Question

Item 4A. Krech Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance...

Item 4A.

Krech Corporation's comparative balance sheet appears below:

Comparative Balance Sheet
Ending Balance Beginning Balance
Assets:
Current assets:
Cash and cash equivalents $ 31,000 $ 28,000
Accounts receivable 18,000 20,000
Inventory 58,000 56,000
Prepaid expenses 12,000 10,000
Total current assets 119,000 114,000
Property, plant, and equipment 374,000 354,000
Less accumulated depreciation 190,000 165,000
Net property, plant, and equipment 184,000 189,000
Total assets $ 303,000 $ 303,000
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $ 13,000 $ 9,000
Accrued liabilities 52,000 53,000
Income taxes payable 67,000 69,000
Total current liabilities 132,000 131,000
Bonds payable 76,000 73,000
Total liabilities 208,000 204,000
Stockholders’ equity:
Common stock 28,000 26,000
Retained earnings 67,000 73,000
Total stockholders’ equity 95,000 99,000
Total liabilities and stockholders' equity $ 303,000 $ 303,000

The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.

Which of the following is correct regarding the operating activities section of the statement of cash flows?

Multiple Choice

  • The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income
  • The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income
  • The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income
  • The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income

4B.

Financial statements of Rukavina Corporation follow:

Comparative Balance Sheet
Ending Balance Beginning Balance
Assets:
Cash and cash equivalents $ 40 $ 37
Accounts receivable 98 88
Inventory 57 47
Property, plant, and equipment 768 640
Less accumulated depreciation 362 315
Total assets $ 601 $ 497
Liabilities and stockholders' equity:
Accounts payable $ 80 $ 84
Bonds payable 174 270
Common stock 108 88
Retained earnings 239 55
Total liabilities and stockholders' equity $ 601 $ 497

Income Statement
Sales $ 785
Cost of goods sold 351
Gross margin 434
Selling and administrative expense 113
Net operating income 321
Income taxes 115
Net income $ 206

Cash dividends were $22. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows.

The net cash provided by (used in) investing activities for the year was:

Multiple Choice

  • $(128)
  • $128
  • $(22)
  • $22

Homework Answers

Answer #1

Solution 4A:

Change in account Payable = $13000 - $9000 = $4000 Increase

Change in Accrued Liabilities = $52000 - $53000= $1000 decrease

Since there is Increase in Accounts payable, It will be added to the net income and since there is decrease in Accrues liabilities, it will be substracted from net income.

Hence first option is correct.

Solution 4B:

Net Cash provided (used in) investing Activities = Purchase of Property, Plant and Equipment

= $640- $768 = -$128 (i.e. Net cash used in Investment Activities)

