Cash flows from operating activities —direct method The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows: Sales $511,000 Cost of goods sold 290,500 Gross profit $220,500 Operating expenses: Depreciation expense $ 39,200 Other operating expenses 105,000 Total operating expenses 144,200 Income before income tax $ 76,300 Income tax expense 21,700 Net income $ 54,600 Changes in the balances of selected accounts from the beginning to the end of the current year are as follows: Increase (Decrease) Accounts receivable (net) $(11,760) Inventories 3,920 Prepaid expenses (3,780) Accounts payable (merchandise creditors) (7,980) Accrued expenses payable (operating expenses) 1,260 Income tax payable (2,660) A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method. B. What does die direct method show about a company's cash flows from operating activities that is not shown using the indirect method.''

BuyFind

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
BuyFind

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169

Solutions

Chapter 13, Problem 13.21EX
Textbook Problem

Cash flows from operating activities —direct method

The income statement of Booker T Industries Inc. for the current year ended June 30 is as follows:

Sales   $511,000
Cost of goods sold   290,500
Gross profit   $220,500
Operating expenses:
Depreciation expense $ 39,200  
Other operating expenses 105,000  
Total operating expenses   144,200
Income before income tax   $ 76,300
Income tax expense   21,700
Net income   $ 54,600

Changes in the balances of selected accounts from the beginning to the end of the current year are as follows:

 

Increase

(Decrease)

Accounts receivable (net) $(11,760)
Inventories 3,920
Prepaid expenses (3,780)
Accounts payable (merchandise creditors) (7,980)
Accrued expenses payable (operating expenses) 1,260
Income tax payable (2,660)
  1. A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the direct method.
  2. B. What does die direct method show about a company's cash flows from operating activities that is not shown using the indirect method.''

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Chapter 13 Solutions

Corporate Financial Accounting
Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Adjustments to net incomeindirect method Ripley...Ch. 13 - Changes in current operating assets and...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Land transactions on the statement of cash flows...Ch. 13 - Common stock transactions on the statement of cash...Ch. 13 - Free cash flow Dillin Inc. reported the following...Ch. 13 - Appendix 2 Cash received from customersdirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Cash flows from operating activitiesnet loss...Ch. 13 - Effect of transactions on cash flows Slate the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting land transactions on statement of cash...Ch. 13 - Determining cash payments to stockholders The...Ch. 13 - Reporting stockholders' equity items on statement...Ch. 13 - Reporting land acquisition for cash and mortgage...Ch. 13 - Reporting issuance and retirement of long-term...Ch. 13 - Determining net income from net cash flow from...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method List the...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Determining selected amounts for cash flows from...Ch. 13 - Cash flows from operating activities direct method...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsdirect method The...Ch. 13 - Statement of cash flows direct method applied to...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows indirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows direct method The...Ch. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Free Cash Flow Analyze and compare Amazon.com,...Ch. 13 - Analyze and compare Apple, Coca-Cola, and Verizon...Ch. 13 - Analyze Aeropostale Aeropostale, Inc. (AROPQ) is a...Ch. 13 - Analyze and compare ATT and Facebook ATT Inc. (T)...Ch. 13 - Analyze Priceline The Priceline Group Inc. (PCLN)...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Communication Tidewater Inc., a retailer, provided...Ch. 13 - Using the statement of cash flows You are...

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