Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities
Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities
Chapter16: Statement Of Cash Flows
Section: Chapter Questions
Problem 5EA: What adjustment(s) should be made to reconcile net income to net cash flows from operating...
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Question
A comparative
CRUZ, INCORPORATED | ||
Comparative Balance Sheets | ||
At December 31 | 2021 | 2020 |
---|---|---|
Assets | ||
Cash | $ 99,000 | $ 25,000 |
42,800 | 53,100 | |
Inventory | 89,600 | 99,700 |
Prepaid expenses | 5,600 | 4,400 |
Total current assets | 237,000 | 182,200 |
Furniture | 113,000 | 124,700 |
(17,600) | (9,400) | |
Total assets | $ 332,400 | $ 297,500 |
Liabilities and Equity | ||
Accounts payable | $ 15,600 | $ 21,900 |
Wages payable | 9,400 | 5,200 |
Income taxes payable | 1,500 | 2,700 |
Total current liabilities | 26,500 | 29,800 |
Notes payable (long-term) | 31,100 | 65,700 |
Total liabilities | 57,600 | 95,500 |
Equity | ||
Common stock, $5 par value | 238,600 | 190,000 |
36,200 | 12,000 | |
Total liabilities and equity | $ 332,400 | $ 297,500 |
CRUZ, INCORPORATED | |
Income Statement | |
For Year Ended December 31, 2021 | |
Sales | $ 509,400 |
---|---|
Cost of goods sold | 327,800 |
Gross profit | 181,600 |
Operating expenses (excluding depreciation) | 92,900 |
Depreciation expense | 39,200 |
Income before taxes | 49,500 |
Income taxes expense | 18,100 |
Net income | $ 31,400 |
Required:
Use the indirect method to prepare the operating activities section of Cruz’s statement of
Note: Amounts to be deducted should be indicated with a minus sign.

Transcribed Image Text:Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Changes in current operating assets and liabilities
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