Chapter 15: The Statement of Cash Flows
Student: ___________________________________________________________________________
2. Because noncash investing and financing transactions do not affect cash, they should not be reflected in the
4. The statement of cash flows discloses the effect on cash of the purchase and sale of both short- and long-term
7. For purposes of preparing the statement of cash flows, cash is defined as including both cash and cash
9. The statement of cash flows shows the effects on net income of a company's operating, investing, and
11. The primary purpose of the statement of cash flows is to provide information about a company's cash
12. The primary purpose of the statement of cash flows is to provide information about a company's investing
13. Investors could use the statement of cash flows to determine whether the company will be able to pay
14. The statement of cash flows explains the difference between net income as shown on the income statement
15. Interest paid on bonds payable would be included in the financing activities category on the statement of
16. Interest received on investments would be included in the operating activities category on the statement of
17. Cash payments made on accounts payable or accrued liabilities are considered repayments of loans and are
18. Noncash investing and financing transactions, such as the exchange of a long-term asset for a long-term
liability, represent significant investing and financing activities and are reflected in a separate schedule as part
19. The income statement indicates a business's success or failure in earning an income from its operating
20. Under the indirect method, gains or losses from the sale of equipment used in operations would appear as
21. When preparing a statement of cash flows using the indirect method, amortization expense is added to net
22. When preparing a statement of cash flows using the indirect method, a gain on sale of land is deducted from
23. When preparing a statement of cash flows using the indirect method, depreciation expense is added to net
24. When preparing a statement of cash flows using the indirect method, an increase in accounts receivable is
25. When preparing a statement of cash flows using the indirect method, an increase in wages payable is
26. When preparing a statement of cash flows using the indirect method, an increase in accounts payable is
27. A decrease in the balance of merchandise inventory is subtracted from net income when calculating net cash
28. Determining net cash flows from operating activities using the indirect method reveals cash collected from
29. Purchases and sales of long-term investments for the period should be netted for disclosure in the investing
30. When presenting decreases in long-term investments in the investing activities section of the statement of
31. Since investing activities center on the long-term assets shown on the balance sheet, they do not include any
32. A decrease in plant assets shown in the investing activities section of the statement of cash flows would be
33. Cash inflows and outflows are not netted in the investing activities section of the statement of cash flows but
34. Payment of dividends would be reflected as a cash outflow in the investing activities section of the
35. The activity on the balance sheet to be presented in the financing activities section of the statement of cash
36. The financing activities section of the statement of cash flows includes certain transactions and activities
37. Issuance of notes, either long- or short-term, would be reflected in the financing activities section of the
38. Dividends declared but unpaid are reflected in the financing activities section of the statement of cash
39. Since it impacts Retained Earnings, the net income for the period would appear in the cash flows from
45. Net cash flows from operating activities would be needed to calculate cash flow yield, cash flows to assets,
46. A positive free cash flow indicates that the company has met all its planned cash commitments and has cash
54. Kingston Company settled a long-term note payable it owed to Creative Company by issuing capital
55. Which of the following is reported as a noncash investing and financing transaction on the statement of cash
56. Lincoln Company engaged in this transaction:
Declared and issued the required dividend on preferred stock.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
57. Lincoln Company engaged in this transaction:
Collected accounts receivable.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
58. Lincoln Company engaged in this transaction:
Accrued interest expense on long-term bonds payable.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
59. Lincoln Company engaged in this transaction:
Retired long-term debt with cash.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
60. Lincoln Company engaged in this transaction:
Sold land it was holding for speculation.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
61. Lincoln Company engaged in this transaction:
Issued stock for land.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
62. Lincoln Company engaged in this transaction:
As required by the landlord, prepaid one year’s rent on its leased warehouse.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
63. Lincoln Company engaged in this transaction:
Abandoned fully depreciated equipment.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
64. Lincoln Company engaged in this transaction:
Received dividends on marketable securities held as a long-term investment.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
65. Lincoln Company engaged in this transaction:
Paid income taxes.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
66. Lincoln Company engaged in this transaction:
Issued common stock for cash.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
67. Lincoln Company engaged in this transaction:
Received 6-month’s rent in advance from a tenant in its office building.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
68. Lincoln Company engaged in this transaction:
Accrued employee wages earned but not yet paid at year-end.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
69. Lincoln Company engaged in this transaction:
Transferred cash to money market account.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
70. Lincoln Company engaged in this transaction:
Converted loans payable to stock.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
71. Lincoln Company engaged in this transaction:
Acquired long-term investment by issuance of long-term debt.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
72. Lincoln Company engaged in this transaction:
Purchased 30-day U.S. Treasury bill.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
73. Lincoln Company engaged in this transaction:
Purchased 60-day commercial paper.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
74. Lincoln Company engaged in this transaction:
Purchased treasury stock with cash.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
77. If the indirect method is used to prepare a statement of cash flows, which of the following would be added
78. If the indirect method is used to prepare a statement of cash flows, which of the following would be added
80. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Accounts Receivable—indicate the effect on net income
81. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Dividend Income (assume that cash received is equal to amount
reported)—indicate the effect on net income in arriving at net cash flows from operating activities by choosing
82. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Interest Income (assume that cash received is equal to amount
reported)—indicate the effect on net income in arriving at net cash flows from operating activities by choosing
83. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Inventory—indicate the effect on net income in arriving at
84. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Increase in Prepaid Expenses—indicate the effect on net income in
85. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Increase in Accounts Payable—indicate the effect on net income in
86. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Accrued Liabilities—indicate the effect on net income in
87. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Interest Expense (assume that cash payments are equal to amount
reported)—indicate the effect on net income in arriving at net cash flows from operating activities by choosing
88. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Income Taxes Payable—indicate the effect on net income
89. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Depletion Expense—indicate the effect on net income in arriving at
90. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Gain on Sale of Investment—indicate the effect on net income in
91. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Loss on Disposal of Equipment—indicate the effect on net income in
92. If the indirect method is used, which of the following would be added to net income to arrive at net cash
93. If the indirect method is used, which of the following would be subtracted from net income to arrive at net
94. If the indirect method is used, which of the following is a proper adjustment to net income to arrive at net
95. Assume that the balance of accounts payable does not change during a period. When preparing a statement
of cash flows, an increase in ending inventory over beginning inventory will result in an adjustment to net
96. In preparing a statement of cash flows using the indirect method, a decrease in an unearned revenue account
97. Bailey Corp. sold investments for $204,000 cash that cost $180,000. The journal entry to record the
98. Freewalt Co. purchased investments for $160,000 cash. The journal entry to record this transaction that
99. Dina Corporation purchased plant assets for $60,000 cash. The journal entry to record the transaction that
100. Northbrook Corporation issued $60,000 bonds payable to acquire Machinery. The journal entry to record
101. Rufina Corp. sold for $20,000 plant assets that cost $40,000 and that had an accumulated depreciation of
102. Determining cash flows from investing activities is the ________ step in preparing the statement of cash
104. Foxworth Company sold plant assets that had accumulated depreciation of $20,000. These assets cost
Foxworth $70,000 when purchased 4 years ago. The sale of the assets resulted in a gain for Foxworth of
105. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
106. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
107. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
108. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
109. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
110. On a statement of cash flows prepared using the indirect method, the amount representing cash paid for
113. Which of the following items would not be included in a statement of cash flows prepared using the
115. Grace Corporation issued 60,000 shares of $5 par value common stock for $600,000. The journal entry to
117. If net cash flows from operating activities were $388,000, net income were $100,000, and net sales were
118. If net cash flows from operating activities were $296,000, net income were $200,000, and sales were
121. During 20x5, Oates Company had sales of $250,000, net income of $25,000, average total assets of
$350,000, dividend payments of $17,500, net cash flows from operating activities of $26,000, purchases of
plant assets of $37,500, and sales of plant assets of $45,000. Cash flow yield equals (Round amounts to one
122. During 20x5, Oates Company had sales of $500,000, net income of $50,000, average total assets of
$700,000, dividend payments of $35,000, net cash flows from operating activities of $90,000, purchases of
plant assets of $75,000, and sales of plant assets of $90,000. Cash flows to sales equals (Round amounts to one
123. During 20x5, Oates Company had sales of $250,000, net income of $25,000, average total assets of
$350,000, dividend payments of $17,500, net cash flows from operating activities of $36,000, purchases of
plant assets of $37,500, and sales of plant assets of $45,000. Cash flows to assets equals (Round amounts to one
124. During 20x5, Oates Company had sales of $500,000, net income of $50,000, average total assets of
$700,000, dividend payments of $35,000, net cash flows from operating activities of $90,000, purchases of
125. To determine whether a company's operations are covering its dividend payments, it is best to focus on
126. Indicate on the blanks below the letter of the type of activity (O = operating activity, F = financing activity,
127. Why does the acquisition of land in exchange for common stock qualify as a noncash investing and
financing transaction?
128. Indicate on the blanks below the letter of the type of activity (O = operating activity, F = financing activity,
129. During the year, Ollie's Outdoor Outfitters issued 20,000 shares of common stock in exchange for a prime
piece of land. Two employees of the accounting department, Audrey and Neil, disagree as to the appearance of
this particular transaction on the statement of cash flows. Audrey believes it to be a significant noncash
transaction, and it therefore should be presented as such at the bottom of the statement. Neil contends that
because this transaction did not cause any cash to flow in or out of the company, it has no place on the
statement of cash flows. Who is correct and why?
130. When preparing a statement of cash flows using the indirect method, why is depreciation added back to net
income within the operating activities section?
131. How is it possible for a company to show a net loss for a given year, yet produce positive net cash flows
from operating activities?
132. Green Skies Company prepares its statement of cash flows using the indirect method. Indicate whether
133. Houston Shoe Co. is preparing a statement of cash flows using the indirect method. Indicate on the blanks
134. Marla Co. sells equipment with a carrying value of $90,000 for $70,000. Where, and for what amounts,
would this transaction appear on a statement of cash flows using the indirect method?
136. Which accounts are analyzed to determine cash flows from financing activities?
137. What elements are used to calculate free cash flow? Indicate whether the element is added or subtracted.
139.
4. A type of marketable security that a company buys and
5. The amount of cash that remains after deducting the
140. Using the indirect method, calculate the amount of net cash flows from operating activities from the
following data. Show your work
141. Using the indirect method, calculate the amount of net cash flows from operating activities from the
following data. Show your work.
