An analysis of the annual financial statements of Conner Corporation reveals the following:a. The company had a $5 million extraordinary loss from insurance proceeds received due to atornado that destroyed a factory building.b. Depreciation for the year amounted to $8 million.c. During the year, $2 million in cash was transferred from the company’s checking account intoa money market fund.d. Accounts receivable from customers increased by $4 million over the year.e. Cash received from customers during the year amounted to $167 million.f. Prepaid expenses decreased by $1 million over the year.g. Dividends declared during the year amounted to $7 million; dividends paid during the yearamounted to $6 million.h. Accounts payable (to suppliers of merchandise) increased by $2.5 million during the year.i. The liability for accrued income taxes payable amounted to $5 million at the beginning of theyear and $3 million at year-end.In the computation of net cash flows from operating activities by the indirect method, explainwhether each of the above items should be added to net income, deducted from net income, oromitted from the computation. Briefly explain your reasons for each answer.
An analysis of the annual financial statements of Conner Corporation reveals the following:
a. The company had a $5 million extraordinary loss from insurance proceeds received due to a
tornado that destroyed a factory building.
b.
c. During the year, $2 million in cash was transferred from the company’s checking account into
a
d.
e. Cash received from customers during the year amounted to $167 million.
f. Prepaid expenses decreased by $1 million over the year.
g. Dividends declared during the year amounted to $7 million; dividends paid during the year
amounted to $6 million.
h. Accounts payable (to suppliers of merchandise) increased by $2.5 million during the year.
i. The liability for accrued income taxes payable amounted to $5 million at the beginning of the
year and $3 million at year-end.
In the computation of net
whether each of the above items should be added to net income, deducted from net income, or
omitted from the computation. Briefly explain your reasons for each answer.
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