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EA 1.

LO 16.1Provide journal entries to record each of the following transactions. For each, identify whether the transaction represents a source of cash (S), a use of cash (U), or neither (N).

  1. Declared and paid to shareholders, a dividend of $24,000.
  2. Issued common stock at par value for $12,000 cash.
  3. Sold a tract of land that had cost $10,000, for $16,000.
  4. Purchased a company truck, with a note payable of $38,000.
  5. Collected $8,000 from customer accounts receivable.
EA 2.

LO 16.2In which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.)

  1. paid advertising expense
  2. paid dividends to shareholders
  3. purchased business equipment
  4. sold merchandise to customers
  5. purchased plant assets
EA 3.

LO 16.2In which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.)

  1. borrowed from the bank for business loan
  2. declared dividends, to be paid next year
  3. purchased treasury stock
  4. purchased a two-year insurance policy
  5. purchased plant assets
EA 4.

LO 16.3Use the following information from Albuquerque Company’s financial statements to determine operating net cash flows (indirect method).

Net income $325,000. Change in accumulated depreciation (no sale of depreciable assets this year) 26,200. Loss on sale of company truck 7,800.
EA 5.

LO 16.3What adjustment(s) should be made to reconcile net income to net cash flows from operating activities (indirect method) considering the following balances in current assets?

Accounts receivable, beginning of year $20,000. Accounts receivable, end of year 25,000. Prepaid insurance, beginning of year 12,000. Prepaid insurance, end of year 9,000.
EA 6.

LO 16.3Use the following information from Birch Company’s balance sheets to determine net cash flows from operating activities (indirect method), assuming net income for 2018 of $122,000.

Accounts Receivable, Prepaid Insurance, Accounts Payable, and Accrued Liabilities December 31, 2018, respectively: $12,800, 4,000, 9,000, 2,500. Accounts Receivable, Prepaid Insurance, Accounts Payable, and Accrued Liabilities December 31, 2017, respectively: $15,000, 3,500, 8,200, 2,800.
EA 7.

LO 16.3Use the following information from Chocolate Company’s financial statements to determine operating net cash flows (indirect method).

Income Statement items: Sales $98,500. Cost of Goods Sold (62,000). Salaries Expense (18,000). Depreciation Expense (9,000). Net Income 9,500. Balance Sheet items: Accounts Receivable increase $2,000. Merchandise Inventory decrease 1,600. Salaries Payable increase 450.
EA 8.

LO 16.3Use the following information from Denmark Company’s financial statements to determine operating net cash flows (indirect method).

Net income $145,000. Depreciation expense 16,500. Loss on sale of land 5,000. Decrease in accounts receivable 1,500. Decrease in accounts payable 1,250.
EA 9.

LO 16.3Use the following excerpts from Eagle Company’s financial records to determine net cash flows from financing activities.

Acquired new plant assets $18,000. Borrowed from bank, note payable 40,000. Declared and paid dividends to shareholders 15,000.
EA 10.

LO 16.3Use the following excerpts from Fruitcake Company’s financial records to determine net cash flows from investing activities.

Acquired new plant assets $18,000. Collected interest on investment assets 4,000. Sold land used in business 36,500.
EA 11.

LO 16.3Use the following excerpts from Grenada Company’s financial records to determine net cash flows from operating activities and net cash flows from investing activities.

Net income this year $158,750. Purchased plant assets this year 40,000. Sold track of land this year 35,000. Original cost of land that was sold 25,000.
EA 12.

LO 16.4Provide the missing piece of information for the following statement of cash flows puzzle.

Cash flows from operating activities $60,000. Cash flows from investing activities (28,500). Cash flows from financing activities ?. Cash at the beginning of the year 12,000. Cash at the end of the year 19,500.
EA 13.

LO 16.4Provide the missing piece of information for the following statement of cash flows puzzle.

Cash flows from operating activities $ ?. Cash flows from investing activities 8,900. Cash flows from financing activities (25,000). Cash at the beginning of the year 24,000. Cash at the end of the year 22,100.
EA 14.

LO 16.5Use the following excerpts from Kirsten Company’s Statement of Cash Flows and other financial records to determine the company’s free cash flow.

Statement of cash flows: Cash flow from operating activities $135,000 minus cash flows from investing activities of (50,000) plus cash flows from financing activities of 65,000. From other records: Cash capital expenditures 75,000 and cash dividends paid 15,000.
EA 15.

LO 16.5Use the following excerpts from Franklin Company’s statement of cash flows and other financial records to determine the company’s free cash flow for 2018 and 2017.

Cash flows from operating activities 2018: $222,000; 2017: $200,000; cash flows from investing activities 2018: (33,000); 2017: (35,000); cash flows from financing activities 2018: 66,000; 2017: 60,000. Capital expenditures were 50 percent of investing activities, both years and cash dividends paid were $15,000, both years.
EA 16.

LO 16.5The following are excerpts from Hamburg Company’s statement of cash flows and other financial records.

Statement of cash flows: Cash flow from operating activities $100,000; cash flows from investing activities (50,000); cash flows from financing activities (25,000). From other records: Cash capital expenditure costs 20,000; cash dividend payments 22,500; sales revenue 221,000; and total assets 302,500.

Compute the following for the company:

  1. free cash flow
  2. cash flows to sales ratio
  3. cash flows to assets ratio
EA 17.

LO 16.6Use the following excerpts from Algona Company’s financial statements to determine cash received from customers in 2018.

From Balance Sheets on December 31, 2018: Accounts Receivable 85,000. December 31, 2017: Accounts Receivable $105,000. From Income Statement of 2018: Sales 700,000.
EA 18.

LO 16.6Use the following excerpts from Huckleberry Company’s financial statements to determine cash paid to suppliers for inventory in 2018.

From Balance Sheet on December 31, 2018: Inventory $74,000; Accounts Payable 55,000. December 31, 2017: Inventory $82,000; Accounts Payable 58,000. From Income Statement of 2018: Cost of Goods Sold $520,000.
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