602 Chapter 13 Statement of Cash Flows
2.
SELF-STUDY QUESTIONS Answers at end of chapter
Cash flows from operating activities:
Cash received from customers^1 $1,107,000
Deduct: Cash paid for merchandise^2 $720,500
Cash paid for operating expenses^3 194,880
Cash paid for interest expense 26,000
Cash paid for income tax^4 50,500 991,880
Net cash flow from operating activities $115,120
Cash flows from investing activities:
Cash received from sale of:
Investments $ 60,000
Land 15,000 $ 75,000
Less: Cash paid for construction of building 115,000
Net cash flow used for investing activities (40,000)
Cash flows from financing activities:
Cash received from issuing mortgage
note payable $ 40,000
Less: Cash paid for dividends^5 70,670
Net cash flow used for financing activities (30,670)
Increase in cash $ 44,450
Cash at the beginning of the year 95,900
Cash at the end of the year $140,350Schedule of Noncash Investing and Financing Activities:
Issued common stock to retire bonds payable $100,000Computations:(^1) $1,100,000$7,000$1,107,000
(^2) $710,000$3,200$7,300$720,500
(^3) $196,000$380$1,500$194,880
(^4) $50,000$500$50,500
(^5) $74,670$10,000$14,000$70,670
Dowling Company
Statement of Cash Flows—Direct Method
For the Year Ended December 31, 2007
- An example of a cash flow from an investing
activity is:
A. receipt of cash from the sale of equipment.
B. receipt of cash from the sale of stock.
C. payment of cash for dividends.
D. payment of cash to acquire treasury stock. - An example of a cash flow from a financing
activity is:
A. receipt of cash from customers on account.
B. receipt of cash from the sale of equipment.
C. payment of cash for dividends.
D. payment of cash to acquire land.
3. Which of the following methods of reporting cash flows
from operating activities adjusts net income for rev-
enues and expenses not involving the receipt or pay-
ment of cash?
A. Direct method
B. Purchase method
C. Reciprocal method
D. Indirect method
4. The net income reported on the income statement for
the year was $55,000, and depreciation of fixed assets
for the year was $22,000. The balances of the current as-
set and current liability accounts at the beginning and
end of the year are as follows: