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This Study Resource Was: Cash Flow - Problems

During 2013, Juan Corp. had the following cash flow activities related to financing: - Converting preferred stock to common shares for $360,000 - Paying a cash dividend of $186,000 - Paying $2,450,000 for early retirement of bonds - Receiving $300,000 from treasury stock sale The net cash used in financing activities was $2,336,000.

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63 views

This Study Resource Was: Cash Flow - Problems

During 2013, Juan Corp. had the following cash flow activities related to financing: - Converting preferred stock to common shares for $360,000 - Paying a cash dividend of $186,000 - Paying $2,450,000 for early retirement of bonds - Receiving $300,000 from treasury stock sale The net cash used in financing activities was $2,336,000.

Uploaded by

venice cambry
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Cash Flow – Problems

1. During 2013, Juan Corp. had the following activities related to its financial operations:
Carrying value of convertible preferred stock in Stout,
converted into common shares of Stout P 360,000
Payment in 2013 of cash dividend declared in 2012 to
preferred shareholders 186,000
Payment for the early retirement of long-term bonds payable
(carrying amount P2,420,000) 2,450,000
Proceeds from the sale of treasury stock (on books at cost of P258,000) 300,000

The amount of net cash used in financing activities to appear in Stout's statement of cash flows for
2013 should be

m
a. P1,790,000.

er as
b. P1,976,000.

co
c. P2,336,000.

eH w
d. P2,348,000

o.
rs e
Solution: P300,000 – P186,000 – P2,450,000 = P2,336,000.
ou urc
2. During 2013, Youtube Company earned net income of P434,000 which included deprecia-tion
expense of P78,000. In addition, the company experienced the following changes in the account
o

balances listed below:


Increases Decreases
aC s

Accounts payable P45,000 Accounts receivable P12,000


vi y re

Inventory 36,000 Accrued liabilities 24,000


Prepaid insurance 33,000
Based upon this information what amount will be
ed d

shown for net cash provided by operating activities for 2013?


a. 542,000
ar stu

b. 515,000
c. 335,000
d. 317,000
is

Solution: P434,000 + P78,000 + P45,000 – P36,000 + P12,000 – P24,000 + P33,000 = P542,000.


Th

3. Net cash flow from operating activities for 2013 for Luffy Inc. was P350,000. The following items
are reported on the financial statements for 2013:
sh

Depreciation and amortization 20,000


Cash dividends paid on common stock 12,000
Increase in accounts receivable 24,000

a. 306,000.
b. 314,000.

This study source was downloaded by 100000816852252 from CourseHero.com on 06-05-2021 09:00:33 GMT -05:00

https://www.coursehero.com/file/95486563/Cash-Flow-probdocx/
c. 346,000.
d. 354,000.
Solution: 350,000 – 20,000 + 24,000 = 354,000

4. The net income for the year ended December 31, 2013, Calibri Company was P1,500,000.
Additional information is as follows:

Depreciation on plant assets P600,000


Amortization of leasehold improvements 340,000
Provision for doubtful accounts on short-term receivables 120,000
Provision for doubtful accounts on long-term receivables 100,000
Interest paid on short-term borrowings 80,000
Interest paid on long-term borrowings 60,000

Based solely on the information given above, what should be the net cash provided by operating
activities in the statement of cash flows for the year ended December 31, 2013?

m
er as
a. P2,560,000.

co
b. P2,660,000.

eH w
c. P2,640,000.

o.
d. P2,800,000.

rs e
ou urc
Solution: P1,500,000 + P600,000 + P340,000 + P120,000 + P100,000 = P2,660,000.

5. Equipment which cost P426,000 and had accumulated depreciation of P228,000 was sold for
o

P222,000. This transaction should be shown on the statement of cash flows (indirect method) as
a(n)
aC s

a. addition to net income of P24,000 and a P222,000 cash inflow from financing activities.
vi y re

b. deduction from net income of P24,000 and a P198,000 cash inflow from investing
activities.
c. deduction from net income of P24,000 and a P222,000 cash inflow from investing
ed d

activities.
d. addition to net income of P24,000 and a P198,000 cash inflow from financing activities.
ar stu

Solution:
426,000
is

(228,000)
(222,000)
Th

24,000
sh

This study source was downloaded by 100000816852252 from CourseHero.com on 06-05-2021 09:00:33 GMT -05:00

https://www.coursehero.com/file/95486563/Cash-Flow-probdocx/
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