Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Textbook Question
Chapter 9, Problem 3SEA
Calculate and identify
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Which of the following situations required us to make an downward adjustment to net income (subtracting) when computing operating cash flows? (check all that apply)
A. there was a depreciation expense
B. some property was sold for a gain on the net book value
C. some recognized expenses were for COGS to suppliers paid for on account
D. there were some recognized revenues in accounts receivable
Need to compute cash flows from operating activities for each case using the direct method. I need to solve for cash collected from customers, cash payments to suppliers, cash payments for salaries and wages, and net cash provided by operating activities. Here are the numbers for these cases:
Case A
Case B
Case C
Sales revenue
$74,000
64,000
$105,000
Cost of goods sold
39,500
30,500
70,300
Depreciation expense
10,900
2,900
26,900
Salaries and wages expense
5,900
13,900
8,900
Net income (loss)
17,700
16,700
(1,100
Accounts receivable increase (decrease)
(1,000
4,900
3,900
Inventory increase (decrease)
2,900
0
(3,900
Accounts payable increase (decrease)
0
3,400
(1,000
Salaries and wages payable increase (decrease)
1,950
(2,900
1,000
Indicate the effect each separate transaction has on investing cash flows.
Note: Amounts to be deducted should be indicated with a minus sign..
a. Sold a truck costing $40,000, with $22,000 of accumulated depreciation, for $8,000 cash. The sale results in a $10,000 loss.
b. Sold a machine costing $10,000, with $8,000 of accumulated depreciation, for $5,000 cash. The sale results in a $3,000 gain.
c. Purchased stock investments for $16,000 cash. The purchaser believes the stock is worth at least $30,000.
Answer is not complete.
Cash flows from investing activities
Cash received from sale of truck
Cash received from sale of machine
Cash paid for purchase of investment
S
8,000
5,000
(16,000)
› › ›
$ (3,000)
Chapter 9 Solutions
Financial Accounting
Ch. 9 - Prob. 1YTCh. 9 - Prob. 2YTCh. 9 - Prob. 3YTCh. 9 - Prob. 4YTCh. 9 - Prob. 5YTCh. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5Q
Ch. 9 - Which types of business transactions would result...Ch. 9 - Prob. 7QCh. 9 - Which types of business transactions would result...Ch. 9 - Prob. 9QCh. 9 - Prob. 10QCh. 9 - Prob. 11QCh. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 1MCQCh. 9 - Prob. 2MCQCh. 9 - Prob. 3MCQCh. 9 - Prob. 4MCQCh. 9 - Prob. 5MCQCh. 9 - Prob. 6MCQCh. 9 - Depreciation for the year was 50,000 and net...Ch. 9 - Accounts receivable decreased by 12,000....Ch. 9 - Prob. 9MCQCh. 9 - Prob. 10MCQCh. 9 - Prob. 1SEACh. 9 - Prob. 2SEACh. 9 - Calculate and identify cash flows. (LO 3, 6). A...Ch. 9 - Prob. 4SEACh. 9 - Prob. 5SEACh. 9 - Prob. 6SEACh. 9 - Prob. 7SEACh. 9 - Prob. 8SEACh. 9 - Prob. 9SEACh. 9 - Prob. 10SEBCh. 9 - Prob. 11SEBCh. 9 - Prob. 12SEBCh. 9 - Prob. 13SEBCh. 9 - Prob. 14SEBCh. 9 - Prob. 15SEBCh. 9 - Prob. 16SEBCh. 9 - Evaluate adjustments to net income under the...Ch. 9 - Prob. 18SEBCh. 9 - Prob. 19EACh. 9 - Prob. 20EACh. 9 - Prob. 21EACh. 9 - Prob. 22EACh. 9 - Prob. 23EACh. 9 - Prob. 24EACh. 9 - Prob. 25EACh. 9 - Prob. 26EACh. 9 - Prob. 27EACh. 9 - Prob. 28EACh. 9 - Prob. 29EACh. 9 - Calculate cash from operating activities using the...Ch. 9 - Prob. 31EACh. 9 - Prob. 32EACh. 9 - Prob. 33EACh. 9 - Prob. 34EBCh. 9 - Prob. 35EBCh. 9 - Prob. 36EBCh. 9 - Prob. 37EBCh. 9 - Prob. 38EBCh. 9 - Prob. 39EBCh. 9 - Prob. 40EBCh. 9 - Prob. 41EBCh. 9 - Prob. 42EBCh. 9 - Prob. 43EBCh. 9 - Prob. 44EBCh. 9 - Prob. 45EBCh. 9 - Prob. 46EBCh. 9 - Prob. 47EBCh. 9 - Prob. 48EBCh. 9 - Prob. 49PACh. 9 - Prob. 50PACh. 9 - Prob. 51PACh. 9 - Prob. 52PACh. 9 - Prob. 53PACh. 9 - Prob. 54PACh. 9 - Prob. 55PACh. 9 - Prob. 56PACh. 9 - Prob. 57PBCh. 9 - Prob. 58PBCh. 9 - Prob. 59PBCh. 9 - Prob. 60PBCh. 9 - Prob. 61PBCh. 9 - Prob. 62PBCh. 9 - Prob. 63PBCh. 9 - Prob. 64PBCh. 9 - Prob. 1FSACh. 9 - Prob. 2FSACh. 9 - Prob. 3FSACh. 9 - Prob. 1CTPCh. 9 - Prob. 2IE
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- Monserrate is preparing the statement of cash flows for Kohler Inc. Monserrate needs to classify cash transactions by the type of activity. How should Monserrate classify a cash transaction for capital expenditures or expenditures in property, plant, and equipment in the statement of cash flows?arrow_forwardWhat is the statement of cash flows? List down three types of activities disclosed in the statement of cash flows with at least two examples for each activity. Open the relevant accounts to find: Tax paid Interest paid Dividend paid Interest received Gain on disposal (if cash received from sale of non-current asset is given) Cash received from sale of non-current asset (if loss on disposal is given)arrow_forwardWhich of the following is considered a source of cash on the statement of cash flows?(You may select more than one answer.)a. A decrease in the accounts payable account.b. An increase in the inventory account.c. A decrease in the accounts receivable account.d. An increase in the property, plant, and equipment account.arrow_forward