Hence first option is correct.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Krech Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current...
Krech Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current assets: Cash and cash equivalents $ 31,000 $ 28,000 Accounts receivable 18,000 20,000 Inventory 58,000 56,000 Prepaid expenses 12,000 10,000 Total current assets 119,000 114,000 Property, plant, and equipment 374,000 354,000 Less accumulated depreciation 190,000 165,000 Net property, plant, and equipment 184,000 189,000 Total assets $ 303,000 $ 303,000 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 13,000 $ 9,000 Accrued liabilities 52,000...
Illies Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current...
Illies Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current assets: Cash and cash equivalents $ 48,000 $ 41,000 Accounts receivable 27,000 29,800 Inventory 75,000 77,800 Total current assets 150,000 148,600 Property, plant, and equipment 382,000 355,000 Less accumulated depreciation 172,000 140,000 Net property, plant, and equipment 210,000 215,000 Total assets $ 360,000 $ 363,600 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 26,000 $ 27,800 Accrued liabilities 62,000 67,800 Income taxes payable...
Krech Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current...
Krech Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current assets: Cash and cash equivalents $ 35,000 $ 27,300 Accounts receivable 20,000 24,000 Inventory 66,000 62,000 Prepaid expenses 12,800 10,400 Total current assets 133,800 123,700 Property, plant, and equipment 422,000 402,000 Less accumulated depreciation 211,000 180,900 Net property, plant, and equipment 211,000 221,100 Total assets $ 344,800 $ 344,800 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 19,400 $ 13,000 Accrued liabilities 56,000...
Carriveau Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets:...
Carriveau Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current assets: Cash and cash equivalents $ 31 $ 34 Accounts receivable 73 67 Inventory 74 64 Total current assets 178 165 Property, plant, and equipment 456 370 Less accumulated depreciation 207 196 Net property, plant, and equipment 249 174 Total assets $ 427 $ 339 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 49 $ 56 Accrued liabilities 19 20 Income taxes...
Alcoser Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets:...
Alcoser Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 103 $ 45 Accounts receivable 57 60 Inventory 77 113 Property, plant, and equipment 650 558 Less accumulated depreciation 256 230 Total assets $ 631 $ 546 Liabilities and stockholders' equity: Accounts payable $ 65 $ 74 Accrued liabilities 41 40 Income taxes payable 28 52 Bonds payable 253 224 Common stock 99 93 Retained earnings 145 63 Total...
Alcoser Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets:...
Alcoser Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 103 $ 45 Accounts receivable 57 60 Inventory 77 113 Property, plant, and equipment 650 558 Less accumulated depreciation 256 230 Total assets $ 631 $ 546 Liabilities and stockholders' equity: Accounts payable $ 65 $ 74 Accrued liabilities 41 40 Income taxes payable 28 52 Bonds payable 253 224 Common stock 99 93 Retained earnings 145 63 Total...
Financial statements of Rukavina Corporation follow: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and...
Financial statements of Rukavina Corporation follow: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 26 $ 23 Accounts receivable 81 74 Inventory 39 33 Property, plant, and equipment 558 500 Less accumulated depreciation 330 301 Total assets $ 374 $ 329 Liabilities and stockholders' equity: Accounts payable $ 44 $ 56 Bonds payable 105 130 Common stock 81 74 Retained earnings 144 69 Total liabilities and stockholders' equity $ 374 $ 329 Income Statement Sales...
Financial statements of Rukavina Corporation follow: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and...
Financial statements of Rukavina Corporation follow: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 57 $ 55 Accounts receivable 81 86 Inventory 62 63 Property, plant, and equipment 526 500 Less accumulated depreciation 263 250 Total assets $ 463 $ 454 Liabilities and stockholders' equity: Accounts payable $ 113 $ 89 Bonds payable 316 360 Common stock 95 94 Retained earnings (61 ) (89 ) Total liabilities and stockholders' equity $ 463 $ 454 Income...
Financial statements of Rukavina Corporation follow: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and...
Financial statements of Rukavina Corporation follow: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 33 $ 37 Accounts receivable 54 59 Inventory 44 45 Property, plant, and equipment 436 410 Less accumulated depreciation 218 205 Total assets $ 349 $ 346 Liabilities and stockholders' equity: Accounts payable $ 86 $ 71 Bonds payable 226 270 Common stock 86 85 Retained earnings (49 ) (80 ) Total liabilities and stockholders' equity $ 349 $ 346 Income...
Carr Corporation's comparative balance sheet and income statement for last year appear below: Comparative Balance Sheet...
Carr Corporation's comparative balance sheet and income statement for last year appear below: Comparative Balance Sheet Ending Balance Beginning Balance Cash and cash equivalents $ 3,150 $ 25,300 Accounts receivable 90,500 78,100 Inventory 42,100 48,410 Prepaid expenses 9,270 15,450 Long-term investments 259,200 216,000 Property, plant, and equipment 525,300 504,000 Less accumulated depreciation 326,400 318,600 Total assets $ 603,120 $ 568,660 Accounts payable $ 9,900 $ 27,250 Accrued liabilities 26,160 18,020 Income taxes payable 52,900 50,600 Bonds payable 164,800 220,000 Common...