Statement of Cash Flows
23 – 21
Equipment that cost $875,000 and had a book value of $390,000 was sold for $450,000. Data
from the comparative balance sheets are:
12/31/18 12/31/17
Equipment $5,400,000 $4,875,000
Accumulated Depreciation 1,650,000 1,425,000
62. Equipment purchased during 2018 was
a. $1,400,000.
b. $825,000.
c. $525,000.
d. $915,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
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, 2018
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
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 22
Net cash provided by financing activities 600,000
Net increase in cash 408,000
Cash, January 1, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-
tion on the equipment sold was $336,000.
63. 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.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
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, 2018
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
Statement of Cash Flows
23 – 23
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, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-
tion on the equipment sold was $336,000.
64. The book value of the buildings and equipment at December 31, 2018 was
a. $3,048,000.
b. $3,120,000.
c. $4,272,000.
d. $3,528,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
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, 2018
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
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 24
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, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-
tion on the equipment sold was $336,000.
65. The accounts payable at December 31, 2018 were
a. $264,000.
b. $648,000.
c. $192,000.
d. $888,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
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, 2018
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
Statement of Cash Flows
23 – 25
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, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-
tion on the equipment sold was $336,000.
66. The balance in the Retained Earnings account at December 31, 2018 was
a. $1,080,000.
b. $2,640,000.
c. $2,280,000.
d. $3,000,000.
Financial statements for Kiner Company are given below:
Kiner Company
Balance Sheet
January 1, 2018
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, 2018
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
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 26
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, 2018 960,000
Cash, December 31, 2018 $1,368,000
Total assets on the balance sheet at December 31, 2018 are $6,648,000. Accumulated deprecia-
tion on the equipment sold was $336,000.
67. Capital stock (plus any additional paid-in capital) at December 31, 2018 was
a. $2,400,000.
b. $2,760,000.
c. $1,560,000.
d. $3,720,000.
68. The amount of the cash dividend was
a. $496,000.
b. $556,000.
c. $776,000.
d. $1,276,000.
69. 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 2018 financial statements of Dunlop
Corporation:
Bonds payable, January 1, 2018 $ 800,000
Bonds payable, December 31, 2018 4,800,000
During 2018
• A $720,000 payment was made to retire bonds payable with a face amount of
$800,000.
Statement of Cash Flows
23 – 27
• 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, 2018, 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 2018 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
Lindsay’s net cash provided by operating activities for 2018 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 2018 for Spencer Corporation was $450,000.
The following items are reported on the financial statements for 2018:
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 2018 was
a. $462,000.
b. $446,000.
c. $414,000.
d. $406,000.
73. During 2018, 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
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 28
Based upon this information what amount will be shown for net cash provided by
operating activities for 2018?
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 12/31/18. 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.
75. In preparing Titan Inc.’s statement of cash flows for the year ended December 31, 2018,
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, 2018,
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
Statement of Cash Flows
23 – 29
77. Jarvis, Inc. reported net income of $59,000 for the year ended December 31, 2018
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 2018:
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, 2018?
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, 2018
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 2018:
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, 2018?
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, 2018.
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 2018:
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, 2018?
a. $2,520,000
b. $2,540,000
c. $3,800,000
d. $ 450,000
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 30
80. During 2018, 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 2018?
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 12/31/18.
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
a. $578,000.
b. $482,000.
c. $458,000.
d. $362,000.
82. Net cash flow from operating activities for 2018 for Graham Corporation was $495,000.
The following items are reported on the financial statements for 2018:
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 2018 was:
a. $429,000.
b. $441,000.
c. $489,000.
d. $501,000.
Statement of Cash Flows
23 – 31
83. The net cash provided (used) by investing activities during 2018 is
a. $300,000.
b. $(1,100,000).
c. $(2,100,000).
d. $(4,500,000).
84. The net cash provided by financing activities during 2018 is
a. $3,200,000.
b. $3,600,000.
c. $4,200,000.
d. $4,600,000.
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 32
85. The net cash provided by operating activities was
a. $94,000.
b. $122,000.
c. $102,000.
d. $86,000.
86. The net cash provided (used) by investing activities was
a. $52,000.
b. $(80,000).
c. $(272,000).
d. $(72,000).
Statement of Cash Flows
23 – 33
87. 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 2018 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,
2018, as a result of the above information?
a. $99,000
b. $384,000.
c. $315,000.
d. $1,275,000.
Test Bank for Intermediate Accounting, Sixteenth Edition
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89. Selected information from Dinkel Company’s 2018 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, 2018, 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 2018. The following
data were extracted from the company’s financial records:
12/31/17 12/31/18
Prepaid Expenses $ 60,000 $69,000
Accrued Expenses 210,000 255,000
On a statement of cash flows for 2018, using the direct method, cash payments for
operating expenses should be
a. $429,000.
b. $411,000.
c. $339,000.
d. $321,000.
91. The following information was taken from the 2018 financial statements of Jenny Gardner
Corporation:
Inventory, January 1, 2018 $ 180,000
Inventory, December 31, 2018 240,000
Accounts payable, January 1, 2018 150,000
Accounts payable, December 31, 2018 240,000
Sales revenue 1,200,000
Cost of goods sold 800,000
If the direct method is used in the 2018 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
Statement of Cash Flows
23 – 35
92. Alex Company prepares its statement of cash flows using the direct method for operating
activities. For the year ended December 31, 2018, 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 good sold 1,575,000
What is the amount of cash collections from customers reported by Alex Company for the
year ended December 31, 2018?
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, 2018, 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, 2018?
a. $1,539,000
b. $1,611,000
c. $1,755,000
d. $1,395,000
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 36
Putnam, Inc.
Comparative Balance Sheets
December 31,
2019 2018
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,
2019 2018
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
2019 and 2018, 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.
Statement of Cash Flows
23 – 37
94. What amount of cash was collected from 2019 accounts receivable?
a. $15,000,000.
b. $14,040,000.
c. $13,080,000.
d. $6,540,000.
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 38
95. What amount of cash was paid on accounts payable to suppliers during 2019?
a. $9,210,000.
b. $8,850,000.
c. $8,190,000.
d. $7,470,000.
Statement of Cash Flows
23 – 39
96. 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.
Test Bank for Intermediate Accounting, Sixteenth Edition
23 – 40
97. 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. The net cash provided (used) by investing activities during 2018 is
a. $(1,200,000).
b. $(600,000).
c. $200,000.
d. $800,000.