Problem 1. On October 28, 2009, Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to SFAS No. 144, and was properly classified as held for sale on December 31, 2009, the end of the company's fiscal year. The division's loss from operations for 2009 was $2,000,000.
The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $2,500,000, respectively. What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2009 income statement?
A. $2,000,000 loss.
B. $2,500,000 loss.
C. None.
D. $500,000 impairment loss included in continuing operations and a $2,000,000 loss from discontinued operations
Rowdy's Restaurants Cash Flow (in millions)
Problem 2. Rowdy's would report net cash inflows (outflows) from financing activities in the amount of:
A. $ 1,100.
B. $(1,100).
C. $ 820.
D. $ 900.
Problem 3. Nevada Boot Co. reported net income of $216,000 for its year ended December 31, 2009. Purchases totaled $152,000. Accounts payable balances at the beginning and end of the year were $36,000 and $33,000, respectively. Beginning and ending inventory balances were $44,000 and $46,000, respectively. Assuming that all relevant information has been presented, Nevada Boot would report operating cash flows of:
A. $155,000.
B. $221,000.
C. $211,000.
D. $151,000.
Problem 4. Arrow Printers paid $2,000 interest on short-term notes payable, $10,000 interest on long-term bonds, and $6,000 in dividends on its common stock. Arrow would report cash outflows from activities, as follows:
A. Operating, $2,000; financing $16,000.
B. Operating, $0; financing $18,000.
C. Operating, $12,000; financing $6,000.
D. Operating, $18,000; financing $0