Reading 34: Understanding the Cash Flow Statement - LOS f, following, company, border, about

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Q28. An analyst has gathered the following information about a company:

Income Statement for the Year
Sales							$1,500
Expenses
	COGS					$1,300
	Depreciation					20
	Goodwill					10
	Int. Expenses					40
					Total expenses		1,370
Income from cont. op.							130
				Gain on sale			30
Income before tax							160
Income tax							64
Net Income							$96

 

Additional Information:
Dividends paid	$30
Common stock sold	20
Equipment purchased	50
Bonds issued	80
Fixed asset sold for (original cost of $100 with accumulated depreciation of $70)	60
Accounts receivable decreased by	30
Inventory decreased by	20
Accounts payable increased by	20
Wages payable decreased by	10

What is the cash flow from financing?

A)   $110.

B)   $130.

C)   $70.

Q29. The Red Company’s balance sheet as of December 31, 2004 was as follows:

	Dec. 31, 2003	Dec. 31, 2004
Cash	$1,500,000	$1,900,000
Accounts Receivable	3,000,000	3,400,000
Inventory	2,300,000	2,500,000
Property, Plant & Equipment	16,700,000	19,700,000
Less Accumulated Depreciation	(5,300,000)	(8,200,000)
Total Assets	$18,200,000	$19,300,000
Accounts Payable	$2,100,000	$1,900,000
Interest Payable	800,000	1,200,000
Income Taxes Payable	1,000,000	800,000
Notes Payable	2,700,000	2,900,000
Deferred Income Taxes	2,600,000	2,900,000
Common Stock	1,000,000	1,000,000
Retained Earnings	8,000,000	8,600,000
	$18,200,000	$19,300,000

Red’s interest expense was $900,000 and income tax expense was $1,000,000 in 2004. Red prepares its Statements of Cash Flows using the direct method.

The other cash outflows section of Cash Flow from Operations (CFO) for 2004 would total:

A)   $1,400,000.

B)   $2,100,000.

C)   $1,700,000.

Q30. Financial information for Jefferson Corp. for the year ended December 31^st, was as follows:

Sales	$3,000,000
Purchases	1,800,000
Inventory at Beginning	500,000
Inventory at Ending	800,000
Accounts Receivable at Beginning	300,000
Accounts Receivable at Ending	200,000
Other Operating Expenses Paid	400,000

Based upon this data and using the direct method, what was Jefferson Corp.’s cash flow from operations (CFO) for the year ended December 31^st?

A)   $1,200,000.

B)   $800,000.

C)   $900,000.

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