142. Following are the income statement and other information for Zambrano Corporation.
Zambrano Corporation
Income Statement
For the Year Ended December 31, 20x5
Sales
$6,000
Cost of goods sold
3
,
0
0
0
Gross margin
$
3
143. Following are the income statement and other information for American Horse Corporation.
American Horse Corporation
Income Statement
For the Year Ended December 31, 20x5
Sales
$6,000
Cost of goods sold
3
,
0
0
0
Gross margin
$
3
144. The following comparative balance sheet and other information relate to Carlson Company.
Carlson Company
Comparative Balance Sheets
December 31, 20x5 and 20x4
Assets
20x5
20x4
Cash
$ 140
$ 140
Accounts receivable (net)
210
280
Inventory
350
420
Prepaid expenses
105
70
Equipment (net)
3,010
2,800
Investments and other assets
4,900
4,200
Total assets
$8,715
$7,910
Liabilities and Stockholders' Equity
Accounts payable
$ 350
$ 280
Income taxes payable
70
140
Long-term note payable
2,100
1,400
Common stock
1,400
1,400
Retained earnings
4,795
4,690
Total liabilities and stockholders' equity
$8,715
$7,910
145. Ralston Company's cash balance at December 31, 20x5, was $23,000. During the year, Ralston sold assets
with a book value of $245,000 that resulted in a loss of $110,000. Calculate the company's cash balance at
December 31, 20x6 , given the following information for the year ended December 31, 20x6. Show your work.
Net Income
$470,000
Depreciation and Amortization Expense
88,000
Decrease in Accounts Receivable (net)
14,000
Decrease in Inventory
25,000
Increase in Accounts Payable
20,000
Net Cash Flows from Investing Activities
??
Net Cash Flows from Financing Activities
(400,000)
146. The activity in the Plant Assets and related Accumulated Depreciation accounts for 20x5 is shown below.
In addition, the income statement shows a gain on sale of plant assets of $16,000.
Plant Assets
Accumulated Depreciation
20x5 Beginning balance
$234,000
$124,000
20x5 Purchases
120,000
20x5 Depreciation
36,000
20x5 Disposals
(82,000)
(26,000)
20x5 Ending balance
$272,000
$134,000
Based on the information given, compute the amounts to be shown and indicate how they would appear on the statement of cash flows. Assume that
the indirect method is being used and that the plant assets were purchased for cash.
147. The activity from the Long-Term Investments account for Fisk Corporation appears below. In addition, the
income statement shows a loss on the sale of investments of $32,000.
Long-Term Investments
Beginning balance, 20x5
$184,000
Purchases
278,000
Sales
(202,000)
Ending balance, 20x5
$260,000
Based on the information given, compute the amounts to be shown and indicate how they would appear on the statement of cash flows. Assume that
the indirect method is being used and that the investments were purchased for cash.
148. The following 20x5 information relates to Taylor, Inc.:
Net Income
$365,000
Depreciation Expense
96,000
Amortization of Intangible Assets
11,000
Beginning Accounts Receivable
420,000
Ending Accounts Receivable
439,000
Beginning Inventory
516,000
Ending Inventory
560,000
Beginning Prepaid Expenses
48,000
Ending Prepaid Expenses
42,000
Beginning Accounts Payable
119,000
Ending Accounts Payable
146,000
Purchase of Long-Term Assets for Cash
616,000
Cash from Issuance of Long-Term Debt
200,000
Issuance of Stock for Cash
160,000
Issuance of Stock for Long-Term Assets
110,000
Purchase of Treasury Stock
64,000
Sale of Long-Term Investment at Cost
39,000
149. The following information relates to Royale Enterprises for the year ended December 31, 20x5:
Net Income
$300,000
Depreciation Expense
72,000
Amortization of Intangible Assets
9,000
Beginning Accounts Receivable
336,000
Ending Accounts Receivable
351,000
Beginning Inventory
413,000
Ending Inventory
450,000
Beginning Prepaid Expenses
34,000
Ending Prepaid Expenses
38,000
Beginning Accounts Payable
95,000
Ending Accounts Payable
116,000
Purchase of Long-Term Assets for Cash
493,000
Cash from Issuance of Long-Term Debt
160,000
Issuance of Stock for Cash
128,000
Issuance of Stock for Long-Term Assets
88,000
Purchase of Treasury Stock
51,000
Sale of Long-Term Investment at Cost
31,000
150. The following information relates to Ferguson Company for 20x6 and 20x5:
Ferguson Company
Comparative Balance Sheets
December 31, 20x6 and 20x5
Assets
20x6
20x5
Change
Cash
$ 21,000
$ 54,000
($ 33,000)
Accounts receivable (net)
421,000
480,000
(59,000)
Inventory
310,000
340,000
(30,000)
Prepaid expenses
17,000
15,000
2,000
Investments
80,000
80,000
0
Land
350,000
300,000
50,000
Building (net)
680,000
700,000
(20,000)
Equipment (net)
520,000
340,000
180,000
Total assets
$2,399,000
$2,309,000
$ 90,000
Liabilities
Accounts payable
$ 328,000
$ 335,000
($ 7,000)
Accrued liabilities
171,000
170,000
1,000
Income taxes payable
22,000
34,000
(12,000)
Bonds payable
410,000
700,000
(290,000)
Long-term note payable
130,000
0
130,000
Total liabilities
$1,061,000
$1,239,000
($178,000)
151. Use the following data for Jenkins Co. to prepare a statement of cash flows using the indirect method for
the year ended June 30, 20x6.
Jenk
ins
Co.
Inco
me
State
ment
For
the
Year
Ende
d
June
30,
20x6
Sales
$700,000
Less
expe
nses
Cost of goods sold
$400,000
Depreciation expense
40,000
Administrative expenses
104,000
Selling expenses
70,000
Loss on sale of investment
1,000
6
1
5
,
0
0
0
Inco
me
befor
e
inco
me
taxes
$ 85,000
152. Use the following data for Window Rock Company to prepare a statement of cash flows using the indirect
method for the year ended June 30, 20x6.
