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    Thea Kimberly Oamil
    Holland Corp had a building destroyed by a tornado. The building cost $100,000 and had $48,000 in accumulated depreciation, for a book value of $52,000. Holland received a $21,000 cash settlement from their insurance company for the loss. Therefore, the net change in cash flows from investing activities on Holland's cash flow statement should be an increase of $31,000, which is the difference between the book value and insurance settlement.

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    P 1

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    Thea Kimberly Oamil
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    Holland Corp had a building destroyed by a tornado. The building cost $100,000 and had $48,000 in accumulated depreciation, for a book value of $52,000. Holland received a $21,000 cash settlement from their insurance company for the loss. Therefore, the net change in cash flows from investing activities on Holland's cash flow statement should be an increase of $31,000, which is the difference between the book value and insurance settlement.

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    Holland Corp had a building destroyed by a tornado. The building cost $100,000 and had $48,000 in accumulated depreciation, for a book value of $52,000. Holland received a $21,000 cash settlement from their insurance company for the loss. Therefore, the net change in cash flows from investing activities on Holland's cash flow statement should be an increase of $31,000, which is the difference between the book value and insurance settlement.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    528 views3 pages

    P 1

    Uploaded by

    Thea Kimberly Oamil
    Holland Corp had a building destroyed by a tornado. The building cost $100,000 and had $48,000 in accumulated depreciation, for a book value of $52,000. Holland received a $21,000 cash settlement from their insurance company for the loss. Therefore, the net change in cash flows from investing activities on Holland's cash flow statement should be an increase of $31,000, which is the difference between the book value and insurance settlement.

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    © All Rights Reserved
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    of 3

    5. In year 1, a tornado completely destroyed a building belonging to Holland Corp.

    The building cost


    $100,000 and had accumulated depreciation of $48,000 at the time of the loss. Holland received a
    cash settlement from the insurance company and reported an extraordinary loss of $21,000. In
    Hollands year 1 cash flow statement, the net change reported in the cash flows from investing
    activities section should be a
    a. $10,000 increase.
    b. $21,000 decrease.
    c. $31,000 increase.
    d. $52,000 decrease.

    (c) The building which was destroyed had a book value of $52,000 ($100,000
    $48,000). The cash settlement from the insurance company resulted in a loss of
    $21,000. Therefore, the cash inflow from this investing activity must be $31,000
    as shown below.

    24. Metro, Inc. reported net income of $150,000 for year 1. Changes occurred in several balance
    sheet accounts during year 1 as follows:
    Investment in Videogold, Inc. stock, carried on the equity basis $5,500 increase Accumulated
    depreciation, caused by major repair to projection equipment 2,100 decrease Premium on bonds
    payable 1,400 decrease Deferred income tax liability (long-term) 1,800 increase In Metros year 1
    cash flow statement, the reported net cash provided by operating activities should be
    a. $150,400
    b. $148,300
    c. $144,900
    d. $142,800

    Items 33 through 36 relate to data to be reported in the statement of cash flows of Debbie Dress
    Shops, Inc. based on the following information:
    Debbie Dress Shops, Inc. BALANCE SHEETS
    December 31 Year 2 Year 1
    Assets Current assets:
    Cash $ 300,000 $ 200,000
    Accounts receivablenet 840,000 580,000
    Merchandise inventory 660,000 420,000
    Prepaid expenses 100,000 50,000
    Total current assets 1,900,000 1,250,000

    Long-term investments 80,000


    Land, buildings, and fixtures 1,130,000 600,000
    Less accumulated depreciation 110,000 50,000
    1,020,000
    550,000
    Total assets $3,000,000 $1,800,000

    Equities Current liabilities:


    Accounts payable $ 530,000 $ 440,000
    Accrued expenses 140,000 130,000
    Dividends payable 70,000 T
    otal current liabilities 740,000 570,000
    Note payabledue year 4 500,000
    Stockholders equity:
    Common stock 1,200,000 900,000
    Retained earnings 560,000 330,000 1,760,000 1,230,000
    Total liabilities and stockholders equity $3,000,000 $1,800,000

    Debbie Dress Shops, Inc. INCOME STATEMENTS


    Year ended December 31 Year 2 Year 1 Net credit sales $6,400,000 $4,000,000 Cost of goods sold
    5,000,000 3,200,000 Gross profit 1,400,000 800,000 Expenses (including income taxes) 1,000,000
    520,000 Net income $400,000 $280,000 Additional information available included the following:
    All accounts receivable and accounts payable are related to trade merchandise. Accounts payable are
    recorded net and always are paid to take all of the discount allowed. The allowance for doubtful
    accounts at the end of year 2 was the same as at the end of year 1; no receivables were charged
    against the allowance during year 2.
    The proceeds from the note payable were used to finance a new store building. Capital stock was
    sold to provide additional working capital.
    33. Cash collected during year 2 from accounts receivable amounted to
    a. $5,560,000
    b. $5,840,000
    c. $6,140,000
    d. $6,400,000
    34. Cash payments during year 2 on accounts payable to suppliers amounted to
    a. $4,670,000
    b. $4,910,000
    c. $5,000,000
    d. $5,150,000
    35. Net cash provided by financing activities for year 2 totaled
    a. $140,000
    b. $300,000
    c. $500,000
    d. $700,000
    36. Net cash used in investing activities during year 2 was
    a. $ 80,000
    b. $530,000
    c. $610,000
    d. $660,000

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