accounting homework – accountsguru

Homework Questions

1. The following is a list of various cash payments and cash receipts:

Cash paid to suppliers and employees $400,000

Dividends paid 18,000

Interest paid 12,000

Purchase of plant assets 45,000

Interest and dividends received 17,000

Payments to settle short-term debt 29,000

Income taxes paid 23,000

Cash received from customers 601,000

Based only on the above items, net cash flows from operating activities are:

a. $138,000

b. $91,000

c. $183,000

d. $120,000

2. Where is the change in cash shown on the statement of cash flows?

a. In the top part, before the operating activities section

b. In one of the operating, investing, or financing activities sections

c. In the bottom part, following the financing activities section

d. None of the above

3. On March 1, Jumper Products (a U.S. firm) purchased manufacturing inputs from a Mexican supplier for 20,000 pesos payable on June 1. The exchange rate for pesos on March 1 was $0.17. If the exchange rate increases to $0.19 on June 1, what amount of gain or loss would be reported by Jumper related to the currency exchange?

a. $400 gain

b. $200 loss

c. $400 loss

d. $200 gain

4. Schoomer Corp. paid $200,000 to purchase 30 percent of the stock of Shape, Inc. this year. At the end of the year, Shape reported net income of $50,000 and declared and paid dividends of $20,000. If Schoomer uses the equity method to account for its investment in Shape, at what amount would the investment be reported at the end of the year?

a. $200,000

b. $209,000

c. $215,000

d. $221,000

5. During the current year, Winter Corporation purchased common shares of Summertime Development Corp. (LDC) for $200,000, received a $2,000 dividend from LDC, and saw the market value of its investment in LDC increase by $4,000 by year end. If Winter considered its investment in LDC to be securities available for sale, what amount will Winter report as investment income on its income statement this year?

a. $2,000

b. $4,000

c. $6,000

d. None of the above

ALLEN COMPANY

Comparative Balance Sheet

Dec. 31, 2012 Dec. 31, 2011

Assets

Cash $ 28,000 $13,000

Accounts receivable 18,000 14,000

Prepaid expenses 7,000 9,000

Inventory 25,000 15,000

Long-term investments -0- 18,000

Equipment 60,000 30,000

Accumulated depreciation—equipment (18,000) (14,000)

Total assets $120,000 $85,000

Liabilities and Stockholders’ Equity

Accounts payable $ 25,000 $ 7,000

Bonds payable 37,000 45,000

Common stock 40,000 23,000

Retained earnings 18,000 10,000

Total liabilities and stockholders’ equity $116,000 $85,000

Additional information:

1. Net income for the year ending December 31, 2012, was $20,000.

2. Cash dividends of $12,000 were declared and paid during the year.

3. Long-term investments that had a book value of $18,000 were sold for $16,000.

4. Sales for 2012 are $120,000.

Instructions

1. Prepare a statement of cash flows for the year ended December 31, 2012, using the indirect method

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