Win
dow
Rock
Com
pany
Inco
me
State
ment
For
the
Year
Ende
d
June
30,
20x6
Sales
$1,400,000
Less
expe
nses
Cost of goods sold
$800,000
Depreciation expense
80,000
Administrative expenses
208,000
Selling expenses
140,000
Loss on sale of investment
2,000
1
,
2
3
0
,
0
0
0
Inco
me
befor
e
170,000
153. For 20x5, Sahara Company had average total assets of $520,000, sales of $450,000, net income of
154. For 20x5, Devers Enterprises had average total assets of $1,040,000, sales of $900,000, net income of
155. Use the following information to obtain the ratios below. Round amounts to one decimal place
Net cash flows from operating activities
$837 million
Net income
465 million
Sales
6,750 million
Average total assets
7,150 million
Dividends
105 million
Purchases of plant assets
170 million
Sales of plant assets
380 million
Chapter 15: The Statement of Cash Flows Key
2. Because noncash investing and financing transactions do not affect cash, they should not be reflected in the
4. The statement of cash flows discloses the effect on cash of the purchase and sale of both short- and long-term
7. For purposes of preparing the statement of cash flows, cash is defined as including both cash and cash
9. The statement of cash flows shows the effects on net income of a company's operating, investing, and
11. The primary purpose of the statement of cash flows is to provide information about a company's cash
12. The primary purpose of the statement of cash flows is to provide information about a company's investing
13. Investors could use the statement of cash flows to determine whether the company will be able to pay
14. The statement of cash flows explains the difference between net income as shown on the income statement
15. Interest paid on bonds payable would be included in the financing activities category on the statement of
16. Interest received on investments would be included in the operating activities category on the statement of
17. Cash payments made on accounts payable or accrued liabilities are considered repayments of loans and are
18. Noncash investing and financing transactions, such as the exchange of a long-term asset for a long-term
liability, represent significant investing and financing activities and are reflected in a separate schedule as part
19. The income statement indicates a business's success or failure in earning an income from its operating
20. Under the indirect method, gains or losses from the sale of equipment used in operations would appear as
21. When preparing a statement of cash flows using the indirect method, amortization expense is added to net
22. When preparing a statement of cash flows using the indirect method, a gain on sale of land is deducted from
23. When preparing a statement of cash flows using the indirect method, depreciation expense is added to net
24. When preparing a statement of cash flows using the indirect method, an increase in accounts receivable is
25. When preparing a statement of cash flows using the indirect method, an increase in wages payable is
26. When preparing a statement of cash flows using the indirect method, an increase in accounts payable is
27. A decrease in the balance of merchandise inventory is subtracted from net income when calculating net cash
28. Determining net cash flows from operating activities using the indirect method reveals cash collected from
29. Purchases and sales of long-term investments for the period should be netted for disclosure in the investing
30. When presenting decreases in long-term investments in the investing activities section of the statement of
31. Since investing activities center on the long-term assets shown on the balance sheet, they do not include any
32. A decrease in plant assets shown in the investing activities section of the statement of cash flows would be
33. Cash inflows and outflows are not netted in the investing activities section of the statement of cash flows but
34. Payment of dividends would be reflected as a cash outflow in the investing activities section of the
35. The activity on the balance sheet to be presented in the financing activities section of the statement of cash
36. The financing activities section of the statement of cash flows includes certain transactions and activities
37. Issuance of notes, either long- or short-term, would be reflected in the financing activities section of the
38. Dividends declared but unpaid are reflected in the financing activities section of the statement of cash
39. Since it impacts Retained Earnings, the net income for the period would appear in the cash flows from
45. Net cash flows from operating activities would be needed to calculate cash flow yield, cash flows to assets,
46. A positive free cash flow indicates that the company has met all its planned cash commitments and has cash
54. Kingston Company settled a long-term note payable it owed to Creative Company by issuing capital
55. Which of the following is reported as a noncash investing and financing transaction on the statement of cash
56. Lincoln Company engaged in this transaction:
Declared and issued the required dividend on preferred stock.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
57. Lincoln Company engaged in this transaction:
Collected accounts receivable.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
58. Lincoln Company engaged in this transaction:
Accrued interest expense on long-term bonds payable.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
59. Lincoln Company engaged in this transaction:
Retired long-term debt with cash.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
60. Lincoln Company engaged in this transaction:
Sold land it was holding for speculation.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
61. Lincoln Company engaged in this transaction:
Issued stock for land.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
62. Lincoln Company engaged in this transaction:
As required by the landlord, prepaid one year’s rent on its leased warehouse.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
63. Lincoln Company engaged in this transaction:
Abandoned fully depreciated equipment.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
64. Lincoln Company engaged in this transaction:
Received dividends on marketable securities held as a long-term investment.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
65. Lincoln Company engaged in this transaction:
Paid income taxes.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
66. Lincoln Company engaged in this transaction:
Issued common stock for cash.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
67. Lincoln Company engaged in this transaction:
Received 6-month’s rent in advance from a tenant in its office building.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
68. Lincoln Company engaged in this transaction:
Accrued employee wages earned but not yet paid at year-end.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
69. Lincoln Company engaged in this transaction:
Transferred cash to money market account.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
70. Lincoln Company engaged in this transaction:
Converted loans payable to stock.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
71. Lincoln Company engaged in this transaction:
Acquired long-term investment by issuance of long-term debt.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
72. Lincoln Company engaged in this transaction:
Purchased 30-day U.S. Treasury bill.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
73. Lincoln Company engaged in this transaction:
Purchased 60-day commercial paper.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
74. Lincoln Company engaged in this transaction:
Purchased treasury stock with cash.
Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash
77. If the indirect method is used to prepare a statement of cash flows, which of the following would be added
78. If the indirect method is used to prepare a statement of cash flows, which of the following would be added
80. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Accounts Receivable—indicate the effect on net income
81. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Dividend Income (assume that cash received is equal to amount
reported)—indicate the effect on net income in arriving at net cash flows from operating activities by choosing
82. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Interest Income (assume that cash received is equal to amount
reported)—indicate the effect on net income in arriving at net cash flows from operating activities by choosing
83. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Inventory—indicate the effect on net income in arriving at
84. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Increase in Prepaid Expenses—indicate the effect on net income in
85. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Increase in Accounts Payable—indicate the effect on net income in
86. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Accrued Liabilities—indicate the effect on net income in
87. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Interest Expense (assume that cash payments are equal to amount
reported)—indicate the effect on net income in arriving at net cash flows from operating activities by choosing
88. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Decrease in Income Taxes Payable—indicate the effect on net income
89. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Depletion Expense—indicate the effect on net income in arriving at
90. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Gain on Sale of Investment—indicate the effect on net income in
91. Assume the indirect method is used to compute net cash flows from operating activities. For this item
extracted from the financial statements—Loss on Disposal of Equipment—indicate the effect on net income in
92. If the indirect method is used, which of the following would be added to net income to arrive at net cash
93. If the indirect method is used, which of the following would be subtracted from net income to arrive at net
94. If the indirect method is used, which of the following is a proper adjustment to net income to arrive at net
95. Assume that the balance of accounts payable does not change during a period. When preparing a statement
of cash flows, an increase in ending inventory over beginning inventory will result in an adjustment to net
96. In preparing a statement of cash flows using the indirect method, a decrease in an unearned revenue account
97. Bailey Corp. sold investments for $204,000 cash that cost $180,000. The journal entry to record the
98. Freewalt Co. purchased investments for $160,000 cash. The journal entry to record this transaction that
99. Dina Corporation purchased plant assets for $60,000 cash. The journal entry to record the transaction that
100. Northbrook Corporation issued $60,000 bonds payable to acquire Machinery. The journal entry to record
101. Rufina Corp. sold for $20,000 plant assets that cost $40,000 and that had an accumulated depreciation of
102. Determining cash flows from investing activities is the ________ step in preparing the statement of cash
104. Foxworth Company sold plant assets that had accumulated depreciation of $20,000. These assets cost
Foxworth $70,000 when purchased 4 years ago. The sale of the assets resulted in a gain for Foxworth of
105. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
106. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
107. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
108. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
109. Use this information to answer the following question.
1. Sold machinery for $9,000 cash.
2. Purchased a building for $80,000 cash.
3. Issued $70,000 worth of stock to acquire an airplane.
4. Converted long-term bonds by issuing $100,000 worth of stock.
5. Declared and paid a $10,000 cash dividend.
110. On a statement of cash flows prepared using the indirect method, the amount representing cash paid for
113. Which of the following items would not be included in a statement of cash flows prepared using the
115. Grace Corporation issued 60,000 shares of $5 par value common stock for $600,000. The journal entry to
117. If net cash flows from operating activities were $388,000, net income were $100,000, and net sales were
118. If net cash flows from operating activities were $296,000, net income were $200,000, and sales were
121. During 20x5, Oates Company had sales of $250,000, net income of $25,000, average total assets of
$350,000, dividend payments of $17,500, net cash flows from operating activities of $26,000, purchases of
plant assets of $37,500, and sales of plant assets of $45,000. Cash flow yield equals (Round amounts to one
122. During 20x5, Oates Company had sales of $500,000, net income of $50,000, average total assets of
$700,000, dividend payments of $35,000, net cash flows from operating activities of $90,000, purchases of
plant assets of $75,000, and sales of plant assets of $90,000. Cash flows to sales equals (Round amounts to one
123. During 20x5, Oates Company had sales of $250,000, net income of $25,000, average total assets of
$350,000, dividend payments of $17,500, net cash flows from operating activities of $36,000, purchases of
plant assets of $37,500, and sales of plant assets of $45,000. Cash flows to assets equals (Round amounts to one
124. During 20x5, Oates Company had sales of $500,000, net income of $50,000, average total assets of
$700,000, dividend payments of $35,000, net cash flows from operating activities of $90,000, purchases of
125. To determine whether a company's operations are covering its dividend payments, it is best to focus on
126. Indicate on the blanks below the letter of the type of activity (O = operating activity, F = financing activity,
1. F
4. O
2. O
5. N
3. F
6. O
127. Why does the acquisition of land in exchange for common stock qualify as a noncash investing and
financing transaction?
128. Indicate on the blanks below the letter of the type of activity (O = operating activity, F = financing activity,
1. F
5. N
8. N
2. N
6. O
9. F
3. F
7. I
10. I
4. O
129. During the year, Ollie's Outdoor Outfitters issued 20,000 shares of common stock in exchange for a prime
piece of land. Two employees of the accounting department, Audrey and Neil, disagree as to the appearance of
this particular transaction on the statement of cash flows. Audrey believes it to be a significant noncash
transaction, and it therefore should be presented as such at the bottom of the statement. Neil contends that
because this transaction did not cause any cash to flow in or out of the company, it has no place on the
statement of cash flows. Who is correct and why?
