99. Hogan Company had the following account balances for 2006:

	Dec. 31	Jan. 1
Accounts receivable	$44,000	$35,000
Accounts payable	60,000	55,000
Prepaid insurance	15,000	10,000

Hogan reported net income of $300,000 for 2006. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2006 reported on the statement of cash flows?

A) $291,000.

B) $290,000.

C) $281,000.

D) $301,000.

Answer: A Learning Objective: 4 Level of Learning: 3

Rationale:

Net income	$300,000
Increase in accounts receivable	(9,000	)
Increase in accounts payable	5,000
Increase in prepaid insurance	(5,000	)
	$291,000

100. Hanson Company had the following account balances for 2006:

	Dec. 31	Jan. 1
Inventory	$40,000	$35,000
Accounts payable	40,000	55,000

Hanson reported net income of $90,000 for 2006. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2006 reported on the statement of cash flows?

A) $ 70,000.

B) $ 80,000.

C) $100,000.

D) $110,000.

Answer: A Learning Objective: 4 Level of Learning: 3

Rationale:

Net income	$90,000
Increase in inventory	(5,000	)
Decrease in accounts payable	(15,000	)
	$70,000

101. A company reported interest expense of $540,000 for the year. Interest payable was $35,000 and $75,000 at the beginning and the end of the year, respectively. What was the amount of interest paid?

A) $580,000.

B) $615,000.

C) $500,000.

D) $575,000.

Answer: C Learning Objective: 4 Level of Learning: 3

Rationale:

Interest expense	540,000
Interest payable		40,000
Cash		500,000

102. A firm reported (in millions of dollars) net cash inflows (outflows) as follows: operating $75, investing ($200), and financing $350. The beginning cash balance was $250. What was the ending cash balance?

A) $875.

B) $ 25.

C) $475.

D) $125.

Answer: C Learning Objective: 1 Level of Learning: 3

Rationale: $75 - $200 + $350 + $250 = $475

103. During the year, cash increased by $300 million. Investing and financing activities created positive cash flow totaling $500 million. What were net cash flows from operating activities on the statement of cash flows?

A) Inflow of $300 million.

B) Outflow of $200 million.

C) Outflow of $300 million.

D) Inflow of $600 million.

Answer: B Learning Objective: 3 Level of Learning: 3

Rationale: $300 $500 = ($200)

104. Bowers Corporation reported the following (in thousands of dollars) for the year:

	Balance
	Beginning	Ending
Accounts receivable	$600	$850
Allowance for bad debts	40	35

Sales on account were $1,900 and bad debt expense was $18 for the year. How much cash was collected from customers on account?

A) $1,627.

B) $1,642.

C) $1,638.

D) $2,142.

Answer: A Learning Objective: 3 Level of Learning: 3

Rationale:

Cash	1,627
Accounts receivable	250
Allowance for bad debts	5
Bad debt expense	18
Sales revenue		1,900

105. Sneed Corporation reported balances in the following accounts for the current year:

	Beginning	Ending
Income tax payable	$50	$30
Deferred tax liability	80	140

Income tax expense was $230 for the year. What was the amount paid for taxes?

A) $280.

B) $220.

C) $210.

D) $190.

Answer: D Learning Objective: 3 Level of Learning: 3

Rationale:

Income tax expense	230
Income tax payable	20
Deferred tax liability		60
Cash		190

106. Dooling Corporation reported balances in the following accounts for the current year:

	Beginning	Ending
Inventories	$600	$300
Accounts payable	300	500

Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?

A) $7,000.

B) $7,200.

C) $7,300.

D) $7,500.

Answer: A Learning Objective: 3 Level of Learning: 3

Rationale:

Cost of goods sold	7,500
Inventory		300
Accounts payable		200
Cash		7,000

107. A firm reported salary expense of $239,000 for the current year. The beginning and ending balances in salaries payable were $40,000 and $15,000, respectively. What was the amount of cash paid for salaries?

A) $214,000.

B) $289,000.

C) $264,000.

D) $239,000.

Answer: C Learning Objective: 3 Level of Learning: 3

Rationale:

Salary expense	239,000
Salaries payable	25,000
Cash		264,000

108. Goodfellow Corporation reported pension expense of $477 for the current year. The beginning and ending balances in the prepaid pension expense account were $50 and $30, respectively. What was the amount of cash paid into the pension fund?

A) $477.

B) $457.

C) $497.

D) None of the above is correct.

Answer: B Learning Objective: 5 Level of Learning: 3

Rationale:

Pension expense	477
Prepaid pension expense		20
Cash		457

109. Melanie Corporation declared cash dividends of $13,500 during the current year. The beginning and ending balances in dividends payable were $450 and $750, respectively. What was the amount of cash paid for dividends?

A) $12,750.

B) $13,800.

C) $12,900.

D) $13,200.

Answer: D Learning Objective: 6 Level of Learning: 3

Rationale:

Retained earnings	13,500
Dividends payable		300
Cash		13,200