27 Preparing the Operating Activities Section of the Statement of Cash Flows Ana

Question

27 Preparing the Operating Activities Section of the Statement of Cash Flows Anakin, Inc, provides the following account balances for 2015 and 2014: Dec. 31, 2015 Dec. 31, 2014 $15,500 27,200 22,400 1,350 18,700 25,440 21,650 1,500 278,700 197,000 16,700 35,200 24,300 Inventory Accounts Payable Salaries Payable . Depreciation Expense. Other Expenses .. Using the format presented in the chapter, prepare the Operating Activities section of the statement of cash flows and present that information using (a) the direct method and (b) the indirect method

Explanation / Answer

Anakin, Inc. Statement of Cash Flows For the year ended December 31, 2017 Indirect Method Cash flows from operating activities Amount Net Income $5,500 Adjust to reconcile net income to net cash provided Depreciation expenses $16,700 Changes in current assets and current liabilities Increase in Accounts receivable -$3,200 Decrease in Merchandise Inventory $1,760 Decrease in Accounts Payable -$750 Increase in salaries payable $150 Net cash Provided by operating activities $20,160 Direct Method Cash from operating activities : Cash collected from customers $275,500 cost of goods sold $197,000 Cash paid for inventory -$195,990 + Ending inventory $25,440 Cash paid for Expenses -$59,350 - Beginning inventory -$27,200 Purchases $195,240 Net Cash inflows provided by operating activities $20,160 Beginning AP $22,400 + purchaes $195,240 - Ending AP -$21,650 $195,990

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