Audrey is correct in her contention that the issuance of stock in exchange for land represents a significant
noncash transaction and therefore should be disclosed in a separate schedule as part of the statement of cash
flows. Usually, a transaction involving either part of this event would affect cash and would be included in the
body of the cash flow statement. Because the movement of such items significantly affects the makeup of the
balance sheet and income statement, adequate disclosure is necessary.
130. When preparing a statement of cash flows using the indirect method, why is depreciation added back to net
income within the operating activities section?
131. How is it possible for a company to show a net loss for a given year, yet produce positive net cash flows
from operating activities?
132. Green Skies Company prepares its statement of cash flows using the indirect method. Indicate whether
1. –
6. –
2. +
7. +
3. +
8. +
4. +
9. –
5. +
10. –
133. Houston Shoe Co. is preparing a statement of cash flows using the indirect method. Indicate on the blanks
1. O
7. O
2. O
8. NA
3. N
9. F
4. I
10. NA
5. F
11. I O*
6. F
12. O
134. Marla Co. sells equipment with a carrying value of $90,000 for $70,000. Where, and for what amounts,
would this transaction appear on a statement of cash flows using the indirect method?
135. Give two explanations for why the amount of cash outflow for equipment for the year might not equal the
increase in the Equipment account balance from one balance sheet date to the next.
1. Some equipment owned at the beginning of the year was disposed of during the year. This would offset some
2. Some acquisitions of equipment may have been made for something other than cash. Other consideration
3. Some acquisitions of equipment may have been made by giving a down payment in cash and a promissory
136. Which accounts are analyzed to determine cash flows from financing activities?
137. What elements are used to calculate free cash flow? Indicate whether the element is added or subtracted.
138. What does it mean when a company has positive free cash flow? What does it mean when a company has
negative free cash flow?
139.
4. A type of marketable security that a company buys and sells
5. The amount of cash that remains after deducting the funds a
140. Using the indirect method, calculate the amount of net cash flows from operating activities from the
following data. Show your work
141. Using the indirect method, calculate the amount of net cash flows from operating activities from the
following data. Show your work.
Net Income
$51,000
Beginning Accounts Payable
$ 3,000
Beginning Accounts
Ending Accounts Payable
2,800
Receivable
5,000
Depreciation Expense
10,200
Ending Accounts Receivable
4,400
Amortization of Intangible
142. Following are the income statement and other information for Zambrano Corporation.
Zambrano Corporation
Income Statement
For the Year Ended December 31, 20x5
Sales
$6,000
Cost of goods sold
3
,
0
0
0
Gross margin
$
3
,
0
0
0
Operating expenses
$1,200
Depreciation expense
600
1
,
8
0
0
Income before income taxes
$
1
,
2
0
0
Income taxes expense
3
0
0
Net income
$
9
0
0
Accounts receivable (net) decreased by $1,500 during the year. Inventory increased by $900, and Accounts Payable decreased by $1,200 during the
year. Income Taxes Payable increased by $300 during the year.
Prepare a schedule of cash flows from operating activities using the indirect method.
a.
Cash
flow
s
from
oper
ating
activ
ities:
Net
inco
me
$900
Adju
stme
Decr
(1,200)
143. Following are the income statement and other information for American Horse Corporation.
American Horse Corporation
Income Statement
For the Year Ended December 31, 20x5
Sales
$6,000
Cost of goods sold
3
,
0
0
0
Gross margin
$
3
,
0
0
0
Operating expenses
$1,200
Depreciation expense
600
1
,
8
0
0
Income before income taxes
$
1
,
2
0
0
Income taxes expense
3
0
0
Net income
$
9
0
0
Accounts receivable (net) increased by $1,500 during the year. Inventory decreased by $1,900, and Accounts Payable increased by $1,200 during the
year. Income Taxes Payable decreased by $300 during the year.
Prepare a schedule of cash flows from operating activities using the indirect method.
a.
Cash
flows
from
operat
ing
activit
ies:
Net
incom
e
$900
Adjust
Incr
1,200
144. The following comparative balance sheet and other information relate to Carlson Company.
Carlson Company
Comparative Balance Sheets
December 31, 20x5 and 20x4
Assets
20x5
20x4
Cash
$ 140
$ 140
Accounts receivable (net)
210
280
Inventory
350
420
Prepaid expenses
105
70
Equipment (net)
3,010
2,800
Investments and other assets
4,900
4,200
Total assets
$8,715
$7,910
Liabilities and Stockholders' Equity
Accounts payable
$ 350
$ 280
Income taxes payable
70
140
Long-term note payable
2,100
1,400
Common stock
1,400
1,400
Retained earnings
4,795
4,690
Total liabilities and stockholders' equity
$8,715
$7,910
Additional information:
Depreciation expense $560
Cash dividends declared and paid 50
a. Compute net income, assuming net income and the cash dividends were the only items affecting retained earnings. Show your work.
b. Compute net cash flows from operating activities using the indirect method.
a.
Net
incom
e:
Increa
se in
retaine
d
earnin
gs
$10
5
Divide
nds
50
Net
incom
e
$15
5
b.
Cash
flows
from
operati
ng
activiti
es:
Net
incom
e
$15
5
Adjust
Increa
(35)
145. Ralston Company's cash balance at December 31, 20x5, was $23,000. During the year, Ralston sold assets
with a book value of $245,000 that resulted in a loss of $110,000. Calculate the company's cash balance at
December 31, 20x6 , given the following information for the year ended December 31, 20x6. Show your work.
