### Financial Accounting Problem: Operating Cash Flow Calculation**Scenario:**Kingbird, Inc.'s net income for the current year was $547,000. Depreciation was $71,000. Accounts receivable and inventories decreased by $23,000 and $36,000, respectively. Prepaid expenses and salaries payable increased, respectively, by $2,000 and $18,000. Equipment was sold at a gain of $8,900. How much cash was provided by operating activities?**Options:**- $610,000- $684,100- $656,000- $543,000To solve this problem, follow these steps:### Step-by-Step Solution:1. **Start with Net Income:** \[ \text{Net Income} = \$547,000 \]2. **Add back Depreciation (Non-cash Charge):** \[ \text{Depreciation} = \$71,000 \] \[ \text{Adjusted Net Income} = \$547,000 + \$71,000 = \$618,000 \]3. **Adjust for Changes in Working Capital:** - **Decrease in Accounts Receivable:** \[ \text{Decrease in Accounts Receivable} = \$23,000 \] \[ \text{Adjusted Net Income} = \$618,000 + \$23,000 = \$641,000 \] - **Decrease in Inventory:** \[ \text{Decrease in Inventory} = \$36,000 \] \[ \text{Adjusted Net Income} = \$641,000 + \$36,000 = \$677,000 \] - **Increase in Prepaid Expenses (Deduct):** \[ \text{Increase in Prepaid Expenses} = \$2,000 \] \[ \text{Adjusted Net Income} = \$677,000 - \$2,000 = \$675,000 \] - **Increase in Salaries Payable:** \[ \text{Increase in Salaries Payable} = \$18,000 \] \[ \text{Adjusted Net Income} = \$675,000 + \$18,000 = \$693,000 \]4.

Indirect method of cash flow statement involves a reconciliation from profit before tax, adjusting…

Kingbird, Inc.'s net income for the current year was $547000. Depreciation was $71000. Accounts receivable and inventories decreased by $23000 and $36000, respectively. Prepaid expenses and salaries payable increased, respectively, by $2000 and $18000. Equipment was sold at a gain of $8900. How much cash was provided by operating activities? O $610000. O $684100. O $656000. O $543000.

Kingbird, Inc.'s net income for the current year was $547000. Depreciation was $71000. Accounts receivable and inventories decreased by $23000 and $36000, respectively. Prepaid expenses and salaries payable increased, respectively, by $2000 and $18000. Equipment was sold at a gain of $8900. How much cash was provided by operating activities? O $610000. O $684100. O $656000. O $543000.

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

Staley Inc. reported the following data: Net income: $465,400 Depreciation expense: $68,100 Loss on disposal of equipment: $29,900 Increase in accounts receivable: $21,700 Increase in accounts payable: $12,700 Compute cash flow from operating activities
Metlock, Inc.'s net income for the current year was $432000. Depreciation was $56000. Accounts receivable and inventories decreased by $18000 and $29000, respectively. Prepaid expenses and salaries payable increased, respectively, by $2000 and $14000. Equipment was sold at a gain of $7800. How much cash was provided by operating activities?
A company had net income of $244,839. Depreciation expense is $20,103. During the year, Accounts Receivable and Inventory increased by $18,423 and $39,765, respectively. Prepaid Expenses and Accounts Payable decreased by $2,854 and $5,603, respectively. There was also a loss on the sale of equipment of $6,008. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?
The term a(n) refers to an account that is used to track the owner's interests in the firm. a. Withdrawals account. b. Capital account. c. Revenue account. d. Expense account. e. Liability account.
Lindsay Corporation had net income for 2021 of $3,000,000. Additional information is as follows: Depreciation of plant assets Amortization of intangibles Increase in accounts receivable Increase in accounts payable $1,200,000 240,000 420,000 540,000 Lindsay's net cash provided by operating activities for 2021 was $2,680,000. $4,440,000. $4,320,000. $4,560,000.
A company reports net income of $560,000 that Includes depreciation expense of $82,000. Also, cash of $59,000 was borrowed on a 6-year note payable. Based on this data, total cash inflows from operating activities are: Multiple Cholce $478,000. $642,000. $619,000. $701,000.
F47. Gryphon Corporation reported net income of $75,000 for the year. During the year, accounts receivable DECREASES by $6000, accounts payable INCREASED by $3000, there were no gains or losses, and depreciation expense of $5000 was recorded. Using the indirect method, cash provided by operating activities for the year is: a) $89,000 b) $71,000 c) $83,000 d) $73,000
Company DotThrive reported the following financial results. Operating income is $94.98 million and depreciation and amortization is $6.12 million. The company spent $13.99 million buying new equipment and sold $3.58 million old equipment (this is the after-tax salvage). Net working capital increased by $1.31 million from previous year. The company's tax bracket is 21%. What's the company's Free Cash Flow (FCF) for the year?
Vaughn Company reported net income of $112000 for the year ended December 31, 2020. During the year, inventories decreased by $14600, accounts payable decreased by $20500, depreciation expense was $17800 and a gain on disposal of equipment of $9500 was recorded. Net cash provided by operating activities in 2020 using the indirect method was O $123900. O $105900. O $126600. O $114400.
Kela Corporation reports net income of $510,000 that includes depreciation expense of $85,000. Also, cash of $46,000 was borrowed on a 3-year note payable. Based on this data, total cash inflows from operating activities are: Multiple Choice O $641,000. $595,000. O $556,000 $425,000
Chris’s Outdoor Furniture, Incorporated, has net cash flows from operating activities for the last year of $310 million. The income statement shows that net income is $285 million and depreciation expense is $41 million. During the year, the change in inventory on the balance sheet was $31 million, change in accrued wages and taxes was $11 million, and change in accounts payable was $22 million. At the beginning of the year, the balance of accounts receivable was $41 million. Calculate the end-of-year balance for accounts receivable.
The balance sheet of Computer World reports total assets of $350,000 and $450,000 at the beginning and end of the year, respectively. Sales revenues are $800,000, net income is $100,000, and net cash flows from operating activities are $150,000. What is Computer World's cash return on assets? Multiple Choice 37.5% 25.0% 33.3% 42.9%