Cash Flows from Operating ActivitiesâIndirect Method
The net income reported on the income statement for the currentyear was $229,700. Depreciation recorded on equipment and abuilding amounted to $68,700 for the year. Balances of the currentasset and current liability accounts at the beginning and end ofthe year are as follows:
End of Year Beginning of Year
Cash $62,940 $67,350
Accounts receivable (net) 79,810 83,110
Inventories 157,350 143,190
Prepaid expenses 8,750 9,500
Accounts payable (merchandise creditors) 70,300 75,160
Salaries payable 10,130 9,360
Hide
a. Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Use the minussign to indicate cash out flows, cash payments, decreases in cashand for any adjustments, if required.
Statement of Cash Flows (partial)
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operatingactivities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
$
b. If the direct method had been used, would the net cash flowfrom operating activities have been the same?
Cash Flows from Operating ActivitiesâIndirect Method
The net income reported on the income statement for the currentyear was $229,700. Depreciation recorded on equipment and abuilding amounted to $68,700 for the year. Balances of the currentasset and current liability accounts at the beginning and end ofthe year are as follows:
End of Year Beginning of Year
Cash $62,940 $67,350
Accounts receivable (net) 79,810 83,110
Inventories 157,350 143,190
Prepaid expenses 8,750 9,500
Accounts payable (merchandise creditors) 70,300 75,160
Salaries payable 10,130 9,360
Hide
a. Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Use the minussign to indicate cash out flows, cash payments, decreases in cashand for any adjustments, if required.
Statement of Cash Flows (partial)
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operatingactivities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
$
b. If the direct method had been used, would the net cash flowfrom operating activities have been the same?
Related questions
The net income reported on the income statement for the currentyear was $364,000. Depreciation recorded on store equipment for theyear amounted to $14,500. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:
End of Year | Beginning of Year | |
|---|---|---|
| Cash | $43,210 | $38,400 |
| Accounts receivable (net) | 31,360 | 29,020 |
| Merchandise inventory | 39,590 | 45,160 |
| Prepaid expenses | 4,740 | 3,670 |
| Accounts payable (merchandise creditors) | 41,480 | 35,590 |
| Wages payable | 21,910 | 22,970 |
Required:
| A. | Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to theAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign to indicatecash outflows, cash payments, decreases in cash and for anyadjustments, if required. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B
|
Statement of Cash Flows
The following are several items involving the cash flow activities of the ROCKY HORROR PICTURE CO. for 2016:
Net income, $41,500
Payment of dividends, $15,700
Ten-year, $34,400 bonds payable were issued at face value
Depreciation expense, $15,700
Building acquired at a cost of $39,900
Accounts receivable decreased by $3,200
Accounts payable decreased by $3,100
Equipment acquired at a cost of $7,600
Inventories increased by $7,700
Beginning cash balance, $24,600
Required:
Prepare Rocky Horror Picture's statement of cash flows for 2016 using the indirect method. Use a minus sign for any negative amounts.
| ROCKY HORROR PICTURE CO. | ||
| Statement of Cash Flows | ||
| For Year Ended December 31, 2016 | ||
| Net Cash Flow From Operating Activities | ||
| $ | ||
| Adjustments for differences between income flows and cash flows from operating activities: | ||
| $ | ||
| Cash Flows From Investing Activities | ||
| $ | ||
| Cash Flows From Financing Activities | ||
| $ | ||
| $ | ||
| $ | ||
Natalie Daniels has completed the basic format to be used inpreparing the statement of cash flows (indirect method) for CPUHardware Designers. All amounts are in thousands (000s). |
| CPU HARDWARE DESIGNERS Statement of Cash Flows For the year ended December 31, 2015 | ||
| Cash Flows fromOperating Activities | ||
| Netincome | ||
| Adjustments for noncash effects: | ||
| Changesin current assets and current liabilities: | ||
| Net cash flows from operatingactivities | ||
| Cash Flows fromInvesting Activities | ||
| Netcash flows from investing activities | ||
| Cash Flows fromFinancing Activities | ||
| Net cash flows from financingactivities | ||
| Net increase(decrease) in cash | $ | (28,000) |
| Cash at thebeginning of the period | 90,000 | |
| Cash at the end ofthe period | $ | 62,000 |
Below, in random order, are line items to be included in thestatement of cash flows. |
| Cash received fromthe sale of land | $ 4,000 |
| Issuance of commonstock | 300,000 |
| Depreciationexpense | 30,000 |
| Increase in accountsreceivable | 70,000 |
| Increase in accountspayable | 11,000 |
| Loss on sale ofland | 8,000 |
| Purchase ofequipment | 230,000 |
| Increase ininventory | 40,000 |
| Increase in prepaidrent | 11,000 |
| Payment ofdividends | 50,000 |
| Net income | 80,000 |
| Repayment of notespayable | 60,000 |
| Required: |
Prepare the statement of cash flows for CPU Hardware Designersusing the indirect method. (List cash outflows and any decrease in cashas negative amounts. Enter your answers inthousands.) |
| CPU HARDWARE DESIGNERS | ||
| Statement of Cash Flows | ||
| For the Year Ended December 31, 2015 | ||
| Cash Flows from Operating Activities: | ||
| Adjustments to reconcile net income to net cash flows fromoperating activities | ||
| Net cash flows from operating activities | $0 | |
| Cash Flows from Investing Activities: | ||
| Net cash flows from investing activities | 0 | |
| Cash Flows from Financing Activities: | ||
| Net cash flows from financing activities | 0 | |
| Cash at the beginning of the period | ||
| Cash at the end of the period | $0 | |
