The net income reported on the income statement for the current year was $283,900. Depreciation recorded on equipment and a building amounted to $84,900 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $72,390 $76,730 Accounts receivable (net) 91,790 94,680 Inventories 180,980 163,130 Prepaid expenses 10,060 10,820 Accounts payable (merchandise creditors) 80,860 85,630 Salaries payable 11,650 10,670 a. Prepare the "Cash Flows from Operating Activities" section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities

The net income reported on the income statement for the current year was $283,900. Depreciation recorded on equipment and a building amounted to $84,900 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $72,390 $76,730 Accounts receivable (net) 91,790 94,680 Inventories 180,980 163,130 Prepaid expenses 10,060 10,820 Accounts payable (merchandise creditors) 80,860 85,630 Salaries payable 11,650 10,670 a. Prepare the "Cash Flows from Operating Activities" section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Changes in current operating assets and liabilities: Decrease in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accounts payable Increase in salaries payable Net cash flow from operating activities

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 6E

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Cash flows from operating activitiesindirect method The net income reported on the income statement for the current year was 93,700. Depreciation recorded on store equipment for the year amounted to 31,200. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: a. Prepare the Cash flows from operating activities section of the statement of cash flows, using the indirect method. b. Briefly explain why net cash flow from operating activities is different than net income.
Net Cash Flow from Operating Activities The following are accounting items taken from Tyrone Shoelaces Required: a. Net income, 22,900 b. Payment for purchase of land, 4,000 c. Payment for retirement of bonds, 6,000 d. Depreciation expense, 7,800 e. Receipt from issuance of common stock, 7,000 f. Patent amortization expense, 2,700 g. Increase in accounts receivable, 3,400 h. Payment of dividends, 5,000 i. Decrease in accounts payable, 2,600 Required: Prepare the operating activities section of Tyrones statement of cash flows using the indirect method.
COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Powell Companys condensed income statement for the year ended December 31, 20-2, was as follows: Additional information obtained from Powells comparative balance sheet and auxiliary records as of December 31, 20-2 and 20-1, was as follows: Depreciation expense for 20-2, included in operating expenses on the income statement, was 29,000. REQUIRED Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2.
Statement of cash flowsindirect method The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows: Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows: a. Net income, 250,000. b. Depreciation reported on the income statement, 135,000. c. Equipment was purchased at a cost of 420,000 and fully depreciated equipment costing 90,000 was discarded, with no salvage realized. d. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty. e. 30,000 shares of common stock were issued at 20 for cash. f. Cash dividends declared and paid, 45,000. Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.
COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Horn Companys condensed income statement for the year ended December 31, 20-2, was as follows: Additional information obtained from Horns comparative balance sheet and auxiliary records as of December 31, 20-2 and 20-1, was as follows: Depreciation expense for 20-2, included in operating expenses on the income statement, was 32,000. REQUIRED Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2.
COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Horn Companys condensed income statement for the year ended December 31, 20-2, was as follows: Additional information obtained from Horns comparative balance sheet and auxiliary records as of December 31, 20-2 and 20-1, was as follows: Depreciation expense for 20-2, included in operating expenses on the income statement, was 32,000. REQUIRED Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2. SCHEDULE FOR CALCULATION OF CASH GENERATED FROM OPERATING ACTIVITIES Using the information provided in Problem 23-9A for Horn Company, prepare the following: 1. A schedule for the calculation of cash generated from operating activities for Horn Company for the year ended December 31, 20-2. 2. A partial statement of cash flows for Horn Company reporting cash from operating activities under the direct method for the year ended December 31, 20-2.
COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Powell Companys condensed income statement for the year ended December 31, 20-2, was as follows: Additional information obtained from Horns comparative balance sheet and auxiliary records as of December 31, 20-2 and 20-1, was as follows: Depreciation expense for 20-2, included in operating expenses on the income statement, was 32,000. REQUIRED Prepare a partial statement of cash flows reporting cash provided by operating activities for the year ended December 31, 20-2. SCHEDULE FOR CALCULATION OF CASH GENERATED FROM OPERATING ACTIVITIES Using the information provided in Problem 23-11B for Powell Company, prepare the following: 1. A schedule for the calculation of cash generated from operating activities for Powell Company for the year ended December 31, 20-2. 2. A partial statement of cash flows for Powell Company reporting cash from operating activities under the direct method for the year ended December 31, 20-2.
Statement of Cash Flows A list of Fischer Companys cash flow activities is presented here: a. Patent amortization expense, 3,500 b. Machinery was purchased for 39,500 c. At year-end, bonds payable with a face value of 20,000 were issued for 17,000 d. Net income, 47,200 k. Inventories increased by 15,400 e. Dividends paid, 16,000 f. Depreciation expense, 12,900 g. Preferred stock was issued for 13,600 h. Investments were acquired for 21,000 i. Accounts receivable increased by 4,300 j. Land was sold at cost, 11,000 k. Inventories increased by 15,400 l. Accounts payable increased by 2,700 m. Beginning cash balance, 19,400 Required: Prepare Fischers statement of cash flows.
Partial Statement of Cash Flows Service Company had net income during the current year of $65,800. The following information was obtained from Services balance sheet: Accounts receivable $26,540 increase Inventory 32,180 increase Accounts payable 9,300 decrease Interest payable 2,120 increase Accumulated depreciation (Building) 14,590 increase Accumulated depreciation (Equipment) 32,350 increase Additional Information: 1. Equipment with accumulated depreciation of $18,000 was sold during the year. 2. Cash dividends of $29,625 were paid during the year. Required: 1. Prepare the net cash flows from operating activities using the indirect method. 2. CONCEPTUAL CONNECTION How would the cash proceeds from the sale of equipment he reported on the statement of cash flows? 3. CONCEPTUAL CONNECTION How would the cash dividends be reported on the statement of cash flows? 4. CONCEPTUAL CONNECTION What could the difference between net income and cash flow from operating activities signal to financial statement users?
Which item is added to net income when computing cash flows from operating activities? a. Gain on the disposal of property, plant, and equipment b. Increase in wages payable c. Increase in inventory d. Increase in prepaid rent Use the following information for Multiple-Choice Questions 11-9 and 11-10: Cornett Company reported the following information: cash received from the issuance of common stock, $150,000; cash received from the sale of equipment, $14,800; cash paid to purchase an investment, $20,000; cash paid to retire a note payable, $50,000; and cash collected from sales to customers, $225,000.