Chapter 12 financial acct

Blossom Company reported income taxes of $400,438,200 on its 2017 income statement and income taxes payable of $296,604,700 at December 31, 2016, and $506,015,100 at December 31, 2017. What amount of cash payments were made for income taxes during 2017?

Cash payment for income taxes= income tax expense-increase in income taxes payable= 400,438,200-209,410,400=191,027,800

Which items is reported in the operating activities section of a statement of cash flows prepared using the direct method?

Cash payments to suppliers

Suppose Columbia Sportswear Company had accounts receivable of $289,597,400 at January 1, 2017, and $207,182,400 at December 31, 2017. Assume sales revenue was $1,246,642,700 for the year 2017. What is the amount of cash receipts from customers in 2017?

cash receipt from customer= sale revenue+ decrease I account receivable= 1,246,642,700+(289,597,400-207,182,400)=1,329,057,700

Significant noncash activities are a part of the statement of cash flows.

true. explanation:Significant financing and investing activities that do not affect cash are reported in either a separate schedule at the bottom of the statement of cash flows, or in a separate note or supplementary schedule to the financial statements. This satisfies the full disclosure principle.

What is the cash debt coverage?

A measure of solvency

Under the indirect method of preparing the statement of cash flows, which of the following is added to net income in the operating activities section? Increase in accounts receivable Depreciation expense Decrease in accounts payable Gain on sale of equipment

Depreciation expense

How are cash dividends paid to stockholders classified on the statement of cash flows?

Financing activities deal with obtaining cash from issuing debt and repaying the amounts borrowed, and obtaining cash from stockholders, repurchasing shares, and paying dividends.

Under the indirect method of preparing the statement of cash flows, which of the following is deducted from net income in the operating activities section? Gain on sale of land Increase in wages payable Amortization expense Decrease in inventory

Gain on sale of land explanation: A gain on the sale of land should be deducted from net income in the operating activities section because gains are added in determining net income and the goal is to remove all non-cash amounts from net income.

Which is an example of a cash flow from an investing activity

Investing activities include acquiring and disposing of investments and property, plant, and equipment, and lending money and collecting loans.

What type of activity is the purchase of equipment for cash?

Investing activity

Which is an example of a cash flow from a financing activity?

Issuance of debt for cash

Which statement is not correct about the usefulness of the statement of cash flows? It helps users assess the profitability of a company. It helps users assess the entity's ability to generate future cash flows. It helps users assess the entity's ability to pay its obligations. It helps users assess investing and financing activities during the perio

It helps users assess the profitability of a company.

Under the indirect method of preparing the statement of cash flows, how is an increase in accounts receivable handled?

It is deducted from net income.

With which of the following does the indirect method of preparing the statement of cash flows begin? Net income Cash sales Adjustments to reconcile net income to net cash provided by operating activities Collections from customers

Net Income

the calculation for free cash flow?

Net cash provided by operations less capital expenditures less cash dividends

Which activities are reported on the statement of cash flows?

Operating, investing, and financing are the three classifications of cash payments and cash receipts used in the statement of cash flows.

Which of the following is not an operating activity? Payment of taxes Payment to suppliers Dividends received Payment of a cash dividend

Payment of a cash dividend

Which is an example of a cash flow from an investing activity?

Receipt of cash from the sale of equipment explanation: Investing activities include acquiring and disposing of investments and property, plant, and equipment, and lending money and collecting loans.

Hanover, Inc. purchased land through the issuance of long-term bonds. How is this reported on the statement of cash flows? Financing outflow Investing inflow Significant noncash investing and financing activity that merits disclosure Operating activity

Significant noncash investing and financing activity that merits disclosure

Which of the following is true about the preparing the statement of cash flows? The indirect method is easier and less costly to prepare than the direct method. The indirect method shows operating cash receipts and payments. It focuses on the differences between net income and the balance sheet. The direct method adjusts net income for items that do not affect cash to determine net cash provided by operating

The indirect method is easier and less costly to prepare than the direct method. explanation:It takes the same information to construct the statement of cash flows. The two major reasons companies favor the indirect method are 1) it is easier to prepare and 2) it focuses on the differences between net income and cash flows from operating activities.

Kingbird, Inc. reports operating expenses of $98,090, excluding depreciation expense of $13,860 for 2017. During the year, prepaid expenses decreased $7,730 and accrued expenses payable increased $4,700. Compute the cash payments for operating expenses in 2017.

cash payment for operating expenses= operating expenses-decrease in prepaid expense-increase in accrued expense payable= 98,090-7,730-4700=85660

Suppose during 2017 that Cypress Semiconductor Corporation reported net cash provided by operating activities of $80,818,000, cash used in investing of $44,280,000, and cash used in financing of $7,821,000. In addition, cash spent for fixed assets during the period was $27,465,000. No dividends were paid. Calculate free cash flow

free cash flow= 80,818,000-27,465,000-0=53,353,000

Suppose Canwest Global Communications Corp. reported net cash used by operating activities of $110,853,800 and sales revenue of $2,909,711,600 during 2017. Cash spent on plant asset additions during the year was $79,715,800. Calculate free cash flow

free cash flow=(110,853,800)-79,715,800-0= ($190,569,600)

he management of Whispering Winds Corp. is trying to decide whether it can increase its dividend. During the current year, it reported net income of $895,500. It had net cash provided by operating activities of $784,100, paid cash dividends of $99,500, and had capital expenditures of $336,200. Compute the company's free cash flow.

free cash flow=784,100-336,200-99,500=$348,400

Purchase of equipment.

investing activity

Sale of building

investing activity

During which phase of the corporate life cycle are cash from operations and net income approximately equal?

maturity. In the maturity stage, net income and cash from operations are approximately the same.

The statement of cash flows classifies cash receipts and payments into three activity categories: operating, investing, and financing.

true

Each of these items must be considered in preparing a statement of cash flows for Irvin Co. for the year ended December 31, 2017. For each item, state how it should be shown in the statement of cash flows for 2017. a) Issued bonds for $200,000 cash. b)Purchased equipment for $180,000 cash. c)Sold land costing $20,000 for $20,000 cash. d)Declared and paid a $50,000 cash dividend.

a) cash inflows from financing activity b)Cash outflows from investing activity c)Cash inflow from investing activity d) Cash outflows from financing activity