Net Income
$470,000
Depreciation and Amortization Expense
88,000
Decrease in Accounts Receivable (net)
14,000
Decrease in Inventory
25,000
Increase in Accounts Payable
20,000
Net Cash Flows from Investing Activities
??
Net Cash Flows from Financing Activities
(400,000)
Net Income
$470,000
146. The activity in the Plant Assets and related Accumulated Depreciation accounts for 20x5 is shown below.
In addition, the income statement shows a gain on sale of plant assets of $16,000.
Plant Assets
Accumulated Depreciation
20x5 Beginning balance
$234,000
$124,000
20x5 Purchases
120,000
20x5 Depreciation
36,000
20x5 Disposals
(82,000)
(26,000)
20x5 Ending balance
$272,000
$134,000
Based on the information given, compute the amounts to be shown and indicate how they would appear on the statement of cash flows. Assume that
the indirect method is being used and that the plant assets were purchased for cash.
20x5 depreciation expense of $36,000 is added to net income to arrive at net cash flows from operating
activities. The gain, however, should be deducted from net income in the operating activities section.
147. The activity from the Long-Term Investments account for Fisk Corporation appears below. In addition, the
income statement shows a loss on the sale of investments of $32,000.
Long-Term Investments
Beginning balance, 20x5
$184,000
Purchases
278,000
Sales
(202,000)
148. The following 20x5 information relates to Taylor, Inc.:
Net Income
$365,000
Depreciation Expense
96,000
Amortization of Intangible Assets
11,000
Beginning Accounts Receivable
420,000
Ending Accounts Receivable
439,000
Beginning Inventory
516,000
Ending Inventory
560,000
Beginning Prepaid Expenses
48,000
Ending Prepaid Expenses
42,000
Beginning Accounts Payable
119,000
Ending Accounts Payable
146,000
Purchase of Long-Term Assets for Cash
616,000
Cash from Issuance of Long-Term Debt
200,000
Issuance of Stock for Cash
160,000
Issuance of Stock for Long-Term Assets
110,000
Purchase of Treasury Stock
64,000
Sale of Long-Term Investment at Cost
39,000
149. The following information relates to Royale Enterprises for the year ended December 31, 20x5:
Net Income
$300,000
Depreciation Expense
72,000
Amortization of Intangible Assets
9,000
Beginning Accounts Receivable
336,000
Ending Accounts Receivable
351,000
Beginning Inventory
413,000
Ending Inventory
450,000
Beginning Prepaid Expenses
34,000
Ending Prepaid Expenses
38,000
Beginning Accounts Payable
95,000
Ending Accounts Payable
116,000
Purchase of Long-Term Assets for Cash
493,000
Cash from Issuance of Long-Term Debt
160,000
Issuance of Stock for Cash
128,000
Issuance of Stock for Long-Term Assets
88,000
Purchase of Treasury Stock
51,000
Sale of Long-Term Investment at Cost
31,000
150. The following information relates to Ferguson Company for 20x6 and 20x5:
Ferguson Company
Comparative Balance Sheets
December 31, 20x6 and 20x5
Assets
20x6
20x5
Change
Cash
$ 21,000
$ 54,000
($ 33,000)
Accounts receivable (net)
421,000
480,000
(59,000)
Inventory
310,000
340,000
(30,000)
Prepaid expenses
17,000
15,000
2,000
Investments
80,000
80,000
0
Land
350,000
300,000
50,000
Building (net)
680,000
700,000
(20,000)
Equipment (net)
520,000
340,000
180,000
Total assets
$2,399,000
$2,309,000
$ 90,000
Liabilities
Accounts payable
$ 328,000
$ 335,000
($ 7,000)
Accrued liabilities
171,000
170,000
1,000
Income taxes payable
22,000
34,000
(12,000)
Bonds payable
410,000
700,000
(290,000)
Long-term note payable
130,000
0
130,000
Total liabilities
$1,061,000
$1,239,000
($178,000)
Stockholders' Equity
Common stock
$ 800,000
$ 600,000
$200,000
Additional paid-in capital
152,000
152,000
0
Retained earnings
386,000
318,000
68,000
Total stockholders' equity
$1,338,000
$1,070,000
$268,000
Total liabilities and stockholders' equity
$2,399,000
$2,309,000
$ 90,000
Additional information:
Net income for 20x6 was $143,000.
Issued a long-term note payable in exchange for computer equipment for $130,000.
Purchased computer terminals for $90,000.
Depreciation on equipment for 20x6 was $40,000.
Depreciation on building for 20x6 was $20,000.
Reacquired bonds payable at par for $290,000.
Declared and paid dividends of $75,000.
Issued 20,000 shares of common stock at par value of $10 per share.
Paid $50,000 for land intended for a new plant site.
Prepare a statement of cash flows using the indirect method. Include a schedule of noncash investing and financing transactions, if applicable.
Ferguson Company
Statement of Cash Flows
For the Year Ended December 31, 20x6
Ferg
uson
Com
pany
State
ment
of
Cash
Flow
s
Net
$272,000
Cash
54,0
151. Use the following data for Jenkins Co. to prepare a statement of cash flows using the indirect method for
the year ended June 30, 20x6.
Jenk
ins
Co.
Inco
me
State
ment
For
the
Year
Ende
d
June
30,
20x6
Sales
$700,000
Less
expe
nses
Cost of goods sold
$400,000
Depreciation expense
40,000
Administrative expenses
104,000
Selling expenses
70,000
Loss on sale of investment
1,000
6
1
5
,
0
0
0
Inco
me
befor
e
inco
me
taxes
$ 85,000
Inco
me
taxes
expe
nse
20,000
Net
inco
me
$ 65,000
Jenkins Co.
