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Ripley Corporation’s accumulated depreciation—furniture account increased by $11,575, while $2,500 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a loss of $3,400 from the sale of land. Reconcile a net income of $224,500 to net cash flow from operating activities.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 16, Problem 2PEA
Textbook Problem
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Ripley Corporation’s accumulated depreciation—furniture account increased by $11,575, while $2,500 of patent amortization was recognized between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a loss of $3,400 from the sale of land. Reconcile a net income of $224,500 to net cash flow from operating activities.

To determine

Compute net cash flows from operating activities under indirect method.

Explanation of Solution

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Cash flows from operating activities: These are the cash produced by the normal business operations.

The below table shows the way of calculation of cash flows from operating activities:

Cash flows from operating activities (Indirect method)
 
Add: Decrease in current assets
         Increase in current liability
         Depreciation expense and amortization expense
         Loss on sale of plant assets
 
Deduct: Increase in current assets
              Decrease in current liabilities
 ;&#...

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Chapter 16 Solutions

Financial Accounting
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Ch. 16 - Identify whether each of the following would be...Ch. 16 - Identify whether each of the following would be...Ch. 16 - Ripley Corporations accumulated...Ch. 16 - Ya Wen Corporations accumulated...Ch. 16 - Zwilling Corporations comparative balance sheet...Ch. 16 - Huluduey Corporations comparative balance sheet...Ch. 16 - Demers Inc. reported the following data: Prepare...Ch. 16 - Staley Inc. reported the following data: Prepare...Ch. 16 - Simkin Corporation purchased land for 420,000....Ch. 16 - IZ Corporation purchased land for 400,000. Later...Ch. 16 - Sales reported on the income statement were...Ch. 16 - Sales reported on the income statement were...Ch. 16 - The cost of merchandise sold reported on the...Ch. 16 - The cost of merchandise sold reported on the...Ch. 16 - McMahon Inc. reported the following on the...Ch. 16 - Dillin Inc. reported the following on the companys...Ch. 16 - On its income statement for a recent year,...Ch. 16 - State the effect (cash receipt or payment and...Ch. 16 - Identify the type of cash flow activity for each...Ch. 16 - Indicate whether each of the following would be...Ch. 16 - The net income reported on the income statement...Ch. 16 - The net income reported on the income statement...Ch. 16 - The income statement disclosed the following items...Ch. 16 - The board of directors declared cash dividends...Ch. 16 - An analysis of the general ledger accounts...Ch. 16 - An analysis of the general ledger accounts...Ch. 16 - On the basis of the details of the following fixed...Ch. 16 - On the basis of the following stockholders equity...Ch. 16 - On the basis of the details of the following fixed...Ch. 16 - On the basis of the details of the following bonds...Ch. 16 - Curwen Inc. reported net cash flow from operating...Ch. 16 - Selected data derived from the income statement...Ch. 16 - The comparative balance sheet of Olson-Jones...Ch. 16 - The following statement of cash flows for Shasta...Ch. 16 - The cash flows from operating activities are...Ch. 16 - The cost of merchandise sold for Kohls Corporation...Ch. 16 - Selected data taken from the accounting records of...Ch. 16 - The income statement of Booker T Industries Inc....Ch. 16 - The income statement for Rhino Company for the...Ch. 16 - Sweeter Enterprises Inc. has cash flows from...Ch. 16 - The financial statements for Nike, Inc., are...Ch. 16 - Lovato Motors Inc. has cash flows from operating...Ch. 16 - The comparative balance sheet of Navaria Inc. for...Ch. 16 - The comparative balance sheet of Yellow Dog...Ch. 16 - The comparative balance sheet of Whitman Co. at...Ch. 16 - The comparative balance sheet of Canace Products...Ch. 16 - The comparative balance sheet of Navaria Inc. for...Ch. 16 - The comparative balance sheet of Merrick Equipment...Ch. 16 - The comparative balance sheet of Harris Industries...Ch. 16 - The comparative balance sheet of Coulson, Inc. at...Ch. 16 - The comparative balance sheet of Martinez Inc. for...Ch. 16 - The comparative balance sheet of Merrick Equipment...Ch. 16 - Lucas Hunter, president of Simmons Industries...Ch. 16 - Tidewater Inc., a retailer, provided the following...Ch. 16 - You are considering an investment in a new...Ch. 16 - Dillip Lachgar is the president and majority...

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