Chapter 13 Practice Questions

Chapter 13 Practice Questions - Chap 13 Statement of Cash...

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Chap 13 Statement of Cash Flows Practice Questions Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity, or (d) a noncash investing and financing activity. 1. Collected accounts receivable. 2. Declared and paid dividends on common stock. 3. Sold long-term investments for cash. 4. Issued stock for equipment. 5. Repaid five year note payable. 6. Paid employee wages. 7. Converted bonds payable to common stock. 8. Acquired long-term investment with cash. 9. Sold buildings and equipment for cash. 10. Sold merchandise to customers. 1. (a) Operating activity 2. (c) Financing activity 3. (b) Investing activity 4. (d) Noncash activity 5. (c) Financing activity 6. (a) Operating activity 7. (d) Noncash activity 8. (b) Investing activity 9. (b) Investing activity 10. (a) Operating activity
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Q2) The Hendley Company reported net income of $240,000 for the current year. Depreciation recorded on buildings and equipment amounted to $75,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $20,000 $15,000 Accounts receivable 19,000 32,000 Inventories 50,000 65,000 Prepaid expenses 7,500 5,000 Accounts payable 12,000 18,000 Income taxes payable 1,600 1,200 Instructions Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method. Solution Net income . .................................................................. $240,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense . .......................................... 75,000 Decrease in accounts receivable . ....................... 13,000 Decrease in inventories . ...................................... 15,000 Increase in prepaid expenses . ............................. (2,500)
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This note was uploaded on 04/22/2008 for the course ACCT 2251 taught by Professor Lilysieux during the Winter '07 term at CSU East Bay.

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Chapter 13 Practice Questions - Chap 13 Statement of Cash...

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