- Indicate the effect each separate transaction has on investing cash flows. (Amounts to be deducted should be indicated with a minus sign.) Sold a truck costing $40,000, with $22,000 of accumulated depreciation, for $8,000 cash. The sale results in a $10,000 loss. Sold a machine costing $10,000, with $8,000 of accumulated depreciation, for $5,000 cash. The sale results in a $3,000 gain. Purchased stock investments for $16,000 cash. The purchaser believes the stock is worth at least $30,000.arrow_forwardKennedy, Inc., reported the following data: Net income Depreciation expense Loss on disposal of equipment Gain on sale of building Increase in accounts receivable Decrease in accounts payable Prepare the operating activities section of the statement of cash flows using the indirect method. Use the minus sign to indicate cash outflows, a decrease in cash, cash payments, or any negative adjustments. $133,712 16,162 (10,474) 21,575 8,728 (2,832) Kennedy, Inc. Statement of Cash Flows Cash flows from (used for) operating activities: Adjustments to reconcile net income to net cash flows from (used for) operating activities: Changes in current operating assets and liabilities: 100 000arrow_forwardKennedy, Inc. reported the following data: Net income Depreciation expense Loss on disposal of equipment Gain on sale of building Increase in accounts receivable Decrease in accounts payable Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. Use the minus sign to indicate cash outflows, a decrease in cash, cash payments, or any negative adjustments. Cash flows from operating activities: $152,168 12,599 (10,151) 19,285 8,486 (3,847) Kennedy, Inc. Statement of Cash Flow Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: 0 000 0arrow_forward
- 11. When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash provided by/used by operating activities? a. Increase in accounts receivable. b. Gain on sale of land. c. Depreciation of equipment. d. All of these are added to net income to arrive at cash flow from operating activities. Your answer is _________________arrow_forwardWhich of the following statements is true when computing the net cash provided by (used in) operating activities using the Indirect method? Multiple Cholce If the property, plant, and equlpment balance Increases during the perlod, the amount of the Increase is added to net Income. If the prepald expenses balance Increases during the perlod, the amount of the Increase is added to net Income. If the property, plant, and equipment balance Increases during the perlod, the amount of the Increase is subtracted from net Income. If the prepald expenses balance Increases during the perlod, the amount of the Increase is subtracted from net Income.arrow_forwardIndicate the effect each separate transaction has on investing cash flows. (Amounts to be deducted should be indicated with a minus sign.) a. Sold a truck costing $47,000, with $24,800 of accumulated depreciation, for $10,800 cash. The sale results in a $11,400 loss. b. Sold a machine costing $13,400, with $9,400 of accumulated depreciation, for $7,800 cash. The sale results in a $3,800 gain. c. Purchased stock investments for $23,000 cash. The purchaser believes the stock is worth at least $32,800. Cash flows from investing activitiesarrow_forward
- The income statement shows depreciation expense of $25,000. How is the expense handled when computing net cash provided by operating activities? Question 6 options: Added in cash provided by operating activities Subtracted from cash provided by operating activities Can ignore, it is included in the net income amount Reported in a note to the statement not within the statementarrow_forwardWhich one of the following is NOT an example of cash flows in operating activities according to direct method? Select one: a. Cash received from debtors b. Cash sales of goods and services c. Adding back depreciation expense d. Cash payment for purchase of inventoriesarrow_forwardWhich of the following are Cash Outflows from Operating Activities? Check All That Apply Purchase a Building Purchase a Truck Purchase Inventory Purchase Treasury Stockarrow_forward
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