Question : 108. How should purchases, sales, and depreciation of plant assets be : 1229423

108. How should purchases, sales, and depreciation of plant assets be classified in Johnson’s statement of cash flows for the current year? (Assume the direct method is used by Johnson.) 
A. Purchases of plant assets are classified as investing activities; sales of plant assets are classified as financing activities; depreciation is classified as an operating activity.
B. Purchases of plant assets and depreciation are classified as investing activities; sales of plant assets are classified as financing activities.
C. Purchases and sales of plant assets are classified as investing activities; depreciation does not appear as an operating, financing, or investing activity.
D. Since plant assets are used to generate income from operations, purchases, sales, and depreciation of plant assets are all classified as operating activities.

109. Based solely on the data provided above, Johnson’s net cash flow from investing activities for the current year is: 
A. $160,000 net cash used by investing activities.
B. $147,000 net cash used by investing activities.
C. $13,000 net cash provided by investing activities.
D. $91,000 net cash used by investing activities.

An analysis of changes in selected balance sheet accounts of Hierarchy Corporation shows the following for the current year:
  
Hierarchy’s income statement for the current year includes a $9,600 gain on disposal of plant assets. All payments and proceeds relating to purchase or sale of plant assets were in cash.

110. The amount of cash paid by Hierarchy to acquire plant assets during the current year was: 
A. $252,000.
B. $504,000.
C. $724,000.
D. $768,000.

111. Total cash proceeds received by Hierarchy from sales of plant assets during the current year amounted to: 
A. $696,000.
B. $705,600.
C. $633,600.
D. $768,000.

112. How should purchases, sales, and depreciation of plant assets be classified in Hierarchy’s statement of cash flows for the current year? (Assume the direct method is used by Hierarchy.) 
A. Purchases of plant assets are classified as operating activities; sales of plant assets are classified as financing activities; depreciation is classified as an operating activity.
B. Purchases of plant assets and depreciation are classified as investing activities; sales of plant assets are classified as operating activities.
C. Purchases and sales of plant assets are classified as investing activities; depreciation does not appear as an operating, financing, or investing activity.
D. Since plant assets are used to generate income from operations, purchases, sales, and depreciation of plant assets are all classified as operating activities.

113. Based solely on the data provided above, Hierarchy’s net cash flow from investing activities for the current year is: 
A. $264,000 net cash provided by investing activities.
B. $264,000 net cash used by investing activities.
C. $201,600 net cash provided by investing activities.
D. $1,200,000 net cash provided by investing activities.

114. Haven Corporation issued $700,000 of 10-year bonds payable at par in 2005. During 2009 Haven paid $50,000 interest and an additional $233,333 to retire one-third of the bonds at par. These activities would be reported in Haven’s statement of cash flows for 2009 as: 
A. $283,333 net cash provided by financing activities.
B. $283,333 net cash used in financing activities.
C. $233,333 net cash used in financing activities, and $50,000 cash disbursed for operating activities.
D. $466,667 net cash provided by financing activities, and $50,000 cash disbursed for operating activities.

115. Hines Cannery issued capital stock in 2009 for $700,000. During 2009 the company paid dividends of $250,000. What is the effect of these events in Hines’ statement of cash flows for 2009? 
A. $700,000 cash provided by investing activities, and $250,000 cash disbursed for financing activities.
B. $700,000 cash provided by financing activities, and $250,000 cash disbursed for investing activities.
C. $700,000 cash provided by financing activities, and $250,000 cash disbursed for operating activities.
D. $450,000 net cash provided by financing activities.

116. The accountant for Foster Institute, Inc., determined the cash flow for several transactions to be as follows:
  
On the basis of the above transactions alone, determine the net cash flow from financing activities. 
A. $275,000 net cash used for financing activities.
B. $440,000 net cash provided by financing activities.
C. Zero: cash inflows equal cash outflows from financing activities.
D. $285,000 net cash provided by financing activities.

117. The 2010 statement of cash flows of Dickens Corporation shows $500,000 cash paid for dividends. If dividends in Dickens’ statement of retained earnings are reported at $550,000 then: 
A. Dickens’ dividends payable account must amount to $50,000 at the end of 2010.
B. Dickens’ Cash account must have increased by $50,000 in 2010.
C. Dickens’ dividends payable account must have increased by $50,000 in 2010.
D. Dickens’ dividends payable account must have decreased by $50,000 in 2010.

During 2009, the cash flows related to Global Data, Inc.’s lending and borrowing activities are summarized as follows: