Cash Flows from Operating Activities-Direct Method The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $607,300 and accounts receivable decreased by $38,900 during the year, what was the amount of cash received from customers? b. If income tax expense for the current year was $57,900 and income tax payable decreased by $7,500 during the year, what was the amount of cash payments for income taxes? c. Briefly explain why the cash received from customers in part (a) is different from sales. Because the customers paid than the amount of sales for the period, cash received from customers sales made on account by $38,900 during the current year.

Cash Flows from Operating Activities-Direct Method The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $607,300 and accounts receivable decreased by $38,900 during the year, what was the amount of cash received from customers? b. If income tax expense for the current year was $57,900 and income tax payable decreased by $7,500 during the year, what was the amount of cash payments for income taxes? c. Briefly explain why the cash received from customers in part (a) is different from sales. Because the customers paid than the amount of sales for the period, cash received from customers sales made on account by $38,900 during the current year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Exercise 7-16: From the following list, identify whether the change in the account balance during the year would be added to or deducted from net income when the indirect method is used to determine cash flows from operating activities: Increase in accounts receivable Decrease in accounts receivable Increase in notes receivable Decrease in notes receivable
pregunta anexa question in image
Prepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $ 667,500 Cost of goods sold 302,000 Gross profit 365,500 Operating expenses (excluding depreciation) $ 149,400 Depreciation expense 37,750 187,150 Other gains (losses) Loss on sale of equipment (22,125) Income before taxes 156,225 Income taxes expense 48,050 Net income $ 108,175 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year…
Cash Flows from (Used for) Operating Activities The income statement disclosed the following items for the year: Depreciation expense Gain on disposal of equipment Net income The changes in the current asset and liability accounts for the year are as follows: Accounts receivable Inventory Prepaid insurance Accounts payable Income taxes payable Dividends payable Increase (Decrease) $5,190 (2,950) (1,110) (3,520) 1,110 780 $33,300 19,440 225,100 a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from (used for) operating activities: 27 Adjustments to reconcile net income to net cash flows from (used for) operating activities: Changes in current operating assets and liabilities: Net cash flows from operating activities b. Why is net cash flows from operating…
ences Hampton Company reports the following information for its recent calendar year. Income Statement Data Sales Expenses: Cost of goods sold Salaries expense Depreciation expense Net income $ 160,000 Accounts receivable increase Inventory decrease Salaries payable increase 100,000 24,000 12,000 $ 24,000 Selected Year-End Balance Sheet Data Required: Prepare the operating activities section of the statement of cash flows using the indirect method. Note: Amounts to be deducted should be indicated with a minus sign. Statement of Cash Flows (partial) Cash flows from operating activities-indirect method 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 $ 10,000 16,000 1,000
Formulating Financial Statements from Raw Data Following is selected financial information from Greenwood Industries, for its fiscal year ended ($ millions). Cash and cash equivalents, end of year Net cash from operations Net sales Stockholders' equity, end of year Cost of goods sold Net cash from financing Total liabilities, end of year Other expenses, including income taxes Noncash assets, end of year Net cash from investing Net income Effect of exchange rate changes on cash Cash and cash equivalents, beginning of year Net income Cost of goods sold REQUIRED a. Prepare an income statement, balance sheet, and statement of cash flows for Greenwood Industries. Note: Do not use negative signs with your answers in the Income Statement. Net cash flows from operations $2,516.7 5,514.3 26,439.9 14,411.2 Greenwood Industries Income Statement ($ millions) # 17,245.1 (2,912.3) 31,798.9 5,878.7 43,693.4 (729.3) 3,316.2 (31.1) 675.0 # # ♦ + ♦ + $ $ $ 0 0 0 0 0 Greenwood Industries Balance Sheet (5…
The following information is available from the current period financial statements: Net income $ 141,238 Depreciation expense $36,864 Increase in accounts receivable $15,924 Decrease in accounts payable $23,055 The net cash flow from operating activities using the indirect method is a.$217,081 b.$139,123 c.$111,505 d.$88,450
Demers Inc. reported the following data: Net income $409,500 Depreciation expense 46,460 Gain on disposal of equipment 37,860 Decrease in accounts receivable 25,340 Decrease in accounts payable 5,930 Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
Hamburger Heaven's income statement for the current year and selected balance sheet data for the current and prior years ended December 31 are presented below. Income Statement $2,280 Sales Revenue Expenses: Cost of Goods Sold 950 Depreciation Expense Salaries and Wages Expense 250 550 Rent Expense 300 Insurance Expense 85 Interest Expense Utilities Expense 65 55 Net Income 25 Selected Balance Sheet Accounts Prior Year Current Year Inventory 92 65 405 500 Accounts Receivable Accounts Payable Salaries/Wages Payable Utilities Payable Prepaid Rent Prepaid Insurance 225 260 39 25 25 70 4 11 13 TIP: Prepaid Rent decreased because the amount taken out of Prepaid Rent (and subtracted from net income as Rent Expense) was more than the amount paid for rent in cash during the current year. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. TIP: Convert the cost of goods sold to cash paid to suppliers by adding the increase…
use the information in the income statement below to calculate operating cash flow (OCF). sales- $1,280 COGS- $620 Dep Exp- $180 EBIT- $480 Int Exp- $110 EBT- $370 Taxes- $78 NI- $292
If Accounts receivable increase by R.O.100,000. Income reported the income statement for the year was R.O.2,800,000. Excluding of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is Select one: a. R.O.3,500,000b. R.O.2,800,000 c R.O.2,700,000 d. R.O.2,900,000
The following information pertains to Peak Heights Company: Sales Expenses Cost of goods sold Salaries expense Net income Income Statement for Current Year $ 93,000 $ 51,875 Depreciation expense 6,000 12,000 69,875 $ 23,125 Partial Balance Sheet Current year Accounts receivable Inventory Salaries payable $ 10,500 13,000 2,250 Prior year $ 12,000 8,000 800 Required: Present the operating activities section of the statement of cash flows for Peak Heights Company using the indirect met Note: List cash outflows as negative amounts. PEAK HEIGHTS COMPANY Statement of Cash Flows (Partial)