Finch Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Finch's Year 2 and Year 1 year-end balance sheets: Account Title Accounts receivable Merchandise inventory Prepaid insurance Accounts payable Salaries payable Unearned service revenue The Year 2 income statement is shown below: Income Statement Sales Cost of goods sold Gross margin Service revenue Insurance expense Salaries expense Year 2 Year 1 $21,800 $28,800 59,800 51,700 15,000 26,400 23,200 17,400 4,650 800 Depreciation expense Operating income Gain on sale of equipment Net income $ 609,000 (381,000) 228,000 4,400 (38,000) (148,000) (5,700) 40,700 4,500 $ 45,200 4,100 2,850 Required a. Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Finch Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and
corresponding balances were drawn from Finch's Year 2 and Year 1 year-end balance sheets:
Account Title
Accounts receivable
Merchandise inventory
Prepaid insurance
Accounts payable
Salaries payable
Unearned service revenue
The Year 2 income statement is shown below:
Income Statement
Sales
Cost of goods sold
Gross margin
Service revenue
Insurance expense
Salaries expense
Depreciation expense
Operating income
Gain on sale of equipment
Net income
Year 2
Year 1
$21,800
$28,800
59,800
51,700
15,000 26,400
23,200
17,400
4,650
4,100
800
2,850
Required A Required B
$ 609,000
(381,000)
228,000
4,400
(38,000)
(148,000)
Required
a. Prepare the operating activities section of the statement of cash flows using the direct method.
b. Prepare the operating activities section of the statement of cash flows using the indirect method.
(5,700)
40,700
4,500
$ 45,200
Complete this question by entering your answers in the tabs below.
Net cash flow from operating activities
Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows shoul
indicated with minus sign.)
FINCH BRANDS, INC.
Statement of Cash Flows (Operating Activities)
For the Year Ended December 31, Year 2
Cash flows from operating activities:
Cash collections from customers for sales
Cash collections from customers for services
Cash payments for:
0
Transcribed Image Text:Finch Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Finch's Year 2 and Year 1 year-end balance sheets: Account Title Accounts receivable Merchandise inventory Prepaid insurance Accounts payable Salaries payable Unearned service revenue The Year 2 income statement is shown below: Income Statement Sales Cost of goods sold Gross margin Service revenue Insurance expense Salaries expense Depreciation expense Operating income Gain on sale of equipment Net income Year 2 Year 1 $21,800 $28,800 59,800 51,700 15,000 26,400 23,200 17,400 4,650 4,100 800 2,850 Required A Required B $ 609,000 (381,000) 228,000 4,400 (38,000) (148,000) Required a. Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method. (5,700) 40,700 4,500 $ 45,200 Complete this question by entering your answers in the tabs below. Net cash flow from operating activities Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows shoul indicated with minus sign.) FINCH BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Cash collections from customers for sales Cash collections from customers for services Cash payments for: 0
Required
a. Prepare the operating activities section of the statement of cash flows using the direct method.
b. Prepare the operating activities section of the statement of cash flows using the indirect method.
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducte
should be indicated with a minus sign.)
Cash flows from operating activities:
Add:
FINCH BRANDS, INC.
Statement of Cash Flows (Operating Activities)
For the Year Ended December 31, Year 2
Deduct:
Add: noncash expenses
Net cash flow from operating activities
$
Required A
0
Required B
Transcribed Image Text:Required a. Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducte should be indicated with a minus sign.) Cash flows from operating activities: Add: FINCH BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Deduct: Add: noncash expenses Net cash flow from operating activities $ Required A 0 Required B
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