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Multiple Choice - Cash Flows

Use the following information for questions 28 through 30.
The balance sheet data of Naley Company at the end of 2008 and 2007 follow:
2008 2007
Cash $ 50,000 $ 70,000
Accounts receivable (net) 120,000 90,000
Merchandise inventory 140,000 90,000
Prepaid expenses 20,000 50,000
Buildings and equipment 180,000 150,000
Accumulated depreciation?buildings and equipment (36,000) (16,000)
Land 180,000 80,000
Totals $654,000 $514,000
Accounts payable $136,000 $110,000
Accrued expenses 24,000 36,000
Notes payable?bank, long-term 80,000
Mortgage payable 60,000
Common stock, $10 par 418,000 318,000
Retained earnings (deficit) 16,000 (30,000)
$654,000 $514,000
Land was acquired for $100,000 in exchange for common stock, par $100,000, during the year; all equipment purchased was for cash. Equipment costing $10,000 was sold for $4,000; book value of the equipment was $8,000 and the loss was reported as an ordinary item in net income. Cash dividends of $20,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. In the statement of cash flows for the year ended December 31, 2008, for Naley Company:

28. The net cash provided by operating activities was
a. $52,000.
b. $66,000.
c. $56,000.
d. $48,000.

29. The net cash provided (used) by investing activities was
a. $26,000.
b. $(40,000).
c. $(136,000).
d. $(36,000).

30. The net cash provided (used) by financing activities was
a. $ -0-.
b. $(20,000).
c. $(40,000).
d. $60,000.

Solution Summary

The solution explains some multiple choice questions relating to cash flow calculations.

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