CASH FLOW2 Prepare the cash flow statement for Second Company using the indirect
ID: 2404261 • Letter: C
Question
CASH FLOW2 Prepare the cash flow statement for Second Company using the indirect method to calculate the cash flow operations. Income statement for 2016: Sales Expenses Cost of goods sold Depreciation& amortization expense Selling, general, & administrative expense Interest expense $150,000 70,000 10,000 20,000 Total expenses Income before income tax Income taxes Net income 45,000 20,000 201 Balance sheets at December 31: Current assets as Accounts receivable (net) Inventory Prepaid insurance $7,000 4,000 4,000 2,000 $1,000 2,000 6,000 Total current assets $17,000 10,000 Long-term assets 60,000 Property and equipment Accumulated depreciation Patents 63,000 28,000 35,0002000040,000 55,000 0,000 Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Interest payable Current maturity of long-term debt Total current liabilities $5,000 1,000 28,000 1,000 S3,000 2,000 25,000 8.,000 35,000 10,000 38,000 7,000 Long-term debt Stockholders' equity 25,000 33,000 Common stock Retained earnings Total Stockholders' equity 62,000 55,000 Total Liabilities and Stockholders' equity 16Explanation / Answer
Cash flow from Operations
Depreciation and Amortization
10000
Changes in current operating assets and liabilities:
Increase in Accounts Receivables [4000-2000]
-2000
Decrease in Inventory [4000-6000]
+2000
Increase in prepaid insurance [2000-1000]
-1000
Increase in Accounts payable [5000-3000]
+2000
Decrease in Income tax payable [1000-2000]
-1000
Increase in Interest payable [28000-25000]
+3000
Decrease in Current maturity of long term debt [1000-8000]
-7000
Cash generated from operating activities--------
6000
Cash flow from Operations
Depreciation and Amortization
10000
Changes in current operating assets and liabilities:
Increase in Accounts Receivables [4000-2000]
-2000
Decrease in Inventory [4000-6000]
+2000
Increase in prepaid insurance [2000-1000]
-1000
Increase in Accounts payable [5000-3000]
+2000
Decrease in Income tax payable [1000-2000]
-1000
Increase in Interest payable [28000-25000]
+3000
Decrease in Current maturity of long term debt [1000-8000]
-7000
Cash generated from operating activities--------
6000
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