1) Use the following information to calculate cash received from dividends:
Dividends revenue
$
68,500
Dividends receivable, January 1
5,100
Dividends receivable, December 31
4,100
Multiple Choice
$68,500.
$69,500.
$64,400.
$73,600.
$67,500.
2) A machine with a cost of $156,000, current year depreciation expense of $23,500 and accumulated depreciation of $98,000 is sold for $50,400 cash. The total amount related to this machine that should be reported in the operating section of the statement of cash flows under the indirect method is:
Multiple Choice
$23,500.
$17,100.
$73,900.
$31,100.
$5,040.
3) The accountant for Crusoe Company is preparing the company’s statement of cash flows for the fiscal year just ended. The following information is available:
Retained earnings balance at the beginning of the year
$
129,500
Cash dividends declared for the year
49,500
Proceeds from the sale of equipment
84,500
Gain on the sale of equipment
7,700
Cash dividends payable at the beginning of the year
21,500
Cash dividends payable at the end of the year
24,200
Net income for the year
95,500
What is the ending balance for retained earnings?
Multiple Choice
$283,000.
$205,500.
$181,000.
$255,000.
$175,500.
4) Use the following information about the current year’s operations of a company to calculate the cash paid for merchandise.
Cost of goods sold
$
560,000
Merchandise inventory, January 1
91,000
Merchandise inventory, December 31
109,000
Accounts payable, January 1
80,000
Accounts payable, December 31
66,000
Multiple Choice
$578,000.
$574,000.
$592,000.
$651,000.
$528,000.
5) Bagwell’s net income for the year ended December 31, Year 2 was $204,000. Information from Bagwell’s comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.
At December 31
Year 2
Year 1
Common Stock, $5 par value
$
519,000
$
467,100
Paid-in capital in excess of par
967,000
870,100
Retained earnings
707,000
599,100
Multiple Choice
$51,900.
$107,900.
$148,800.
$96,900.
$204,000.
6) Scranton, Inc. reports net income of $247,000 for the year ended December 31. It also reports $95,100 depreciation expense and a $5,850 gain on the sale of equipment. Its comparative balance sheet reveals a $38,900 decrease in accounts receivable, a $17,450 increase in accounts payable, and a $13,650 decrease in wages payable. Calculate the cash provided (used) in operating activities using the indirect method.
Multiple Choice
$378,950.
$344,050.
$283,950.
$406,250.
$384,800.
7) A company’s income statement showed the following: net income, $147,000 and depreciation expense, $36,900. An examination of the company’s current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,700; merchandise inventory increased $22,600; and accounts payable increased $5,700. Calculate the net cash provided or used by operating activities.
Multiple Choice
$178,700.
$189,100.
$141,000.
$212,500.
$143,900.
8) Fernwood Company is preparing the company’s statement of cash flows for the fiscal year just ended. The following information is available:
Retained earnings balance at the beginning of the year
$
323,000
Cash dividends declared for the year
72,500
Proceeds from the sale of equipment
124,600
Gain on the sale of equipment
7,200
Cash dividends payable at the beginning of the year
31,900
Cash dividends payable at the end of the year
39,000
Net income for the year
159,500
The amount of cash paid for dividends was:
Multiple Choice
$88,600.
$87,000.
$70,900.
$65,400.
$72,500.
9) Bagwell’s net income for the year ended December 31, Year 2 was $196,000. Information from Bagwell’s comparative balance sheets is given below. Compute the cash paid for dividends during Year 2.
At December 31
Year 2
Year 1
Common Stock, $5 par value
$
511,000
$
459,900
Paid-in capital in excess of par
959,000
862,900
Retained earnings
699,000
591,900
Multiple Choice
$107,100.
$88,900.
$147,200.
$96,100.
$51,100.
10) In preparing a company’s statement of cash flows for the most recent year using the indirect method, the following information is available:
Net income for the year was
$
56,000
Accounts payable increased by
22,000
Accounts receivable decreased by
33,000
Inventories decreased by
9,000
Cash dividends paid were
18,000
Depreciation expense was
28,000
Net cash provided by operating activities was:
Multiple Choice
$148,000.
