1. On February 12, Addison, Inc. purchased 6,000 shares of Lucas Company at $22
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Question
1. On February 12, Addison, Inc. purchased 6,000 shares of Lucas Company at $22 per share plus a $240 brokerage fee. On August 22, Lucas paid a $0.42 dividend per share. On November 10, 4,000 shares of Lucas stock were sold for $28 per share less a $160 brokerage fee. The journal entry for the sale would include:
d. a credit to Investments for $112,000
2. The following information is available from the current period financial statements:
Determine the net cash flow from operating activities using the indirect method.
Select the correct answer.
3. Equipment with an original cost of $60,754 and accumulated depreciation of $33,117 was sold at a loss of $6,070. Find the change in cash as a result of this transaction.
Select the correct answer.
4. The following information is available from the current period financial statements:
Determine the net cash flow from operating activities using the indirect method.
Select the correct answer.
5. A building with a book value of $39,980 is sold for $61,844 cash Using the indirect method, choose how this transaction should be shown on the statement of cash flows.
Select the correct answer.
a. a credit to Loss on Sale for $23,680. b. a debit to Cash for $112,000. c. a debit to Cash for $111,840.d. a credit to Investments for $112,000
2. The following information is available from the current period financial statements:
Net income $ 105,227 Depreciation expense $28,941 Increase in accounts receivable $24,049 Decrease in accounts payable $20,822Determine the net cash flow from operating activities using the indirect method.
Select the correct answer.
a. $89,297 b. $179,039 c. $79,513 d. $105,2273. Equipment with an original cost of $60,754 and accumulated depreciation of $33,117 was sold at a loss of $6,070. Find the change in cash as a result of this transaction.
Select the correct answer.
a. decrease by $6,070 b. increase by $21,567 c. decrease by $33,117 d. increase by $60,7544. The following information is available from the current period financial statements:
Net income $116,940 Depreciation expense $23,960 Increase in accounts receivable $15,492 Decrease in accounts payable $19,962Determine the net cash flow from operating activities using the indirect method.
Select the correct answer.
a. $105,446 b. $176,354 c. $57,526 d. $116,9405. A building with a book value of $39,980 is sold for $61,844 cash Using the indirect method, choose how this transaction should be shown on the statement of cash flows.
Select the correct answer.
a. an increase of $39,980 from investing activities and an addition to net income of $21,864 b. an increase of $61,844 from investing activities c. an increase of $39,980 from investing activities d. an increase of $61,844 from investing activities and a deduction from net income of $21,864Explanation / Answer
Addsion Inc. 1 Sale of shares Sale proceeds for 4000 shares @28 112000 Less Brokerage fees 160 Net proceeds 111,840.00 So cash will be debited by $ 111,840 Option c. is correct 2 Cash flow from operating activities Net income 105,227 Add : Depreciation 28,941 Less: Increase in Accounts Receivable 24,049 Less: decrease in Accounts Payable 20,822 Net Cash Flow from opearting activities 89,297 Answer a. is correct 3 Equipment original cost 60,754 Less accumulated depreciation 33,117 Book value of equipment 27,637 Loss on sale 6,070 Sale value of equipment 21,567 so change in cash for this transaction = Cash flow increase by $21,567 Answer b. is correct 4 Cash flow from operating activities Net income 116,940 Add : Depreciation 23,960 Less: Increase in Accounts Receivable 15,492 Less: decrease in Accounts Payable 19,962 Net Cash Flow from opearting activities 105,446 Answer a. is correct 5 Book Value of building 39,980 Sale proceeds 61,844 Gain on sale 21,864 So sale procceds of $61,844 will be increase in cash flow from investing activities and capital gain on sale of building of $21,864 will be shown as deduction from net income in cash flow from opearting activities. So answer d. is appropritae.
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