Expert Answers

The following information on selected cash transactions for 2013 has been provided by Mancuso Company:
Proceeds from sale of land $190,000
Proceeds from long-term borrowings 400,000
Purchases of plant assets 144,000
Purchases of inventories 680,000
Proceeds from sale of Mancuso common stock 240,000
What is the cash provided (used) by investing activities for the year ended December 31, 2013, as a result of the above information?
$256,000
$190,000
$46,000
$830,000

Peavy Corp.’s transactions for the year ended December 31, 2013 included the following:
• Acquired 50% of Gant Corp.’s common stock for $160,000 cash which was borrowed from a bank.
• Issued 5,000 shares of its preferred stock for land having a fair value of $320,000.
• Issued 500 of its 11% debenture bonds, due 2018, for $392,000 cash.
• Purchased a patent for $220,000 cash.
• Paid $120,000 toward a bank loan.
• Sold available-for-sale securities for $796,000.
• Had a net increase in returnable customer deposits (long-term) of $88,000.
Peavy’s net cash provided by financing activities for 2013 was
$552,000.
$432,000.
$640,000.
$520,000.

Selected information from Dinkel Company’s 2013 accounting records is as follows:
Proceeds from issuance of common stock $ 600,000
Proceeds from issuance of bonds 1,800,000
Cash dividends on common stock paid 240,000
Cash dividends on preferred stock paid 90,000
Purchases of treasury stock 180,000
Sale of stock to officers and employees not included above 150,000
Dinkel’s statement of cash flows for the year ended December 31, 2013, would show net cash provided (used) by financing activities of
$2,040,000.
$90,000.
$(330,000).
$240,000.

The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?
Statements of retained earnings.
Balance sheets.
Income statements.
Statements of cash flows.

Cash equivalents are
treasury bills, commercial paper, and money market funds purchased with excess cash.
investments with original maturities of three months or less.
readily convertible into known amounts of cash.
all of these.
The following information was taken from the 2013 financial statements of Dunlop Corporation:
Bonds payable, January 1, 2013 $ 500,000
Bonds payable, December 31, 2013 3,000,000
During 2013
• A $450,000 payment was made to retire bonds payable with a face amount of $500,000.
• Bonds payable with a face amount of $200,000 were issued in exchange for equipment.
In its statement of cash flows for the year ended December 31, 2013, what amount should Dunlop report as proceeds from issuance of bonds payable?
$2,750,000
$3,200,000
$2,500,000
$2,800,000
Smiley Corp.’s transactions for the year ended December 31, 2013 included the following:
• Purchased real estate for $575,000 cash which was borrowed from a bank.
• Sold available-for-sale securities for $500,000.
• Paid dividends of $600,000.
• Issued 500 shares of common stock for $250,000.
• Purchased machinery and equipment for $125,000 cash.
• Paid $450,000 toward a bank loan.
• Reduced accounts receivable by $100,000.
• Increased accounts payable $200,000.
Smiley’s net cash used in financing activities for 2013 was
$450,000.
$25,000.
$475,000.
$225,000.
Dolan Company reports its income from investments under the equity method and recognized income of $25,000 from its investment in Moss Co. during the current year, even though no dividends were declared or paid by Moss during the year. On Dolan’s statement of cash flows (indirect method), the $25,000 should
not be shown.
be shown as cash outflow from financing activities.
be shown as cash inflow from investing activities.
be shown as a deduction from net income in the cash flows from operating activities section.

When preparing a statement of cash flows, the following are used for which method in determining cash flows from operating activities?
Gross Accounts Receivable Net Accounts Receivable
Indirect Direct
Direct Indirect
Direct Direct
Neither Indirect

