Prepare the statement of Operating Activities section of the Statement of Cash Flows for RichCorp using the Indirect method. RichCorp Income Statement FYE 12/31/20 Revenues 3,560,000 Cost of Goods Sold (1,860,000) Operating Expenses (884,000) Interest Expense (48,000) Loss on sale of equipment (8,000) (2,800,000) Income before income taxes 760,000 Income tax expense (260,000) Net Income 500,000 Additional Information relating to 2020 activities: Cash dividends of $220,000 were declared and paid Equipment costing $164,000 and having a carrying value of $144,000, was sold for $136,000 cash Equipment with a cost of $664,000 was purchased for cash Operating expenses include depreciation expense of $132,000 and amortization of prepaid expenses of $8,000 Land was sold at its book value for cash Interest expense of $48,000 was paid in cash Common stock was issued for cash Inventory was purchased on credit Assume operating expenses are paid in cash INDIRECT METHOD 12/31/19 Debits Credits 12/31/20 Cash 148,000 216,000 Accounts Receivable 104,000 272,000 Inventory 0 216,000 Prepaid Insurance 24,000 16,000 Land 280,000 180,000 Buildings 800,000 800,000 Equipment 272,000 772,000 1,628,000 2,472,000 Accumulated Depreciation, Buildings 44,000 84,000 Accumulated Depreciation, Equipment 40,000 112,000 Accounts Payable 160,000 132,000 Bonds Payable 600,000 440,000 Common Stock ($1 par) 240,000 880,000 Retained Earnings 544,000 824,000 1,628,000 2,472,000 Cash Flow Section DIRECT METHOD 12/31/19 Debits Credits 12/31/20 Cash 148,000 216,000 Accounts Receivable 104,000 272,000 Inventory 0 216,000 Prepaid Insurance 24,000 16,000 Land 280,000 180,000 Buildings 800,000 800,000 Equipment 272,000 772,000 1,628,000 2,472,000 Accumulated Depreciation, Buildings 44,000 84,000 Accumulated Depreciation, Equipment 40,000 112,000 Accounts Payable 160,000 132,000 Bonds Payable 600,000 440,000 Common Stock ($1 par) 240,000 880,000 Retained Earnings 544,000 824,000 1,628,000 2,472,000 Income Statement Section Revenues Cost of Goods Sold Operating Expenses Interest Expense Loss on sale of equipment Income tax expense Net Income Cash Flow Section

Prepare the statement of Operating Activities section of the Statement of Cash Flows for RichCorp using the Indirect method. RichCorp Income Statement FYE 12/31/20 Revenues 3,560,000 Cost of Goods Sold (1,860,000) Operating Expenses (884,000) Interest Expense (48,000) Loss on sale of equipment (8,000) (2,800,000) Income before income taxes 760,000 Income tax expense (260,000) Net Income 500,000 Additional Information relating to 2020 activities: Cash dividends of $220,000 were declared and paid Equipment costing $164,000 and having a carrying value of $144,000, was sold for $136,000 cash Equipment with a cost of $664,000 was purchased for cash Operating expenses include depreciation expense of $132,000 and amortization of prepaid expenses of $8,000 Land was sold at its book value for cash Interest expense of $48,000 was paid in cash Common stock was issued for cash Inventory was purchased on credit Assume operating expenses are paid in cash INDIRECT METHOD 12/31/19 Debits Credits 12/31/20 Cash 148,000 216,000 Accounts Receivable 104,000 272,000 Inventory 0 216,000 Prepaid Insurance 24,000 16,000 Land 280,000 180,000 Buildings 800,000 800,000 Equipment 272,000 772,000 1,628,000 2,472,000 Accumulated Depreciation, Buildings 44,000 84,000 Accumulated Depreciation, Equipment 40,000 112,000 Accounts Payable 160,000 132,000 Bonds Payable 600,000 440,000 Common Stock ($1 par) 240,000 880,000 Retained Earnings 544,000 824,000 1,628,000 2,472,000 Cash Flow Section DIRECT METHOD 12/31/19 Debits Credits 12/31/20 Cash 148,000 216,000 Accounts Receivable 104,000 272,000 Inventory 0 216,000 Prepaid Insurance 24,000 16,000 Land 280,000 180,000 Buildings 800,000 800,000 Equipment 272,000 772,000 1,628,000 2,472,000 Accumulated Depreciation, Buildings 44,000 84,000 Accumulated Depreciation, Equipment 40,000 112,000 Accounts Payable 160,000 132,000 Bonds Payable 600,000 440,000 Common Stock ($1 par) 240,000 880,000 Retained Earnings 544,000 824,000 1,628,000 2,472,000 Income Statement Section Revenues Cost of Goods Sold Operating Expenses Interest Expense Loss on sale of equipment Income tax expense Net Income Cash Flow Section

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter15: Statement Of Cash Flows

Section: Chapter Questions

Problem 15E

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Question




Prepare the statement of Operating Activities section of the Statement of Cash Flows for RichCorp using the Indirect method.

RichCorp
Income Statement
FYE 12/31/20

Revenues		3,560,000
Cost of Goods Sold	(1,860,000)
Operating Expenses	(884,000)
Interest Expense	(48,000)
Loss on sale of equipment	(8,000)	(2,800,000)
Income before income taxes		760,000
Income tax expense		(260,000)
Net Income		500,000

Additional Information relating to 2020 activities:
Cash dividends of $220,000 were declared and paid
Equipment costing $164,000 and having a carrying value of $144,000, was sold for $136,000 cash
Equipment with a cost of $664,000 was purchased for cash
Operating expenses include depreciation expense of $132,000 and amortization of prepaid expenses of $8,000
Land was sold at its book value for cash
Interest expense of $48,000 was paid in cash
Common stock was issued for cash
Inventory was purchased on credit
Assume operating expenses are paid in cash
































INDIRECT METHOD

	12/31/19	Debits	Credits	12/31/20

Cash	148,000			216,000
Accounts Receivable	104,000			272,000
Inventory	0			216,000
Prepaid Insurance	24,000			16,000
Land	280,000			180,000
Buildings	800,000			800,000
Equipment	272,000			772,000
	1,628,000			2,472,000

Accumulated Depreciation, Buildings	44,000			84,000
Accumulated Depreciation, Equipment	40,000			112,000
Accounts Payable	160,000			132,000
Bonds Payable	600,000			440,000
Common Stock ($1 par)	240,000			880,000
Retained Earnings	544,000			824,000
	1,628,000			2,472,000

Cash Flow Section










































DIRECT METHOD

	12/31/19	Debits	Credits	12/31/20
Cash	148,000			216,000
Accounts Receivable	104,000			272,000
Inventory	0			216,000
Prepaid Insurance	24,000			16,000
Land	280,000			180,000
Buildings	800,000			800,000
Equipment	272,000			772,000
	1,628,000			2,472,000

Accumulated Depreciation, Buildings	44,000			84,000
Accumulated Depreciation, Equipment	40,000			112,000
Accounts Payable	160,000			132,000
Bonds Payable	600,000			440,000
Common Stock ($1 par)	240,000			880,000
Retained Earnings	544,000			824,000
	1,628,000			2,472,000

Income Statement Section
Revenues
Cost of Goods Sold
Operating Expenses
Interest Expense
Loss on sale of equipment
Income tax expense
Net Income


Cash Flow Section

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