36) If equipment is sold for $50,000, it is shown in the financing activities section.

 

37) If 2,000 shares of stock were sold for $10 per share, cash flow from financing activities would decrease $20,000.

 

38) Indicate the effect that each of the following transactions has on the cash balance. Use (I) for increase, (D) for decrease, and (N) for no change.

 

a) ________ Increase in inventory

b) ________ Sale of common stock for cash

c) ________ Payment of dividends

d) ________ Depreciation expense for the period

e) ________ Payment of long-term debt

f) ________ Loan of money to another company

g) ________ Increase in Accounts Payable

h) ________ Purchase of equipment on account

 

39) Indicate the effect that each of the following transactions has on the cash balance. Use (I) for increase, (D) for decrease, and (N) for no change.

 

a) ________ Issued common stock for cash

b) ________ Acquired land for cash

c) ________ Purchase equipment on account

d) ________ Paid a cash dividend

e) ________ Purchased supplies on account

f) ________ Received payment on account

g) ________ Borrowed money by issuance of a long-term debt

h) ________ Purchased equipment on account to be paid within one year

40) Identify each of the following transactions as an operating activity (O), an investing activity (I), a financing activity (F), or a transaction that is not reported on the statement of cash flows (N).

 

a) ________ Receipt of interest

b) ________ Increase of accounts payable

c) ________ Borrowed money from a bank

d) ________ Purchase of building for cash

e) ________ Declaration of cash dividends

f) ________ Sold plant equipment for cash

g) ________ Increase of accounts receivable

h) ________ Payment on principal of a note

 

41) Identify where each of the following transactions would be shown on the statement of cash flows when it is prepared by the indirect method. Identify each transaction as an operating activity (O), an investing activity (I), a financing activity (F), or transaction that is not reported on the statement of cash flows (N).

 

a) ________ Paid for fire insurance in advance

b) ________ Cash used to purchase new computers

c) ________ Cash used to retire bonds outstanding

d) ________ Depreciation expense

e) ________ Cash used to purchase fixed assets

f) ________ Cash proceeds from sale of the company’s own stock

g) ________ Bought back own stock

h) ________ Received cash dividends

42) The following information is given for Tripp Company, which uses the indirect method.

 

Net income$20,000

Depreciation expense3,000

Increase in accounts receivable2,000

Payment of dividends2,000

Proceeds from sale of equipment6,000

Increase in accounts payable4,000

Decrease in inventory3,000

 

From the information provided, answer the following questions:

 

a) The cash flow from operating activities is ________.

b) The cash flow from investing activities is ________.

c) The cash flow from financing activities is ________.

 

43) The following information is given for Nevada Times:

 

Net income$20,000

Depreciation expense4,000

Decrease in accounts receivable2,000

Increase in supplies on hand3,000

Sale of common stock10,000

Purchase of equipment5,000

Loan money to a customer4,000

Decrease in accounts payable1,000

 

The indirect method is used.

Required:

 

Answer the following questions with the information provided above.

 

a) The cash flow from operating activities is ________.

b) The cash flow from investing activities is ________.

c) The cash flow from financing activities is ________.

44) The following information is given for Sunny Corporation:

 

Net income$45,000

Depreciation expense8,000

Decrease in accounts receivable3,000

Increase in supplies on hand1,000

Sale of common stock50,000

Purchase of equipment45,000

Payment of dividends6,000

Decrease in accounts payable5,000

 

The indirect method is used. The beginning Cash balance is $23,000.

Required:

 

Answer the following questions with the information provided above.

 

a) The cash flow from operating activities is ________.

b) The cash flow from investing activities is ________.

c) The cash flow from financing activities is ________.

d) The net change in cash is ________.

e) The ending balance of cash is ________.

 

 

 



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