Question

Below are the subtotals from the December 31, 2019 statements of cash flows from Jamison Company...

Below are the subtotals from the December 31, 2019 statements of cash flows from Jamison Company and Adams Company. Why might Jamison Company have negative financing activities?

Jamison Company

Adams Company

Operating activities

$37,800

$1,250

Investing activities

(6,250)

4,900

Financing activities

(9,910)

15,490

Net change in cash

$21,640

$21,640

Multiple Choice

  • Jamison Company invested in a certificate of deposit.

  • Jamison Company paid salaries to its employees.

  • Jamison Company paid cash for inventory.

  • Jamison Company paid a dividend to its shareholders.

  • Typewriter Plus purchased equipment for $40,000 on September 30, 2019. The equipment has a residual value of $8,000 and estimated life of 8 years. Calculate the net book value of the equipment on December 31, 2020.

    Multiple Choice

  • $32,000

  • $28,000

  • $35,000

  • $36,000

  • Which of the following statements about debits is false?

    Multiple Choice

  • Debits increase assets.

  • Debits decrease stockholders’ equity.

  • Debits increase liabilities.

  • Debits decrease liabilities.

  • Elephant Company calculated depreciation per year of $8,000 on a building it purchased on January 1, 2019. How much accumulated depreciation will appear in the December 31, 2020 financial statements?

    Multiple Choice

  • $12,000

  • $24,000

  • $16,000

  • $8,000

Business   Accounting   
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Homework Answers

Answer #1

Answer 1. Jasmin Company paid a dividend to its shareholders

Payment of dividend is included in financing activity in cashflow statement.

Answer 2. 35,000

Depreciation based on Straight line Method = (Cost - Residual value)/ Life of asset

= 40000-8000/8 years

= 4000 per year.

For 2019 October to December months depreciation should be provided = 4000 × 3/12 = 1000

For 2020 depreciation = 4000

Total depreciation till 2020 = 5000 (1000+4000)

Book value on December 31, 2020 = 35000 (40,000 - 5000)

Answer 3. Debit increase Liability

Debit decreases liability and not increase Because Liability have credit balance.

Answer 4. $16,000

December 2019 Depriciation = 8000

December 2020 Depreciation = 8000

Accumulated depriciation as on December 2020 = 16,000 (8000+8000)

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