A432 - Ch. 23 - SCF

The net cash provided by operating activities in Sosa Company's statement of cash flows for 2015 was $155,000. For 2015, depreciation on plant assets was $45,000, amortization of patent was $8,000, and cash dividends paid on common stock was $54,000. Based only on the information given above, Sosa's net income for 2015 was

$102,000. ($155,000 - $45,000 - $8,000 = $102,000.)

An increase in inventory balance would be reported in a statement of cash flows using the indirect method (reconciliation method) as a(n)

deduction from net income in arriving at net cash flow from operating activities.

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is deducted from net income to compute cash provided by/used by operating activities?

Gain on sale of land.

Fleming Company provided the following information on selected transactions during 2015: Dividends paid to preferred stockholders $ 250,000 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 400,000 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 investing activities during 2015 is

$(300,000).(($700,000) + $400,000 = ($300,000).)

Fleming Company provided the following information on selected transactions during 2015: Dividends paid to preferred stockholders $ 250,000 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 400,000 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 2015 is

$1,000,000. (($250,000) + $800,000 + $1,050,000 + ($600,000) = $1,000,000.)

Selected information from Dinkel Company's 2015 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 220,000 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, 2015, would show net cash provided (used) by financing activities of

$2,060,000. ($600,000 + $1,800,000 - $220,000 - $90,000 - $180,000 + $150,000 = $2,060,000.)

Peavy Corp.'s transactions for the year ended December 31, 2015 included the following: • Acquired 50% of Gant Corp.'s common stock for $200,000 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 2020, 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 investing activities for 2015 was

$376,000 (($200,000) - $220,000 + $796,000 = $376,000.)

Net cash flow from operating activities for 2015 for Spencer Corporation was $400,000. The following items are reported on the financial statements for 2015: Cash dividends paid on common stock $20,000 Depreciation and amortization 12,000 Increase in accounts receivables 24,000 Based on the information above, Spencer's net income for 2015 was

$412,000. (X + $12,000 - $24,000 = $400,000 X = $412,000.)

Minear Company reported net income of $450,000 for the year ended 12/31/15. 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

$506,000. ($450,000 + $60,000 + $32,000 - $48,000 + $12,000 = $506,000.)

Peavy Corp.'s transactions for the year ended December 31, 2015 included the following: • Acquired 50% of Gant Corp.'s common stock for $200,000 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 2020, 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 2015 was

$560,000. ($200,000 + $392,000 - $120,000 + $88,000 = $560,000)

Peavy Corp.'s transactions for the year ended December 31, 2015 included the following: • Acquired 50% of Gant Corp.'s common stock for $200,000 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 2020, 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 2015 was

$560,000.($200,000 + $392,000 - $120,000 + $88,000 = $560,000.)

During 2015, Orton Company earned net income of $464,000 which included depreciation 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 Based upon this information what amount will be shown for net cash provided by operating activities for 2015?

$572,000 ($464,000 + $78,000 + $45,000 - $36,000 + $12,000 - $24,000 + $33,000 = $572,000.)

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash provided by/used by operating activities?

Amortization of patent.