional information is available for the year:
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
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* During the year, the company sold long-term investments with a cost of $38,000 when
purchased for $33,000 in cash.
* All sales were on credit.
* The company paid a cash dividend of $25,000.
* The company did not dispose of any property, plant, and equipment, issue any bonds
payable, or repurchase any of its own common stock during the year.
Required:
a. Using the direct method, determine the net cash provided by operating activities for the
year.
b. Using the indirect method, determine the net cash provided by operating activities for the
year.
c. Using the net cash provided by operating activities figure from either part a or b, prepare a
statement of cash flows for the year.
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities
14A–53
Chapter 14 Appendix A The Direct Method of Determining the Net Cash Provided by Operating Activities