Comparative Balance Sheets
June 30, 20x6 and 20x5
Assets
20x6
20x5
Cash
$ 9,000
$ 30,000
Accounts receivable (net)
70,000
55,000
Inventory
80,000
100,000
Prepaid insurance
6,000
5,000
Long-term investments
40,000
50,000
Plant and equipment
160,000
80,000
Accumulated depreciation
(40,000)
(24,000)
Total assets
$325,000
$296,000
Liabilities
Accounts payable
$ 4,000
$ 12,000
Wages payable
440
520
Income taxes payable
1,560
1,480
Notes payable
40,000
24,000
Total liabilities
$ 46,000
$ 38,000
Stockholders' Equity
Common stock
$ 116,000
$ 130,000
Retained earnings
163,000
128,000
Total stockholders' equity
$279,000
$258,000
Total liabilities and stockholders' equity
$325,000
$296,000
Additional information:
A plant asset costing $40,000 was sold for its book value of $16,000.
A long-term investment was sold for $9,000.
The outstanding notes are long-term. A $16,000 note was issued during 20x6 .
Jenkins Co.
Statement of Cash Flows
For the Year Ended June 30, 20x6
Jenk
ins
Co.
State
ment
of
Cash
Flow
s
For
the
Year
Ende
d
June
30,
20x6
Cash
flows
from
opera
ting
activi
ties
Net
income
$65,000
Adjust
ments
to
Net
$102,000
Net
($21,0
152. Use the following data for Window Rock Company to prepare a statement of cash flows using the indirect
method for the year ended June 30, 20x6.
Win
dow
Rock
Com
pany
Inco
me
State
ment
For
the
Year
Ende
d
June
30,
20x6
Sales
$1,400,000
Less
expe
nses
Cost of goods sold
$800,000
Depreciation expense
80,000
Administrative expenses
208,000
Selling expenses
140,000
Loss on sale of investment
2,000
1
,
2
3
0
,
0
0
0
Inco
me
befor
e
inco
me
taxes
170,000
Inco
me
taxes
expe
nse
40,000
Net
inco
me
$ 130,000
Window Rock Company
Comparative Balance Sheets
June 30, 20x6 and 20x5
Assets
20x6
20x5
Cash
$ 18,000
$ 60,000
Accounts receivable (net)
140,000
110,000
Inventory
160,000
200,000
Prepaid insurance
12,000
10,000
Long-term investments
80,000
100,000
Plant and equipment
320,000
160,000
Accumulated depreciation
(80,000)
(48,000)
Total assets
$650,000
$592,000
Liabilities
Accounts payable
$ 8,000
$ 24,000
Wages payable
880
1,040
Income taxes payable
3,120
2,960
Notes payable
80,000
48,000
Total liabilities
$ 92,000
$ 76,000
Stockholders' Equity
Common stock
$ 232,000
$260,000
Retained earnings
326,000
256,000
Total stockholders' equity
$558,000
$516,000
Total liabilities and stockholders' equity
$650,000
$592,000
Additional information:
A plant asset costing $80,000 was sold for its book value of $32,000.
A long-term investment was sold for $18,000.
The outstanding notes are long-term. A $32,000 note was issued during 20x6.
Window Rock Company
Statement of Cash Flows
For the Year Ended June 30, 20x6
Win
dow
Rock
Com
pany
State
ment
of
Cash
Flow
s
For
the
Year
Ende
d
June
30,
20x6
Cash
flows
from
opera
ting
activi
ties
Net
income
$130,000
Net
$204,000
Net
($42,00
153. For 20x5, Sahara Company had average total assets of $520,000, sales of $450,000, net income of
$50,000, net cash flows from operating activities of $75,000, dividend payments of $25,000, purchases of plant
assets of $60,000, and sales of plant assets of $55,000. Using this information, compute (a) cash flow yield, (b)
cash flows to sales, (c) cash flows to assets, and (d) free cash flow. Round amounts to one decimal place.
a. 1.5 times ($75,000 $50,000)
b. 16.7 percent ($75,000 $450,000)
c. 14.4 percent ($75,000 $520,000)
d. $45,000 ($75,000 – $25,000 – $60,000 + $55,000)
154. For 20x5, Devers Enterprises had average total assets of $1,040,000, sales of $900,000, net income of
$100,000, net cash flows from operating activities of $150,000, dividend payments of $50,000, purchases of
plant assets of $120,000, and sales of plant assets of $110,000. Using this information, compute (a) cash flow
yield, (b) cash flows to sales, (c) cash flows to assets, and (d) free cash flow. Round amounts to one decimal
place.
a. 1.5 times ($150,000 $100,000)
b. 16.7 percent ($150,000 $900,000)
c. 14.4 percent ($150,000 $1,040,000)
d. $90,000 ($150,000 – $50,000 – $120,000 + $110,000)
155. Use the following information to obtain the ratios below. Round amounts to one decimal place
Net cash flows from operating activities
$837 million
Net income
465 million
Sales
6,750 million
Average total assets
7,150 million
Dividends
105 million
Purchases of plant assets
170 million
Sales of plant assets
380 million
a. 1.8 times ($837 $465)
b. 12.4% ($837 $6,750)
c. 11.7% ($837 $7,150)
d. $942 million ($837 – $105 – $170 + $380)