multiple choice computational use the following information for questions 26 27 marc 4314501

multiple choice computational use the following information for questions 26 27 marc 4314501

MULTIPLE Choice—Computational

Use the following information for questions 26–27.

Marcellus Corp. provided the following information for calendar 2017: Marcellus adheres to ASPE.

Proceeds from issuing bonds……………….$200,000

Purchase of inventories……………………380,000

Purchase of treasury shares………………..60,000

Purchase of long-term investment…………….280,000

Dividends paid to preferred shareholders……….40,000

Proceeds from issuing preferred shares………..160,000

Proceeds from sale of equipment…………….40,000

26. The cash provided by (used in) investing activities during 2017 is

a) $40,000.

b) $(240,000).

c) $(400,000).

d) $(440,000).

27. The cash provided by financing activities during 2017 is

a) $360,000.

b) $320,000.

c) $260,000.

d) $220,000.

28. Selected information from Regan Ltd.'s 2017 accounting records is as follows:

Proceeds from sale of land…………………$300,000

Proceeds from long-term borrowings………….400,000

Purchase of plant assets…………………..280,000

Purchase of inventories……………………850,000

Proceeds from issuance of common shares……..300,000

Based on the above information, the cash provided by investing activities for calendar 2017 is

a) $20,000.

b) $200,000.

c) $320,000.

d) $400,000.

29. Selected information from Cordelia Corp.'s 2017 accounting records is as follows: Cordelia adheres to ASPE.

Proceeds from issuance of common shares……..$   400,000

Proceeds from issuance of bonds…………….1,200,000

Cash dividends paid on common shares………..160,000

Cash dividends paid on preferred shares……….60,000

Purchase of a FV-NI investment……………..120,000

Sale of shares to officers and employees

NOT included above…………………..100,000

Based on the above information, the cash provided by (used in) financing activities for calendar 2017 is

a) $160,000.

b) $180,000.

c) $(220,000).

d) $1,480,000.

Use the following information for questions 30–31.

Oswald Ltd. has recently decided to go public and has hired you as their independent accountant. They wish to adhere to IFRS and know that they must prepare a statement of cash flows. Their financial statements for 2017 and 2016 are provided below:

Statements of Financial Position

Dec 31/17Dec 31/16

Cash………………………….$  51,000$  24,000

Accounts receivable………………45,00027,000

Merchandise inventory…………….48,00060,000

Property, plant and equipment……….$76,000$120,000

Less accumulated depreciation…… (40,000)    36,000  (38,000)    82,000

Total Assets$180,000$193,000

Accounts payable………………..$  22,000 $  12,000

Income taxes payable……………..44,00049,000

Bonds payable…………………..45,00075,000

Common shares…………………27,00027,000

Retained earnings………………..    42,000    30,000

Total Liabilities & Shareholders’ Equity$180,000$193,000

Income Statement

Year ended December 31, 2017

Sales…………………………………………………….$1,050,000

Cost of sales……………………………………………….    894,000

Gross profit………………………………………………..156,000

Selling and administrative expenses………………………………      99,000

Income from operations……………………………………….57,000

Interest expense…………………………………………….        9,000

Income before taxes………………………………………….48,000

Income taxes……………………………………………….      12,000

Net income………………………………………………..$    36,000

The following additional data were provided for calendar 2017:

1.Dividends declared and paid were $24,000.

2.Equipment was sold for $30,000. This equipment originally cost $44,000, and had a book value of $36,000 at the time of sale. The loss on sale was included in “selling and administrative expenses,” as was the depreciation expense for the year.

3.Bonds were retired during the year at par.

30. On a statement of cash flows for calendar 2017, the cash provided by (used in) investing activities is

a) $6,000.

b) $30,000.

c) $(36,000).

d) $(44,000).

31. On a statement of cash flows for calendar 2017, the cash provided by (used in) by financing activities is

a) $6,000.

b) $24,000.

c) $(54,000).

d) $(30,000).

Use the following information for questions 32–33.

The statements of financial position for King Lear Corp. at the end of 2017 and 2016 are as follows:

    2017    2016

Cash………………………………………….$  75,000$105,000

Accounts receivable (net)……………………………180,000135,000

Merchandise inventory……………………………..210,000135,000

Prepaid expenses…………………………………30,00075,000

Land…………………………………………..270,000120,000

Buildings and equipment…………………………….270,000225,000

Accumulated depreciation—buildings and equipment………..(54,000)(24,000)

Total Assets……………………………………..$981,000$771,000

Accounts payable…………………………………$204,000$165,000

Salaries payable………………………………….36,00054,000

Notes payable—long-term…………………………..—120,000

Mortgage payable…………………………………90,000—

Common shares………………………………….627,000477,000

Retained earnings (deficit)…………………………..    24,000  (45,000)

Total Liabilities & Shareholders’ Equity$981,000$771,000

During 2017, land was acquired in exchange for common shares (which had a market value of $150,000 at the time). All equipment purchased was for cash. Equipment costing $15,000 was sold for $6,000 cash; book value of the equipment at the time of sale was $12,000, and the loss was included in net income. Cash dividends of $30,000 were declared and paid during the year. King adheres to ASPE and uses the indirect method when preparing the statement of cash flows.

32. The cash provided by (used in) investing activities was

a) $39,000.

b) $(54,000).

c) $(60,000).

d) $(204,000).

33. The cash provided by (used in) financing activities was

a) $90,000.

b) $(30,000).

c) $(60,000).

d) $0.

Use the following information for questions 34–35.

Banquo adheres to ASPE. Banquo Corp.'s transactions for the year ended December 31, 2017 included the following:

1.Purchased land for $220,000 cash.

2.Borrowed $220,000 from the bank on a long-term note.

3.Sold long-term investments for $200,000.

4.Accounts receivable decreased by $40,000.

5.Paid cash dividends of $240,000.

6.Issued 1,000 common shares for $100,000.

7.Purchased machinery and equipment for $50,000 cash.

8.Accounts payable increased by $80,000.

34. The cash used in investing activities for 2017 was

a) $(270,000).

b) $(150,000).

c) $(70,000).

d) $(20,000).

35. The cash provided by (used in) financing activities for 2017 was

a) $10,000.

b) $80,000.

c) $(180,000).

d) $(200,000).

Use the following information for questions 36–37.

ecaHecaRoss Corp.'s transactions for calendar 2017 included the following:

1.Acquired 50% of Lennox Ltd.'s common shares for $90,000 cash.

2.Issued 5,000 preferred shares in exchange for land with a fair value of $160,000.

3.Issued 11% bonds, par value $200,000, due 2020, for $196,000 cash.

4.Purchased a patent for $110,000 cash.

5.Borrowed $90,000 from Bank A.

6.Paid $60,000 toward a bank loan with Bank B.

7.Sold long-term investments for $398,000.

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