10. The net income from operations was $80,000 and the only revenue or expense i
ID: 2589377 • Letter: 1
Question
10. The net income from operations was $80,000 and the only revenue or expense item not affecting cash was depreciation expense of $42,000. What amount of net cash flows from operating activities would appear in the statement of cash flows? $_________
11. A corporation purchased and retired 5,000 shares of its $15 par common stock, originally issued at par, for $35. Cash flows amounted to $_________
12. If a loss of $2,000 is incurred in selling (for cash) a fixed asset having a book value of $25,000, the total amount reported as a cash flow in Investing Activities is $_________
13. The $97,000 net income for the year included a charge of $8,000 for the amortization of a patent. Excluding the effect of other adjustments, the amount of net cash flows from operating activities is $_________.
14. A corporation issued $2,000,000 of bonds payable at 104. Cash
flow was $________
15. 25,000 shares of $10 par common stock were issued at $16. The total amount reported in the cash flows from financing activities section of the statement of cash flows is $________
Short problem:
Based on the following information, compute the net cash provided by operating activities:
Net income $125,000
Depreciation expense 10,000
Increase in accounts receivable 12,000
Decrease in merchandise inventory 8,000
Increase in accounts payable 5,000
Dividends paid 9,000
Equipment purchased 15,000
Decrease in accrued liabilities 11,000
ANSWER: The net cash flow from operating activities is: $________
APPENDIX C
True-False:
The following statements are either true or false. Place a (T) in the parentheses before each true statement and an (F) before each false statement.
1. ( ) Trading securities are either debt or equity securities that the company intends to actively trade for profit.
2. ( ) An investor who owns 20% or more of a corporation's voting stock is presumed to have significant influence over the investee.
3. ( ) An investment in a security available-for-sale is reported on the balance sheet at cost.
4. ( ) Unrealized holding gains and losses on investments in equity securities available-for-sale are reported in the stockholders' equity section of the balance sheet.
5. ( ) An unrealized gain on an investment classified as a trading security is reported on the income statement.
6. ( ) The equity method is used to account for investments in equity securities available-for-sale.
7. ( ) At acquisition, the purchase of equity securities is recorded at cost regardless of which method is used to account for the investment.
8. ( ) An investment in a bond classified as held-to-maturity is reported on the balance sheet at its fair (market) value.
9. ( ) Investments in equity securities available-for-sale are reported on the balance sheet at their market values.
Multiple Choice:
You are given several words, phrases, or numbers to choose from in completing each of the following statements or in answering the following questions. In each case select the one that best completes the statement, or answers the question, and place the best answer in the space provided.
_______ 1. On January 1, 20X9, Allured Company purchased 12,000 shares of More Corporation's common stock at 601/4 plus a $6,000 commission. On July 1, 20X9, More Corporation declared and paid dividends of $0.85 per share, and on December 31, 20X9, it reported a net income of $156,000. Assuming More Corporation has 48,000 outstanding common shares and that the market value per share at December 31, 20X9, is $65, what is the carrying value of Alfred’s investment in More at December 31?
a. $729,000.
b. $757,800.
c. $751,800.
d. $723,000.
e. $780,000.
_______ 2. On January 1, 20X9, Allured Company purchased 12,000 shares of More Corporation's common stock at 601/4 plus a $6,000 commission. On July 1, 20X9, More Corporation declared and paid dividends of $0.85 per share, and on December 31, 20X9, it reported a net income of $156,000. Assuming More Corporation has 96,000 outstanding common shares and that the market value per share at December 31, 20X9, is $65, what is the carrying value of Allured’s investment in More at December 31?
a. $723,000.
b. $742,500.
c. $738,300.
d. $780,000.
e. $729,000.
Short problem:
On January 1, 2017, Large Company paid $90,000 for 36,000 of Small Company's 90,000 outstanding common shares. Small Company paid a dividend of $20,000 on November 1, 2017, and at the end of the year reported earnings of $40,000. The market value per share on December 31, 2017, was $2.10. On January 3, 2018, Large Company sold its interest in Small Company for $120,000.
1. Complete the following by filling in the blanks.
The ________ method should be used in Large Company's books to account for the investment in Small Company since an investor that owns ______ or more, but not more than ______, of a company’s voting stock is normally presumed to have a ____________ influence over the investor.
2. Prepare the journal entries for Large Company to record the facts presented above. Do not provide explanations. Skip a line between entries.
DATE
ACCOUNT TITLES AND EXPLANATION
P.R.
DEBIT
CREDIT
Short essay:
The following data are from the financial statements of The Home Depot, Inc. (Home Depot) and Lowe’s Companies, Inc. (Lowe’s):
Home Depot:
Total assets, 1/29/17 $42,966
Total assets, 1/31/16 $41,973
Net income, year ended 1/29/17 $7,957
Net cash from operating activities, year ended 1/29/17 $9,783
Lowe’s:
Total assets, 2/3/17 $34,408
Total assets, 1/29/16 $31,266
Net income, year ended 2/3/17 $3,093
Net cash from operating activities, year ended 2/3/17 $5,617
Required (round all ratios to one decimal place):
1.Compute the return on total assets for Home Depot.
2.Compute the return on total assets for Lowe’s.
3.Which company does a better job of using its assets to generate net income?
4.Compute the cash flow on total assets for Home Depot.
5.Compute the cash flow on total assets for Lowe’s.
6.Which company does a better job of using its assets to generate cash flow?
10. The net income from operations was $80,000 and the only revenue or expense item not affecting cash was depreciation expense of $42,000. What amount of net cash flows from operating activities would appear in the statement of cash flows? $_________
11. A corporation purchased and retired 5,000 shares of its $15 par common stock, originally issued at par, for $35. Cash flows amounted to $_________
12. If a loss of $2,000 is incurred in selling (for cash) a fixed asset having a book value of $25,000, the total amount reported as a cash flow in Investing Activities is $_________
13. The $97,000 net income for the year included a charge of $8,000 for the amortization of a patent. Excluding the effect of other adjustments, the amount of net cash flows from operating activities is $_________.
14. A corporation issued $2,000,000 of bonds payable at 104. Cash
flow was $________
15. 25,000 shares of $10 par common stock were issued at $16. The total amount reported in the cash flows from financing activities section of the statement of cash flows is $________
Explanation / Answer
Dear student, only one question is allowed at a time. I am answering the first question
10)
Cash flows from operating activities
= Net Income + Non cash or Non-operating expense
= $80,000 + $42,000
= $122,000
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