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Exam 12: Reporting and Analyzing Cash Flows

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Question 71

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A company reported operating cash flows in 2009 of $23,400 and $26,220 in 2010.The average total assets for the company in 2009 was $262,000 and $285,000 in 2010.Calculate the cash flow on total assets ratio for both years.Comment on the results.

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\[\begin{array} { | l | l | l | }
\hlin...

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Question 72

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The following information is available for the Ehrens Corporation: Additional information: (1)There was no gain or loss on the sales of the long-term investments,nor on the bonds retired. (2)Old equipment with an original cost of $37,550 was sold for $2,100 cash. (3)New equipment was purchased for $67,550 cash. (4)Cash dividends of $33,600 were paid. (5)Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for the 2010 calendar year using the indirect method.

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(a)Received from sales of long-term inve...

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Question 73

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Internal users of the statement of cash flows often use cash flow information to plan day-to-day operating activities and make long-term financial decisions.

The indirect method for the preparation of the operating activities section of the statement of cash flows:

Non-cash financing activities are disclosed in a note in the financing section of the statement of cash flows.

The cash flow on total assets ratio is defined as average total assets divided by operating income.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income balance.

A company's inventory balance at 12/31/08 was $200,000 and was $188,000 at 12/31/09.Its accounts payable balance at 12/31/08 was $80,000 and was $84,000 at 12/31/09 and its cost of goods sold for 2009 was $720,000.The company's total amount of cash payments for merchandise in 2009 equals:

All cash transactions eventually affect noncash ___________ accounts.

Use the following information to calculate cash paid for wages and salaries: $\begin{array} { | l | r | } \hline \text { Salaries expense } & \$ 168,000 \\\hline \text { Salaries payable, January 1 } & 6,400 \\\hline \text { Salaries payable, December } 31 & 10,600 \\\hline\end{array}$

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ____________ section.

Use the following information to calculate cash paid for salaries: $\begin{array} { | l | r | } \hline \text { Salaries expense } & \$ 79,000 \\\hline \text { Salaries payable, January 1 } & 6,400 \\\hline \text { Salaries payable, December } 31 & 3,320 \\\hline\end{array}$

The direct method of reporting operating cash flows:

A company's cash flow on total assets ratio equals 16%.If average total assets equal $2,937,500 and total cash flows equal $600,000,what is the amount of cash flows from operations?

For each of the following separate cases,use the information provided to calculate the missing cash inflow or cash outflow: (a) $\begin{array}{|l|r|}\hline \text { Accounts receivable balances: } & \\\hline \text { Beginning of year } & \$ 60,000 \\\hline \text { End of year } & 57,000 \\\hline \text { Sales revenue (all on credit) } & 375,000 \\\hline \text { Cash received from customers } & \$ \\\hline\end{array}$ (b) $\begin{array}{|l|r|}\hline \text { Accounts payable balances: } & \\\hline \text { Beginning of year } & \$ 42,000 \\\hline \text { End of year } & 45,000 \\\hline \text { Merchandise inventory balances: } & \\\hline \text { Beginning of year } & 50,000\\\hline \text { End of year } & 47,500\\ \hline \text { Cost of goods sold } & 250,000\\\hline \text { Cash paid for merchandise inventory } & \$ \\\hline\end{array}$ (c) $\begin{array}{|l|r|}\hline \text { Interest payable balances: } & \\\hline \text { Beginning of year } & \$ 7,500 \\\hline \text { End of year } & 9,200 \\\hline \text { Interest expense } & 35,000 \\\hline \text { Cash paid for interest } & \$ \\\hline\end{array}$

Use the following calendar-year information to prepare David Company's statement of cash flows using the direct method: $\begin{array}{|l|r|}\hline \text { Cash paid to purchase machinery } & \$ 124,000 \\\hline \text { Cash paid for merchandise inventory } & 220,000 \\\hline \text { Cash paid for operating expenses } & 280,000 \\\hline \text { Cash paid for interest } & 4,000 \\\hline \text { Cash received for interest } & 10,000 \\\hline \text { Cash proceeds from sale of land } & 100,000 \\\hline \text { Cash balance at beginning of year } & 15,000 \\\hline \text { Cash balance at end of year } & 77,000 \\\hline \text { Cash borrowed on a short-term note } & 25,000 \\\hline \text { Cash dividends paid } & 24,000 \\\hline \text { Cash received from stock issuance } & 57,000 \\\hline \text { Cash collections from customers } & 522,000\\\hline\end{array}$

Under IFRS,interest revenue may be classified as an operating,investing or financing activity assuming that this classification is applied consistently across all periods.

Jacob Corporation's salaries expense was $18.0 million.What is the amount of cash that Jacob paid for salaries if the salaries payable account increased by $4.0 million?

The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is: