Question :
131.The following information was selected from Save Mart’s accounting records : 1302929
131.The following information was selected from Save Mart’s accounting records during 2014:
Cash provided by operations $1,400,000
Long-term note payable issued to acquire land and building1,800,000
Common stock issued to retire preferred stock200,000
Proceeds from sale of long-term investment340,000
Cost of machinery purchased320,000
The machinery purchased required a 10% down payment with the balance due during 2015. How must is Save Mart’s net increase(decrease) in cash and cash equivalents for 2014?
132.Below are items from the accounting records of a national retailer. For each item, fill in the chart by indicating in which section of the statement of cash flows it would appear assuming the indirect method is used. For amounts you identified as operating, indicate whether the amount would have been added to or subtracted from net income in the operating activities section of the statement of cash flows. Any item that is not reported in any of the cash flow sections under the indirect method should be answered as ‘none’.
ItemsSectionAdd/Subtract
A.Accounts payable, increase
B.Accounts receivable, decrease
C.Accrued expenses payable, decrease
D.Capital expenditures made for cash
E.Income taxes payable, increase
F.Depreciation expense
G.Dividends paid
H.Interest payable, decrease
I.Issuance of common stock
J.Issuance of a long-term note payable
K.Cash received from customers
L.Merchandise inventories, decrease
M.Cash paid to buy a patent
N.Proceeds from the sale of equipment
O.Purchase another company
P.Purchase of treasury stock
Q.Repayment of long-term debt
133.During the year, Macklin Grill earned net income of $11,800 during the year. Beginning and ending balances for the year for selected accounts follow:
Ending Beginning
Cash $21,000 $19,400
Accounts receivable 18,900 21,100
Inventory 36,000 33,500
Prepaid insurance 4,000 1,200
Accumulated depreciation 6,500 3,200
Accounts payable 13,500 17,000
Wages payable 2,100 1,900
Prepare the operating activities section of the statement of cash flows using the indirect method for the year. No long-term assets were acquired or sold during the year.
CHALLENGE EXERCISES
134.The excerpts below were taken from Sonata, Inc.’s comparative balance sheet follows.
December 31, 2014December 31, 2013
Property, plant, & equipment
Land $ 94,000 $116,000
Equipment 580,000 576,000
Accumulated depreciation 216,000 219,000
New equipment purchased during 2014 totaled $44,000, paid for with a 20% down payment and the balance paid with a long-term note payable over 4 years. Land with an original cost of $22,000 was sold for $52,000 during 2014. Sonata’s 2014 income statement disclosed net income totaling $54,000, equipment depreciation expense of $31,000, a $2,000 loss on the sale of equipment, and a gain on the sale of land.
Show how the effects of the transactions on the property, plant, and equipment classification will appear on a statement of cash flows prepared using the indirect method for 2014.
135.The following selected information is taken from the accounting records of Metro Communications for the years ending December 31, 2014 and 2013:
Amounts in millionsDecember 31, 2014December 31, 2013
Accumulated depreciation$1,110$1,100
Net income (loss)2,6002,800
Accounts payable650700
Building2,3001,840
Dividends payable240150
Retained earnings780350
Depreciation expense220210
Loss on sale of building200
During 2014, Metro Communications sold a building with a book value of $990 and an original cost of $1,200. The company also purchased a new building during 2014 for cash. Prepare the investing and financing activities sections of the statement of cash flows for the year ending December 31, 2014.
