ACCTG 211 Chapter 9: ACCTG211 Direct and Indirect Method Equations

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yellowminnow102

21 Oct 2016

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Cash received from customers = sales changes in accounts receivable. Cash paid to employees (accrued liability) = salary expense change in salaries payable. Cash paid for accrued liabilities = accrued liability expense change in accrued liabilities. Cash paid to vendors = cogs + change in inventory change in accounts payable. Cash paid for insurance (prepaid expense) = insurance expense + change in prepaid insurance. Cash paid for prepaid expenses = prepaid expenses + change in prepaid expenses. Cash paid for interest = interest expense change in interest payable. Cash paid for income tax = income tax expense change in income taxes payable. Cash paid for dividends (financing) = net income change in retained earnings change in dividends payable. Cash from dividends received (operating) = dividend income change in dividends receivable. Ending cash balance = beginning cash balance + net cash flow from the period. Cash paid for equipment = purchase value change in notes payable.

Related Questions

Cash flows from Operating Activities

Income Statement Indirect Method Direct Method

Net income

Adjustments:

Sales $311 Decrease in accounts receivable 7 Cash receivedfrom customers

Gain on sale of equipment 25 Gain on sale of equipment (25)(Not reportedâno cash effect)

Cost of goods sold Increase in inventory (13)

Increase in accounts payable 19 Cash paid to suppliers(175)

Salaries expense (44)

7 Cash paid to employees (37)

Depreciation expense (10) Depreciation expense 10 Cash paidfor depreciation

Interest expense Decrease in bond discount 4 Cash paid forinterest (10)

Insurance expense (23) Decrease in prepaid insurance 10 Cashpaid for insurance

Loss on sale of land (7) Loss on sale of land 7 (Notreportedâno cash effect)

Income tax expense (29) Increase in income tax payable Cashpaid for income taxes (22)

Net Income $223 Net cash flows from operating activities $26Net cash flows from operating activities $-244

goldtrout992

1-May Issued common stock in exchange for cash $50,000
1-May Purchased a one-year insurance policy to beconsumed evenly over the next 12 months $4,800
1-May Prepaid the next 6 months of rent $3,600
1-May Purchased for cash a truck to be used in thebusiness $18,000
5-May Received prepayment of cash for a contracted jobto be performed in June $4,500
5-May Purchased Office Supplies on credit $1,200
10-May Billed customers for servicesprovided $8,600
12-May Paid advertising expense $1,300
23-May Paid salaries to employees $1,500
31-May Paid dividends to stockholders $1,000

Adjusting Entries: Recognize rent for month ofMay
Recognize insurance for month of May
Recognize Depreciation for on month
Truck has a 5 year useful life and a $3,000 salvageValue
An inventory count of office supplies at may 31 showed$500 of suppies on hand
Employees' salaries earned durning May but not to bepaid until June was $500

REQUIRED: Place in t-account form.

Cash

Accounts payable

Service Revenue

Unearned Revenue

Supplies Expense

Dividend Expense

Accounts Receivable

Truck

Accumplated Dep

Prepaid Insurance

Prepaid rent

Supplies

Salaries payable

Stock

Salaries Expense

Advertising Expense

Dep Exp

Insurance Exp

Rent Exp

REQUIRED: Prepare an income statement:

INCOME STATEMENT

Service Revenue

Expenses: Supplies Expense
Salary Expense
Rent Expense
Insurance Expense
Advertising Expense
Depreciation Expense
NET INCOME
STATEMENT OF RETAINED EARNINGS
Beg Bal Retained earnings $- 0
Plus Net Income
Less Dividends Paid
End bal Retained Earnings

REQUIRED: Prepare the balance sheet:

BALANCE SHEET

ASSETS
Current:
Cash
Acc Rec
Supplies
Prepaid Rent
Prepaid Insur
TOTAL CURRENT ASSETS

Truck
Accum Dep
TOTAL ASSETS

LIABILITIES
Acc. Payable
Unearned Revenue
Salary Payable
EQUITY
Stock
Retained Earnings
TOTAL LIAB. + EQUITY

pinkmammoth601

The most recent comparative balance sheet of Giacomelli Corporation appears below:

	Ending Balance	Beginning Balance
Assets:
Current assets:
Cash and cash equivalents	$37,000	$29,000
Accounts receivable	20,000	24,000
Inventory	65,000	61,000
Prepaid expenses	5,000	7,000
Total current assets	127,000	121,000
Property, plant, and equipment	424,000	399,000
Less accumulated depreciation	231,000	200,000
Net property, plant, and equipment	193,000	199,000
Total assets	$320,000	$320,000

Liabilities and Stockholdersâ Equity
Current liabilities:
Accounts payable	$19,000	$17,000
Accrued liabilities	58,000	51,000
Income taxes payable	47,000	42,000
Total current liabilities	124,000	110,000
Bonds payable	77,000	80,000
Total liabilities	201,000	190,000
Stockholdersâ equity:
Common stock	31,000	30,000
Retained earnings	88,000	100,000
Total stockholdersâ equity	119,000	130,000
Total liabilities and stockholdersâ equity	$320,000	$320,000

The company uses the indirect method to construct the operating activities section of its statements of cash flows.

Which of the following is correct regarding the operating activities section of the statement of cash flows?

		The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income
		The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income
		The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income
		The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income

beigezebra773

ACCTG 211 Chapter 9: ACCTG211 Direct and Indirect Method Equations

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