Question :
51.Denver Company prepares its statement of cash flows using the : 1241776
51.Denver Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2015:
1.Denver retired bonds payable by issuing common stock.
2.Denver collected on a long-term note receivable.
3.Denver issued a stock dividend.
4.Denver recorded depreciation on fixed assets.
5.Denver paid interest on long-term debt.
Which of these transactions or parts of these transactions would be included in the operating activity section of the statement of cash flows?
a. Transaction 2
b. Transaction 5
c. Transaction 4
d. None of these choices is correct.
52.Denver Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2015:
1.Denver retired bonds payable by issuing common stock.
2.Denver collected on a long-term note receivable.
3.Denver issued a stock dividend.
4.Denver recorded depreciation on fixed assets.
5.Denver paid interest on long-term debt.
Which of these transactions or parts of these transactions would not appear on the statement of cash flows?
a. Transactions 1 & 2
b. Transactions 2 & 3
c. Transactions 1, 2, 3, & 4
d. Transactions 1, 3, & 4
53.Denver Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2015:
1.Denver retired bonds payable by issuing common stock.
2.Denver collected on a long-term note receivable.
3.Denver issued a stock dividend.
4.Denver recorded depreciation on fixed assets.
5.Denver paid interest on long-term debt.
Which of these transactions or parts of these transactions would be included in the financing activity section of the statement of cash flows?
a. Transaction 1
b. Transaction 3
c. Transactions 1 & 3
d.None of these transactions would be found in the financing activity section.
54.Samuels Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2015:
1.Samuels purchased inventory on account.
2.Samuels collected open accounts receivable.
3.Samuels exchanged a building for land and realized a gain.
4.Samuels issued 75,000 shares of preferred stock.
5.Samuels purchased a three-year fire insurance policy.
Which of these transactions or parts of these transactions would be included in the operating activity section of the statement of cash flows?
a. Transactions 1,2 & 5
b. Transactions 2 & 5 only
c. Transactions 2, 3, & 5
d. None of these choices is correct.
55.Samuels Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2015:
1.Samuels purchased inventory on account.
2.Samuels collected open accounts receivable.
3.Samuels exchanged a building for land and realized a gain.
4.Samuels issued 75,000 shares of preferred stock.
5.Samuels purchased a three-year fire insurance policy.
Which of these transactions or parts of these transactions would be included in the financing activity section of the statement of cash flows?
a. Transaction 3 only.
b. Transaction 4 only.
c. Transactions 3 & 4
d. None of these transactions would be found in the financing activity section.
56.Samuels Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2015:
1.Samuels purchased inventory on account.
2.Samuels collected open accounts receivable.
3.Samuels exchanged a building for land and realized a gain.
4.Samuels issued 75,000 shares of preferred stock.
5.Samuels purchased a three-year fire insurance policy.
Which of these transactions or parts of these transactions would be included in the investing activity section of the statement of cash flows?
a. Transaction 3 only.
b. Transaction 4 only.
c. Transactions 3 & 4.
d. None of these transactions would be found in the investing activity section.
57.Samuels Company prepares its statement of cash flows using the direct method and engaged in the following transactions during 2015:
1.Samuels purchased inventory on account.
2.Samuels collected open accounts receivable.
3.Samuels exchanged a building for land and realized a gain.
4.Samuels issued 75,000 shares of preferred stock.
5.Samuels purchased a three-year fire insurance policy.
Which of these transactions or parts of these transactions would not be included on the statement of cash flows?
a. Transaction 1 only.
b. Transaction 5 only.
c. Transactions 1, 3, & 5.
d. Transactions 1 & 3.
58.The following information was taken from the records of Albert’s Fine Coffee:
2015
2014
Machinery
$90,000
$40,000
Accumulated depreciation
(30,000)
(20,000)
Depreciation expense
14,000
12,000
Gain on sale of machinery
4,000
1,000
During 2015, machinery with a cost of $16,000 was sold.
Based on this information, how much machinery was purchased during 2015?
a. $50,000
b. $66,000
c. $40,000
d. $60,000
Solution:
2015Ending machinery=2015Beginning machinery + Cost of machinery purchased during 2015– Cost of machinery sold during 2015
$90,000=$40,000 + Machinery purchased – $16,000
Machinery purchased =$66,000
59.The following information was taken from the records of Albert’s Fine Coffee:
2015
2014
Machinery
$90,000
$40,000
Accumulated depreciation
(30,000)
(20,000)
Depreciation expense
14,000
12,000
Gain on sale of machinery
4,000
1,000
During 2015, machinery with a cost of $16,000 was sold.
Based on this information, how much cash was collected on the sale of the machinery during 2015?
a. $10,000
b. $20,000
c. $4,000
d. $16,000
Solution:
When the machinery was sold during 2015, Albert’s would prepare the appropriate entry using the following format.
Cash (+A)……………………….. XX
Accumulated Depreciation (+A)………… XX
Machinery (–A)……………………. XX
Gain on Sale of Machinery (Ga, +SE)……. XX
We can find the cash collected for the sale of the machinery by first calculating the other three amounts.
Machinery
It is given in the exercise that the cost of the machinery sold was $16,000.
Gain on Sale of Machinery
It is given in the exercise that the gain on the sale was $4,000.
Accumulated Depreciation
2015Ending accumulated depreciation=2015Beginning accumulated depreciation + 2015Depreciation expense – Accumulated depreciation on items sold
$30,000=$20,000 + $14,000 – Accumulated depreciation on items sold
Accumulated depreciation on items sold=$4,000
From the entry given above,
Cash=Cost of machinery sold + Gain on sale of machinery – Accumulated depreciation on machinery sold
=$16,000 + $4,000 – $4,000
=$16,000
60.The following information was taken from the records of Albert’s Fine Coffee:
2015
2014
Machinery
$90,000
$40,000
Accumulated depreciation
(30,000)
(20,000)
Depreciation expense
14,000
12,000
Gain on sale of machinery
4,000
1,000
During 2015, machinery with a cost of $16,000 was sold.
The journal entry to record the sale of the machinery would include:
a.a debit to Accumulated Depreciation of $4,000.
b. a debit to Cash of $2,000.
c. a debit to Machinery for $16,000.
d. a credit to Gain on Sale for $3,000.
Solution:
Cash (+A)………………………………….. 16,000
Accumulated Depreciation (+A)……………………. 4,000
Machinery (–A)………………………………. 16,000
Gain on Sale of Machinery (Ga, +SE)………………… 4,000
61.The following year-end totals were taken from the records of Langston Company.
2015
2014
Prepaid insurance
$8,000
$5,200
Wages payable
7,000
0
Insurance expense
4,000
5,700
Wage expense
9,500
4,000
What is the amount of cash outflow associated with insurance during 2015?
a. $4,000
b. $2,800
c. $1,700
d. $6,800
Solution:
Insurance
2015Ending prepaid insurance=2015Beginning prepaid insurance + Insurance purchases during 2015– 2015Insurance expense
$8,000=$5,200 + Insurance purchases – $4,000; Insurance purchases=$6,800
62.The following year-end totals were taken from the records of Langston Company.
2015
2014
Prepaid insurance
$8,000
$5,200
Wages payable
7,000
0
Insurance expense
4,000
5,700
Wage expense
9,500
4,000
What is the amount of cash outflow associated with wages during 2015?
a. $9,500
b. $2,500
c. $5,500
d. $7,000
Solution:
Wages
2015Ending wages payable=2015Beginning wages payable + 2015Wage expense
–Wages paid during 2015
$7,000=$0 + $9,500 – Wages paid; Wages paid=$2,500
