Cash Flow Exercise

This exercise quizzes you on your knowledge of the statement of cash flow and its components.

Problems

  1. Use the following abbreviations to indicate in which section of the statement of cash flows you would find each item below.

    O = Operating Section

    I = Investing Section

    F = Financing Section

    1. Issuance of bonds payable
    2. Cash paid for interest
    3. Cash collected from customers
    4. Paid dividends
    5. Sold equipment
    6. Issued preferred stock
    7. Cash paid for inventory purchases
    8. Purchased an equity investment in another company
    9. Cash received from dividend income

  2. Roy Company enjoyed sales during 20X1 of $120,000. Roy began the year with $56,000 in accounts receivable and ended the year with $79,000 in accounts receivable. Determine the amount of cash Roy collected from customers during 20X1.

  3. Whitmore Corporation had cost of goods sold of $4,793,000 during the year. Whitmore had the following account balances at the beginning and end of the year.

    Figure 17.37 Change in Inventory and Account Payable Balances



    What amount of cash did Whitmore pay for inventory purchases this year?

  4. Jamison Company's income statement for 20X6 is below.

    Figure 17.38 Jamison Company Income Statement as of 12/31/X6




    Figure 17.39 Selected Balance Sheet Accounts from the Beginning and End of 20X6



    Determine Jamison's cash flow from operations using both the direct and indirect methods.

  5. Killian Corporation had several transactions during the year that impacted long-term assets and liabilities and owners' equity. Determine if each of the following items would be shown in investing activities, financing activities or neither.

    Figure 17.40 Determination of Cash Flow Balances

    Determination of cash flow balances

  6. Ruthers Corporation began business on January 1, 20X5. The financial statements for Ruthers' first year are given below. Because it is the first year of the company, there are no beginning balances for the balance sheet accounts. This should simplify your preparation of the cash flow statement.

    Figure 17.41 Ruthers Corporation Income Statement as of 12/31/X5

    Ruthers Corporation Income Statement 12/31/XS


    Figure 17.42 Ruthers Corporation Balance Sheet 12/31/X5




    Additional Information:

    • Ruthers purchased land for $14,000 cash.
    • Common stock was issued for $4,500.
    • A note payable was signed for $10,000 cash.


    Prepare Ruthers' statement of cash flows for 20X5 using the indirect method of calculating cash flows from operations.

  7. Looney Company is in the process of preparing financial statements for the year ended 12/31/X9. The income statement as of 12/31/X9 and comparative balance sheets are presented below. Note that the Balance Sheet is presented with the most current year first, as is done in practice.

    Figure 17.43 Looney Company Income Statement as of 12/31/X9



    Figure 17.44 Looney Company Balance Sheet December 31, 20X9 and 20X8

    Looney Company Balance Sheet Dec 31, 20X9 and 20X8


    The following additional information has been assembled by Looney's accounting department:

    1. Equipment was purchased for $90.
    2. Long-term debt of $70 was issued for cash.
    3. Looney issued eleven shares of common stock for cash during 20X9.

    Prepare Looney's statement of cash flows as of 12/31/X9 using the direct method.

  8. The following information relates to Henrich's Hat Store Inc. for the year ended December 31, 20X8.

    Figure 17.45 Henrich's Hat Store Inc. Balance Sheet



    Figure 17.46 Henrich's Hat Store Inc. Income Statement for the Year Ended December 31, 20X8

    Henrich's Hat Store Inc Income statement


    Other information:

    • The company purchased a building and fixtures with cash during the year, but none were sold.
    • Dividends of $170,000 were declared and paid.
    • Proceeds from the sale of common stock totaled $520,000.
    • Land was purchased for $300,000 cash.

      Prepare the statement of cash flows for Henrich's Hat Store Inc. for the year ended December 31, 20X8 using the indirect method of calculating cash flows from operations.