The accounting records of Colton Industries provided the data below for the year
ID: 2563885 • Letter: T
Question
The accounting records of Colton Industries provided the data below for the year ended December 31, 2018:
Net income
$300,000
Depreciation expense
15,000
Decrease in inventory
2,000
Increase in accounts receivable
1,400
Increase in interest payable
1,600
Amortization of bond premium
3,000
Decrease in accounts payable
7,000
Cash dividends paid
20,000
Required:
In good form, prepare the operating activities section of the statement of cash flows for 2018 using the indirect method.
Net income
$300,000
Depreciation expense
15,000
Decrease in inventory
2,000
Increase in accounts receivable
1,400
Increase in interest payable
1,600
Amortization of bond premium
3,000
Decrease in accounts payable
7,000
Cash dividends paid
20,000
Explanation / Answer
Colton Industries Cash flows from operating activities Net income $300,000 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense 15,000 Amortisation of Bond Premium 3,000 Decrease in inventory 2,000 Increase in Interest payable 1,600 Increase in accounts receivable (1,400) Decrease in accounts payable (7,000) 13,200 Net cash provided by operating activities 313,200 Cash dividends paid to be consider in Cash flow from Operating activity
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