Krech Corporation\'s comparative balance sheet appears below: The company\'s net
ID: 2476555 • Letter: K
Question
Krech Corporation's comparative balance sheet appears below:
The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.
Which of the following is correct regarding the operating activities section of the statement of cash flows?
A. The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income
B.The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income
C. The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income
D. The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income
Walmouth Corporation's comparative balance sheet and income statement for last year appear below:
The company declared and paid a cash dividend of $54,000 during the year. It did not purchase or dispose of any property, plant, and equipment. It did not issue any bonds or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows.
1. The net cash provided by (used in) operating activities last year was:
A. $105,000
B. $58,000
C. $130,000
D. $152,000
2. The net cash provided by (used in) financing activities last year was:
A. ($104,000)
B. $104,000
C. ($60,000)
D. $60,000
7. Excerpts from Aultman Corporation's comparative balance sheet appear below:
Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?
A. The change in Inventory is added to net income; The change in Accounts Payable is added to net income
B. The change in Inventory is added to net income; The change in Accounts Payable is subtracted from net income
C. The change in Inventory is subtracted from net income; The change in Accounts Payable is added to net income
D. The change in Inventory is subtracted from net income; The change in Accounts Payable is subtracted from net income
12. Kaeser Corporation's most recent balance sheet appears below:
Comparative Balance Sheet
Assets Ending Balance Beginning Balance
Current Assets
Cash and cash equivalents. $44 $36
Accounts receivable.. 54 60
Inventory. 32 37
Total Current Assets.130 133
Property, plant and equipment.527 460
Less Accumulated depreciation...339 289
Net property, plant and equipment..188 171
Total Assets$ 318 $ 304
Liabilities and stockholders equity
Current Liabilities:
Accounts Payable..$46 $41
Accrued liabilities 54 17
Income taxes payable26 29
Total current liabilities 92 87
Bonds Payable.. 145 180
Total Liabilities.237 267
Stockholders equity:
Common Stock31 30
Retained earnings.50 7
Total Stockholders equity..81 37
Total liabilities and stockholders equity. $318 $304
The company's net income for the year was $52 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $9. What was the net cash provided by (used in) investing activities for the year?
A. ($67)
B. ($17)
C. $67
D. $17
Ending Balance Beginning Balance Assets: Current assets: Cash and cash equivalents $31,000 $28,000 Accounts receivable 18,000 20,000 Inventory 58,000 56,000 Prepaid expenses 12,000 10,000 Total current assets 119,000 114,000 Property, plant, and equipment 374,000 354,000 Less accumulated depreciation 190,000 165,000 Net property, plant, and equipment 184,000 189,000 Total assets $303,000 $303,000 Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $13,000 $9,000 Accrued liabilities 52,000 53,000 Income taxes payable 67,000 69,000 Total current liabilities 132,000 131,000 Bonds payable 76,000 73,000 Total liabilities 208,000 204,000 Stockholders' equity: Common stock 28,000 26,000 Retained earnings 67,000 73,000 Total stockholders' equity 95,000 99,000 Total liabilities and stockholders' equity $303,000 $303,000Explanation / Answer
Ans 1 B. The change in Prepaid Expenses will be subtracted to net income; The change in Income Taxes Payable will be subtracted from net income There is increase in current assets is subtracted to the cash flow from opeartions this means that cash has been paid and the expenses have not been accured so it is prepaid Decrease in current liabilities is subtracted from cash flow from opeartions as the liability decrease due to payment made of $2000 Ans 2 Ans D $152000 Year Cash flows from operating activities Net opearting Income 150,000.00 Adjustments for: Net cash provided from operating activities Depreciation 25000 Working Capital changes Increase in accounts receivables -10000 Decrease in inventories 7,000.00 Decrease In prepaid Expenses 3,000.00 Increase in Accounts Payable 12,000.00 Decrease in Accured payable (4,000.00) cash from operating activities 183,000.00 Less : Income tax paid (41000+45000-55000) 31,000.00 Net cash from operating activities 152,000.00 Cash flows from Financing activities Repayment Of Bonds Payable -60000 This was used. Ans Issue of Common Stock 10,000.00 Net cash used in investing activities (50,000.00) Ans 7 D. The change in Inventory is subtracted from net income; The change in Accounts Payable is subtracted from net income There is increase in current assets is subtracted to the cash flow from opeartions as it is a cash outflow as money is invested in Inventory Decrease in current liabilities is subtracted from cash flow from opeartions as the liability decrease due to payment made of $2000 Ans 12 Cash flows from Investing activities Purchase of property plant and equipment (527-460) ($67) Ans
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