Accounting

Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $173,000 b. $140,000 c. $313,000 d. $33,000

$173,000

Manana purchased 500 shares of common stock, $25 par, for $19,250. Subsequently, 100shares were sold for $35 per share. What is the amount of gain or loss on the sale? a. $3,500 gain b. $350 gain c. $350 loss [$19,250/500 shares=$38.50; ($38.50-$35)*100 shares] d. $500 gain

$350 loss

On June 1, $50,000 of treasury bonds were purchased between interest dates. The broker commission was $500. The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1. What is the total cost to be debited to the Investment—Treasury Bonds account? a. $50,000 b. $50,500 c. $49,500 d. $53,000

$50,500

Net income for the year was $45,500. Accounts receivable increased $5,500, and accounts payable increased by $11,200. Under the indirect method, the cash flow from operations is a. $51,200 (45,500 - 5,500 + 11,200) b. $45,500 c. $62,200 d. $28,800

$51,200 (45,500 - 5,500 + 11,200)

Shakira declared cash dividends of $60,000 during the year. Cash dividends payable were$20,000 at the beginning of the year and $25,000 at the end of the year. The amount of cash Newton used for payment of dividends during the year was a. $55,000 (20,000 + 60,000 - 55,000 = 25,000) b. $80,000 c. $105,000 d. $65,000

$55,000 (20,000 + 60,000 - 55,000 = 25,000)

If accounts payable have increased during a period, a. revenues on an accrual basis are less than revenues on a cash basis b. expenses on an accrual basis are less than expenses on a cash basis c. expenses on an accrual basis are the same as expenses on a cash basis d. expenses on an accrual basis are greater than expenses on a cash basis

expenses on an accrual basis are greater than expenses on a cash basis

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities

investing activities

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows? a. retirement of bond payable b. acquisition of treasury stock c. declaration of stock dividends d. issuance of long-term debt

issuance of long-term debt

Cash dividends paid on capital stock would be reported in the statement of cash flows in a. the cash flows from financing activities section b. the cash flows from investing activities section c. a separate schedule d. the cash flows from operating activities section

the cash flows from financing activities section

Dumpling purchased 15% of the outstanding shares of common stock of Wonton as a long-term investment. Subsequently, Wonton reported net income and declared and paid cash dividends. What journal entry would Dumpling use to record the dividends it receives? a. debit Investment in Wonton; credit Cash b. debit Cash; credit Dividend Revenue c. debit Investment in Wonton; credit Income of Wonton d. debit Cash; credit Investment in Wonton

debit Cash; credit Dividend Revenue

Jackie Chan purchases $200,000 bonds plus accrued interest for 2 months of $2,000 from Simply Delicious on March 1. The bonds have an annual interest rate of 6% payable on June30 and December 31. The entry to record the purchase of the bonds would include a a. debit to Interest Receivable for $2,000 b. debit to Investment in Bonds for $202,000 c. debit to Cash for $200,000 d. credit to Interest Revenue for $2,000

debit to Interest Receivable for $2,000

The net income reported on the income statement for the current year was$210,000. Depreciation recorded on equipment and a building amount to $62,500 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows :End of Year Beginning of Year Cash $ 56,000 $ 59,500Accounts receivable (net) 71,000 73,400Inventories 140,000 126,500Prepaid expenses 7,800 8,400Accounts payable (merchandise creditors) 62,600 66,400Salaries payable 9,000 8,250(a) Prepare the cash flows from operating activities section of the statement of cash flows, using the indirect method.(b) If the direct method had been used, would the net cash flow from operating activities have been the same? Explain

ANSWER: (a) Cash flows from operating activities :Net income $210,000Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 62,500Changes in current operating assets and liabilities: Decrease in accounts receivable 2,400Increase in inventories (13,500)Decrease in prepaid expenses 600Decrease in accounts payable (3,800)Increase in salaries payable 750 Net cash flow from operating activities $258,950 (b) Yes. The amount of cash flows from operating activities reported on the statement of cash flows is not affected by the method of reporting such flows.

The current period statement of cash flows includes the following: Cash balance at the beginning of the period $310,000Net cash flow from operating activities 185,000Net cash flow used for investing activities 43,000Net cash flow used for financing activities 97,000 The cash balance at the end of the period is a. $45,000 b. $635,000 c. $355,000 (310,000 + 185,000 - 43,000 - 97,000) d. $125,000

c. $355,000 (310,000 + 185,000 - 43,000 - 97,000)