1. If net profit is $47,025; depreciation is $2,200; accounts receivable increases $5,056;accounts payable increases $4,673; and inventory declines $850; what is the operatingcash flow for the month using the indirect method?Net profitadd depreciationAccounts receivableAccounts payableInventoryOperating cash flow2. As a business owner looking at this operating cash flow statement using the indirectmethod, what might you want to further investigate? Why?Answer:

Solution Given Net profit 47025 Depreciation 2200 Accounts receivables increases…

Answered: 1. If nét profit is $47,025;…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Use the above information to prepare a statement of cash flows for the current year using the indirect method. MONTGOMERY INCORPORATED Income Statement For Current Year Ended December 31 Sales $45,575 Cost of goods sold 18,950 Gross profit 26,625 Salaries expense 5,550 Depreciation expense 7,200 Income before taxes 13,875 Income tax expense 3,375 Net income $10,500 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $10,000 cash. c. Purchased equipment for cash; no equipment was sold.
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On 1 July 2020 S Ltd acquired 60% of the issued shares of P Ltd. During the year ended 30 June 2021 the following intra group transactions occurred: Sales of inventory: P Ltd to S Ltd $200,000 (Cost to P Ltd $150,000) Intragroup inventory on hand 30 June 2021: S Ltd held 40% of the inventory acquired from P Ltd Intragroup sale of equipment An item of equipment originally acquired by S Ltd on 1 July 2018 at a cost of $200,000 was sold to P Ltd on 1 July 2020 for $170,000. S Ltd had depreciated this asset at 10% per annum on a straight line basis with no scrap value. Subsequent to the sale the expected useful life of the asset is a further 4 years. During the year ended 30 June 2021 the following dividends were paid: S Ltd $10,000 P Ltd $2,000 On 31 December 2020 S Ltd lent P Ltd $100,000. Interest on this loan at 6% was paid up to 30 June 2021. During the year ended 30 June 2021 P Ltd paid S Ltd $4,000 for management services. Required. Prepare the…
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NOTE: Using INDIRECT Method (Cash Flow)
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