Question : 131.During the current year, Atkins, Inc. sold a parcel of : 1237497

 

 

131.During the current year, Atkins, Inc. sold a parcel of land for $840,000 cash. The land had been purchased by Atkins several years ago for $410,000. Atkins, Inc. uses the indirect method to prepare its statement of cash flows. In order to reconcile net income to net cash flow from operating activities, net income must be:   

A. Decreased by $410,000.

 

B. Decreased by $430,000.

 

C. Increased by $430,000.

 

D. Not adjusted because the sale of land is classified as an investing activity.

$840,000 – $410,000 = $430,000 (decrease)

 

 

 

132.At the end of the first year of operations, the balance sheet of Midwood Medical Supply showed the following account balances: Accounts Receivable, $5,000; Accounts Payable, $6,000; Inventory, $3,000; and Unexpired Insurance, $2,000. The corporation reported net income of $79,000 for the year, including depreciation expense of $5,000, and uses the indirect method of computing net cash flow from operating activities. Solely on the basis of this information, net cash flow from operating activities is:   

A. $78,000.

 

B. $82,000.

 

C. $77,000.

 

D. $80,000.

$79,000 + $5,000 – $5,000 + $6,000 – $3,000 – $2,000 = $80,000

 

 

 

133.At the end of the first year of operations, Meacham’s balance sheet showed the following account balances: Accounts Receivable, $13,400; Inventory, $9,400; and Accounts Payable, $14,650. The company’s income statement reports net income of $37,400, including depreciation expense of $10,400. Using only the given information, compute Meacham’s net cash flow from operating activities using the indirect method.   

A. $65,250.

 

B. $39,650.

 

C. $24,350.

 

D. $26,650.

$37,400 – $13,400 – $9,400 + $14,650 + $10,400 = $39,650

 

 

 

134.Chapin Company reported net income of $410,000 for 2015. Balances of selected current asset and current liability accounts are as shown on the indicated dates:  Depreciation expense for 2015 amounted to $65,000. Using only the above information, compute Chapin’s net cash flow from operating activities (indirect method) for 2015:   

A. $470,600.

 

B. $467,400.

 

C. $460,600.

 

D. $448,600.

$410,000 + $65,000 – $9,400 – $11,000 – $6,000 = $448,600

 

 

 

135.Monarch Company uses the indirect method to prepare its statement of cash flows. The following information has been gathered for the current period:  On the basis of the above information only, Monarch Company’s statement of cash flows shows net cash flow from operating activities to be:   

A. $187,000.

 

B. $333,000.

 

C. $225,000.

 

D. $361,000.

$171,000 – $54,000 + $83,000 + $19,000 – $14,000 + $20,000 = $225,000

 

 

 

136.Empire Company uses the indirect method to prepare its statement of cash flows. The following information has been gathered for the current period:  Solely on the basis of the above information, Empire’s net cash flow from operating activities is:   

A. $338,000.

 

B. $428,000.

 

C. $343,000.

 

D. $358,000.

$309,000 + $15,000 + $68,000 + $17,000 – $22,000 – $29,000 = $358,000

 

 

 

137.Royal Corporation uses the indirect method of computing net cash flow from operating activities and reported the following for 2015: accounts receivable decreased by $10,300, merchandise inventory increased by $15,300, accounts payable decreased by $4,000, and income taxes payable increased by $18,800. If Royal Corporation reported net income for 2015 of $157,800 (including $34,800 of depreciation expense), net cash flow from operating activities for 2015 is:   

A. $202,400.

 

B. $132,800.

 

C. $164,800.

 

D. $221,700.

$157,800 + $34,800 + $10,300 – $15,300 – $4,000 + $18,800 = $202,400

 

 

 

138.At the end of 2015, Schenck Corporation sold its only piece of equipment for $9,000 cash, a price which resulted in a loss of $3,000. During 2015, depreciation expense recognized by Schenck was $1,000. Schenck uses the indirect method to compute net cash flow from operating activities. In reconciling net income to net cash flow from operating activities under the indirect method, the required adjustments based upon the given data:   

A. Increase net income by $4,000.

 

B. Increase net income by $1,000.

 

C. Decrease net income by $4,000.

 

D. Increase net income by $3,000.

$3,000 + $1,000 = $4,000

 

 

 

139.Alexander Company reported an increase of $185,000 in its accounts receivable during the year. The company’s statement of cash flows reported $500,000 of cash received from customers. What amount of net sales must Alexander have recorded?   

A. $315,000.

 

B. $685,000.

 

C. $500,000.

 

D. $185,000.

$500,000 + $185,000 = $685,000

 

 

 

140.Rent expense in Burr Company’s income statement is $480,000. If Prepaid Rent was $120,000 on January 1 and is $95,000 on December 31, the cash paid for rent during the year is:   

A. $480,000.

 

B. $455,000.

 

C. $360,000.

 

D. $575,000.

$480,000 + ($95,000 – $120,000) = $455,000

 

 

 

141.Free cash flow arises out of:   

A. Operating activities.

 

B. Investing activities.

 

C. Financing activities.

 

D. All three types of activities.

 

 

 

 

142.Peak pricing charges:   

A. A higher price when demand is high and a lower price when demand is low.

 

B. A lower price when demand is high and a higher price when demand is low.

 

C. A low price when demand is high and a lower price when demand is low.

 

D. A high price when demand is high and a higher price when demand is low.

 

 

 

 

143.From the viewpoint of stockholders or potential investors, which of the following cash flow measurements would be of least importance?   

A. The dollar amount of net cash flow from operating activities for the current year.

 

B. The trend in net cash flow from operating activities from year to year.

 

C. The corporation’s free cash flow for the current year.

 

D. The dollar amount of overall increase or decrease in cash for the current year.