Heads Up company was started several years ago by two hockey instructors. The co
ID: 2480513 • Letter: H
Question
Heads Up company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement follow, along with additional information. Additional Data: a. Bought new hockey equipment for cash,$460. b. Borrowed $1,100 cash from the bank during the year. c. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax. assume that this expense was fully paid in cash. Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)Explanation / Answer
HEADS UP COMPANY
CASH FLOW STATEMENT
FOR THE YEAR ENDED DECEMBER 31
Cash Flow From Operating Activities Amount $
Net Income 1,090
Adjustments to Reconcile Net Income to Net Cash provided
by Opetating Activities:
Depreciation Expense 210
Changes in Current Assets & Current Liabilities
Decrease in Accounts Receivable 810
Decrease in Accounts Payable -460
Decrease in Salaries & Wages Payable -210
Net Cash flow from operating Activities $1,440
Cash Flow From Investing Activities
Purchase of new hockey equipment -460
Net Cash Flow from investing activities -$460
Cash Flow From Financing Activities
Cash borrowed from bank 1100
Net cash flow from financing activities $1,100
Net Increase in Cash During the Year $2,080
Beginning Cash Balance $4,040
Closing Cash Balance $6,120
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