$78,000.
$79,000.
$130,000.
$32,000.
The correct answer and explanation is:
Here are the correct answers to the provided multiple-choice questions with detailed explanations:
1) Cash Received from Dividends: Correct Answer: $69,500
Explanation: To calculate the cash received from dividends, use the formula: Cash received from dividends=Dividends revenue+Dividends receivable (January 1)−Dividends receivable (December 31)\text{Cash received from dividends} = \text{Dividends revenue} + \text{Dividends receivable (January 1)} – \text{Dividends receivable (December 31)} Using the given values: 68,500+5,100−4,100=69,50068,500 + 5,100 – 4,100 = 69,500
2) Operating Section of the Statement of Cash Flows: Correct Answer: $31,100
Explanation: For the sale of a machine, the cash flow in the operating section is affected by both the depreciation expense and the gain on sale: Depreciation Expense+Gain on Sale=23,500+(50,400−(156,000−98,000))=31,100\text{Depreciation Expense} + \text{Gain on Sale} = 23,500 + (50,400 – (156,000 – 98,000)) = 31,100
3) Ending Retained Earnings: Correct Answer: $181,000
Explanation: The formula to calculate the ending retained earnings is: Ending Retained Earnings=Beginning Retained Earnings+Net Income−Dividends Paid\text{Ending Retained Earnings} = \text{Beginning Retained Earnings} + \text{Net Income} – \text{Dividends Paid}
With adjustments for the changes in the dividends payable: 129,500+95,500−49,500=181,000129,500 + 95,500 – 49,500 = 181,000
4) Cash Paid for Merchandise: Correct Answer: $574,000
Explanation: To calculate the cash paid for merchandise: Cash paid for merchandise=Cost of Goods Sold+Change in Inventory+Change in Accounts Payable\text{Cash paid for merchandise} = \text{Cost of Goods Sold} + \text{Change in Inventory} + \text{Change in Accounts Payable} 560,000+(109,000−91,000)+(80,000−66,000)=574,000560,000 + (109,000 – 91,000) + (80,000 – 66,000) = 574,000
5) Cash Received from Sale of Stock: Correct Answer: $107,900
Explanation: The cash received from the sale of stock is the difference in the Common Stock and Paid-in Capital: (519,000−467,100)+(967,000−870,100)=107,900(519,000 – 467,100) + (967,000 – 870,100) = 107,900
6) Cash Provided (Used) in Operating Activities: Correct Answer: $344,050
Explanation: Cash provided from operating activities is calculated using the indirect method: Net Income+Depreciation+Changes in Working Capital=247,000+95,100+38,900+17,450−13,650=344,050\text{Net Income} + \text{Depreciation} + \text{Changes in Working Capital} = 247,000 + 95,100 + 38,900 + 17,450 – 13,650 = 344,050
7) Net Cash from Operating Activities: Correct Answer: $189,100
Explanation: To calculate the cash provided by operating activities: 147,000+36,900+11,700+(−22,600)+5,700=189,100147,000 + 36,900 + 11,700 + (-22,600) + 5,700 = 189,100
8) Cash Paid for Dividends: Correct Answer: $88,600
Explanation: The cash paid for dividends is calculated as: Cash dividends declared+Change in dividends payable=72,500+(39,000−31,900)=88,600\text{Cash dividends declared} + \text{Change in dividends payable} = 72,500 + (39,000 – 31,900) = 88,600
9) Cash Paid for Dividends (Bagwell): Correct Answer: $96,100
Explanation: The formula for cash paid for dividends is: Cash dividends declared−Change in retained earnings=96,100\text{Cash dividends declared} – \text{Change in retained earnings} = 96,100
10) Net Cash Provided by Operating Activities: Correct Answer: $130,000
Explanation: The net cash provided by operating activities is calculated as: 56,000+22,000+33,000+9,000+28,000−18,000=130,00056,000 + 22,000 + 33,000 + 9,000 + 28,000 – 18,000 = 130,000
Each answer is determined by adjusting for relevant transactions such as changes in working capital, depreciation, and gains or losses.