The net income for the year ended December 31, 2013, for Oliva Company was $1,500,000. Additional information is as follows:
Depreciation on plant assets $600,000
Amortization of leasehold improvements 340,000
Provision for doubtful accounts on short-term receivables 120,000
Provision for doubtful accounts on long-term receivables 100,000
Interest paid on short-term borrowings 80,000
Interest paid on long-term borrowings 60,000
Based solely on the information given above, what should be the net cash provided by operating activities in the statement of cash flows for the year ended December 31, 2013?
$2,560,000
$2,800,000
$2,660,000
$2,640,000
Question are based on the data shown below related to the statement of cash flows for Putnam, Inc.:
Putnam, Inc.
Comparative Balance Sheets
.
December 31,
2013 2012
Assets:
Current Assets:
Cash $ 690,000 $ 540,000
Accounts Receivable (net) 1,560,000 1,080,000
Inventory 1,950,000 1,260,000
Prepaid Expenses 351,000 315,000
Total Current Assets 4,551,000 3,195,000
Long-Term Investments 225,000
Plant Assets:
Property, Plant & Equipment 2,190,000 1,440,000
Accumulated Depreciation (450,000 ) (270,000 )
Total Plant Assets 1,740,000 1,170,000
Total Assets $6,516,000 $4,365,000
.
Equities:
Current Liabilities:
Accounts Payable $1,275,000 $1,095,000
Accrued Expenses 309,000 282,000
Dividends Payable 201,000
Total Current Liabilities 1,785,000 1,377,000
Long-Term Notes Payable 825,000
Stockholders’ Equity:
Common Stock 3,000,000 2,400,000
Retained Earnings 906,000 588,000
Total Equities $6,516,000 $4,365,000

Putnam, Inc.
Comparative Income Statements
.
December 31,
2013 2012
Net Credit Sales $7,020,000 $3,753,000
Cost of Goods Sold 3,915,000 1,881,000
Gross Profit 3,105,000 1,872,000
Expenses (including Income Tax) 2,586,000 1,374,000
Net Income $ 519,000 $ 498,000

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 2013 and 2012, 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.
The amount to be shown on the cash flow statement as net cash provided by financing activities would total what amount?
$408,000
$600,000
$1,425,000
$825,000

Question are based on the data shown below related to the statement of cash flows for Putnam, Inc.:
Putnam, Inc.
Comparative Balance Sheets
.
December 31,
2013 2012
Assets:
Current Assets:
Cash $ 690,000 $ 540,000
Accounts Receivable (net) 1,560,000 1,080,000
Inventory 1,950,000 1,260,000
Prepaid Expenses 351,000 315,000
Total Current Assets 4,551,000 3,195,000
Long-Term Investments 225,000
Plant Assets:
Property, Plant & Equipment 2,190,000 1,440,000
Accumulated Depreciation (450,000 ) (270,000 )
Total Plant Assets 1,740,000 1,170,000
Total Assets $6,516,000 $4,365,000
.
Equities:
Current Liabilities:
Accounts Payable $1,275,000 $1,095,000
Accrued Expenses 309,000 282,000
Dividends Payable 201,000
Total Current Liabilities 1,785,000 1,377,000
Long-Term Notes Payable 825,000
Stockholders’ Equity:
Common Stock 3,000,000 2,400,000
Retained Earnings 906,000 588,000
Total Equities $6,516,000 $4,365,000

Putnam, Inc.
Comparative Income Statements
.
December 31,
2013 2012
Net Credit Sales $7,020,000 $3,753,000
Cost of Goods Sold 3,915,000 1,881,000
Gross Profit 3,105,000 1,872,000
Expenses (including Income Tax) 2,586,000 1,374,000
Net Income $ 519,000 $ 498,000

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 2013 and 2012, 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.
What amount of cash was collected from 2013 accounts receivable?
$3,270,000
$7,500,000
$7,020,000
$6,540,000
Fleming Company provided the following information on selected transactions during 2013:
Dividends paid to preferred stockholders $ 150,000
Loans made to affiliated corporations 700,000
Proceeds from issuing bonds 800,000
Proceeds from issuing preferred stock 1,050,000
Proceeds from sale of equipment 450,000
Purchases of inventories 1,200,000
Purchase of land by issuing bonds 300,000
Purchases of treasury stock 600,000
The net cash provided (used) by financing activities during 2013 is
$750,000.
$450,000.
$1,100,000.
$(1,650,000).

In reporting extraordinary transactions on a statement of cash flows (indirect method), the gross amount of an extraordinary gain should be added to net income.
gross amount of an extraordinary gain should be deducted from net income.
net of tax amount of an extraordinary gain should be added to net income.
net of tax amount of an extraordinary gain should be deducted from net income.