Use the following to answer questions 1-3: The balance sheet data of Kohler Comp

Question

Use the following to answer questions 1-3:

The balance sheet data of Kohler Company at the end of 2015 and 2014 follow:

2015                2014

Cash $ 100,000        $ 140,000

Accounts receivable (net) 240,000           180,000

Inventory 280,000           180,000

Prepaid expenses 40,000           100,000

Buildings and equipment 360,000           300,000

Accumulated depreciation—buildings and equipment (72,000)          (32,000)

Land 360,000          160,000

Totals $1,308,000     $1,028,000

Accounts payable $ 272,000       $220,000

Accrued expenses 48,000 72,000

Notes payable—bank, long-term 160,000

Mortgage payable 120,000

Common stock, $10 par 836,000           636,000

Retained earnings (deficit) 32,000           (60,000)

$1,308,000      $1,028,000

Land was acquired for $200,000 in exchange for common stock, par $200,000, during the year; all equipment purchased was for cash. Equipment costing $20,000 was sold for $8,000; book value of the equipment was$16,000 and the loss was reported as an ordinary item in net income. Cash dividends of $40,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31,2015, for Naley Company:

1. The net cash provided by operating activities was

A) $104,000.

B) $132,000.

C) $112,000.

D) $96,000.

2. The net cash provided (used) by investing activities was

A) $52,000.

B) $(80,000).

C) $(272,000).

D) $(72,000).

3. The net cash provided (used) by financing activities was

A) $ -0-.

B) $(40,000).

C) $(80,000).

D) $120,000.

Explanation / Answer

1) option c

2) option d

3) option c

Cash flow statement Net operating activities Net income    132,000.00 Add: Depreciation        44,000.00 loss on sale of Equipment          8,000.00 Decrease in prepaid expense        60,000.00 increase in account payable        52,000.00 less: increase in account receivable     (60,000.00) increase in inventory (100,000.00) Decrease in accrued expenses     (24,000.00) -20,000.00 Net operating activities    112,000.00 Net cash from investing activities purchase of Equipment -80,000 Sale of equipment 8,000 Net cash used by investing activities    (72,000.00) Net cash from financing activities Notes payable -160,000 cash dividend -40,000 cash from mortagage payable 120,000 Net cash used by financing activities    (80,000.00) Net decrease in cash    (40,000.00) Cash at the beginning    140,000.00 Cash at the end    100,000.00

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