QuestionThe income statement of Cheyenne Company is shown below.CHEYENNE COMPANYINCOME STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2020Sales revenue $6,890,000Cost of goods sold Beginning inventory $1,910,000 Purchases 4,410,000 Goods available for sale 6,320,000 Ending inventory 1,620,000 Cost of goods sold 4,700,000Gross profit 2,190,000Operating expenses Selling expenses 460,000 Administrative expenses 700,000 1,160,000Net income $1,030,000Additional information:1. Accounts receivable decreased $350,000 during the year.2. Prepaid expenses increased $160,000 during the year.3. Accounts payable to suppliers of merchandise decreased $300,000 during the year.4. Accrued expenses payable decreased $90,000 during the year.5. Administrative expenses include depreciation expense of $50,000.Prepare the cash flow statement operating activities section using the direct method.

Answered: The income statement of Cheyenne…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 2E: Cost of Goods Sold and Income Statement Schuch Company presents you with the following account...

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The income statement of Cheyenne Company is shown below.

CHEYENNE COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue		$6,890,000
Cost of goods sold
Beginning inventory	$1,910,000
Purchases	4,410,000
Goods available for sale	6,320,000
Ending inventory	1,620,000
Cost of goods sold		4,700,000
Gross profit		2,190,000
Operating expenses
Selling expenses	460,000
Administrative expenses	700,000	1,160,000
Net income		$1,030,000

Additional information:

1.		Accounts receivable decreased $350,000 during the year.
2.		Prepaid expenses increased $160,000 during the year.
3.		Accounts payable to suppliers of merchandise decreased $300,000 during the year.
4.		Accrued expenses payable decreased $90,000 during the year.
5.		Administrative expenses include depreciation expense of $50,000.

Prepare the cash flow statement operating activities section using the direct method.

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