The net income reported on the income statement for the current year was $318,70
ID: 2466740 • Letter: T
Question
The net income reported on the income statement for the current year was $318,700. Depreciation recorded on equipment and a building amounted to $93,980 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
Required:
A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.
A method of reporting the cash flows from operating activities as the difference between the operating cash receipts and the operating cash payments.
had been used, would the net cash flow from operating activities have been the same?
In CengageNOW, an Amount Description is a text entry other than an Account that has an amount associated with it.
Net loss
A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows
A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.
, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
Question not attempted.
Statement of Cash Flows (partial)
1
Cash flows from operating activities:
2
3
Adjustments to reconcile net income to net cash flow from operating activities:
4
5
Changes in current operating assets and liabilities:
6
7
8
9
10
11
Solution
Statement of Cash Flows (partial)
1
Cash flows from operating activities:
2
3
Adjustments to reconcile net income to net cash flow from operating activities:
4
5
Changes in current operating assets and liabilities:
6
7
8
9
10
11
End of Year
Beginning of Year
Cash $90,370 $95,280 Accounts receivable (net) 111,660 118,570 Inventories 232,780 203,250 Prepaid expenses 12,000 15,310 Accounts payable (merchandise creditors) 96,420 104,940 Salaries payable 15,310 13,420Explanation / Answer
B. the net cash flow from operating activities under direct method would be same as the net cash flow from operating activities under indirect method. Both the methods shows the correct picture of cash flow from operating activities.
A. Cash flow from operating activities using indirect method is as under: Adjustments to reconcile net income to net cash flow from operating activities Depreciation on equipment and Building $ 93,980 Changes in current operating assets and liabilities: Decrease in accounts receivables $ 6,910 Increase of inventories $ (29,530) Decrease in prepaid expenses $ 3,310 Decrease in accounts payable $ (8,520) Increase in salaries payable $ 1,890 Net cash flow from operating activities $ 68,040 Net income $ 318,700 Net cash used for operating activities $ 386,740 Changes in current operating assets and liabilities: Beginning year End of the year Increase/(Decrease) in assets and liabilities Accounts Receivables 118570 111660 6910 Inventories 203250 232780 -29530 Prepaid expenses 15310 12000 3310 Accounts payable 104940 96420 8520 Salaries payable 13420 15310 -1890Related Questions
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