Statement of cash flows: It represents net cash flow available after taking into consideration operating, financing, and investing expenses for a given financial year.
Indirect method: Indirect method is most widely used method to compute cash (used) provided by operating activities. Under this method net cash flow is determined by adding back noncash expense and losses to net income and deducting all noncash income and gains from net income.
Given Information:
Comparative Balance sheet as on December 31 |
2017 ($) |
2016 ($) |
Cash |
6,000 |
7,000 |
Receivables |
62,000 |
51,000 |
Short-term investments (available-for-sale) |
35,000 |
18,000 |
Inventory |
40,000 |
60,000 |
Prepaid rent |
5,000 |
4,000 |
Equipment |
154,000 |
130,000 |
(35,000) |
(25,000) |
|
Copy Rights |
46,000 |
50,000 |
Total Assets |
313,000 |
295,000 |
|
|
|
Accounts payable |
46,000 |
40,000 |
Income Tax payable |
4,000 |
6,000 |
Salaries and wages payable |
8,000 |
4,000 |
Short-term loans payable |
8,000 |
10,000 |
Long-term loans payable |
60,000 |
69,000 |
Common stock $10 par |
100,000 |
100,000 |
Contributed capital, common stock |
30,000 |
30,000 |
Retained earnings |
57,000 |
36,000 |
Total Liabilities and Stockholders’ Equity |
313,000 |
295,000 |
To determine the statement of cash flows (Indirect method).
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Chapter 23 Solutions
INTERMEDIATE ACCOUNTING WPNG MULTI-S
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
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