Cash Flows from Operating Activities—Indirect Method Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows: Income statement data (in thousands): Net income $149,774 Loss on disposal of property (149) Depreciation expense 13,226 Other items involving noncash expense 837 Balance sheet data (in thousands): Increase in accounts receivanle 13,041 Increase in inventory 7,565 Increase in prepaid expense 10,548 Increase in accounts payable and other current liabilities 17,464 a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Enter the amounts in thousands of dollars, as shown above. National Beverage Co. Cash Flows from Operating Activities (in thousands) Cash flows from (used for) operating activities: --- Net Income $ Adjustment to reconcile net income to net cash flows from (used for) operating activities: -- Depreciation expense $ Loss on disposal of property $ Other items involving noncash expense 4 Changes in current operating assests and liabilities: -- Increase in accounts receivable $ Increase in inventory $ Increase in prepaid expenses $ Increase in accounts payable and other current liabilities $ Net cash flows from operating activities $ b. The company has positive earnings and positive net cash flow from operating activities. The increase in accounts receivable indicates a(n) increase in sales. In addition, the company is using its cash to decrease its accounts payable balance, which indicates that the company is generating enough cash from operations to pay for its inventory in cash . Overall, National Beverage is doing well financially.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Cash Flows from Operating Activities—Indirect Method

Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows:

Income statement data (in thousands):

Net income	$149,774
Loss on disposal of property	(149)
Depreciation expense	13,226
Other items involving noncash expense	837
Balance sheet data (in thousands):
Increase in accounts receivanle	13,041
Increase in inventory	7,565
Increase in prepaid expense	10,548
Increase in accounts payable and other current liabilities	17,464

a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Enter the amounts in thousands of dollars, as shown above.

National Beverage Co.

Cash Flows from Operating Activities

(in thousands)

Cash flows from (used for) operating activities:	---
Net Income	$
Adjustment to reconcile net income to net cash flows from (used for) operating activities:	--
Depreciation expense	$
Loss on disposal of property	$
Other items involving noncash expense	4
Changes in current operating assests and liabilities:	--
Increase in accounts receivable	$
Increase in inventory	$
Increase in prepaid expenses	$
Increase in accounts payable and other current liabilities	$

Net cash flows from operating activities

b. The company has positive earnings and positive net cash flow from operating activities. The increase in accounts receivable indicates a(n) increase in sales. In addition, the company is using its cash to decrease its accounts payable balance, which indicates that the company is generating enough cash from operations to pay for its inventory in cash . Overall, National Beverage is doing well financially.

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