P22.6 (LO 2, 3, 4) (SCF-Indirect Method, and Net Cash Flow from Operating Activities, Direct Method) Comparative balance sheet accounts of Marcus Inc. are presented below. Marcus Inc. Comparative Balance Sheet Accounts As of December 31, 2025 and 2024 Additional data (ignoring taxes): Debit Accounts Cash Accounts Receivable Inventory Equity Investments Machinery Buildings Land December 31 2025 2024 $ 42,000 $ 33,750 70,500 60,000 30,000 24,000 22,250 38,500 30,000 18,750 67,500 56,250 7,500 $269,750 7,500 $238,750 Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable Accrued Payables Long-Term Notes Payable Common Stock, no-par Retained Earnings $ 2,250 $ 1,500 2,250 5,625 13,500 9,000 35,000 24,750 3,375 2,625 21,000 31,000 150,000 125,000 39,000 42,625 $269,750 $238,750 1. Net income for the year was $42,500. 2. Cash dividends declared and paid during the year were $21,125. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $25,000 were sold during the year for $28,750. No unrealized gains and losses were recorded on these investments in 2025. 5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200. Marcus's 2025 income statement follows (ignoring taxes). Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,625 depreciation and $5,400 bad debts) Income from operations Other: Gain on sale of investments Loss on sale of machinery Net income Instructions a. Compute net cash flow from operating activities using the direct method. b. Prepare a statement of cash flows using the indirect method. $3,750 (800)
P22.6 (LO 2, 3, 4) (SCF-Indirect Method, and Net Cash Flow from Operating Activities, Direct Method) Comparative balance sheet accounts of Marcus Inc. are presented below. Marcus Inc. Comparative Balance Sheet Accounts As of December 31, 2025 and 2024 Additional data (ignoring taxes): Debit Accounts Cash Accounts Receivable Inventory Equity Investments Machinery Buildings Land December 31 2025 2024 $ 42,000 $ 33,750 70,500 60,000 30,000 24,000 22,250 38,500 30,000 18,750 67,500 56,250 7,500 $269,750 7,500 $238,750 Credit Accounts Allowance for Doubtful Accounts Accumulated Depreciation-Machinery Accumulated Depreciation-Buildings Accounts Payable Accrued Payables Long-Term Notes Payable Common Stock, no-par Retained Earnings $ 2,250 $ 1,500 2,250 5,625 13,500 9,000 35,000 24,750 3,375 2,625 21,000 31,000 150,000 125,000 39,000 42,625 $269,750 $238,750 1. Net income for the year was $42,500. 2. Cash dividends declared and paid during the year were $21,125. 3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized. 4. Equity investments (level of ownership is less than 20%) that cost $25,000 were sold during the year for $28,750. No unrealized gains and losses were recorded on these investments in 2025. 5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200. Marcus's 2025 income statement follows (ignoring taxes). Sales revenue Less: Cost of goods sold Gross margin Less: Operating expenses (includes $8,625 depreciation and $5,400 bad debts) Income from operations Other: Gain on sale of investments Loss on sale of machinery Net income Instructions a. Compute net cash flow from operating activities using the direct method. b. Prepare a statement of cash flows using the indirect method. $3,750 (800)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:P22.6 (LO 2, 3, 4) (SCF-Indirect Method, and Net Cash Flow from Operating Activities, Direct Method) Comparative balance sheet accounts of Marcus Inc. are presented below.
Marcus Inc.
Comparative Balance Sheet Accounts
As of December 31, 2025 and 2024
Additional data (ignoring taxes):
Debit Accounts
Cash
Accounts Receivable
Inventory
Equity Investments
Machinery
Buildings
Land
December 31
2025
2024
$ 42,000
$ 33,750
70,500
60,000
30,000
24,000
22,250
38,500
30,000
18,750
67,500
56,250
7,500
$269,750
7,500
$238,750
Credit Accounts
Allowance for Doubtful Accounts
Accumulated Depreciation-Machinery
Accumulated Depreciation-Buildings
Accounts Payable
Accrued Payables
Long-Term Notes Payable
Common Stock, no-par
Retained Earnings
$ 2,250
$ 1,500
2,250
5,625
13,500
9,000
35,000
24,750
3,375
2,625
21,000
31,000
150,000
125,000
39,000
42,625
$269,750
$238,750
1. Net income for the year was $42,500.
2. Cash dividends declared and paid during the year were $21,125.
3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.
4. Equity investments (level of ownership is less than 20%) that cost $25,000 were sold during the year for $28,750. No unrealized gains and losses were recorded on these investments in 2025.
5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200.
Marcus's 2025 income statement follows (ignoring taxes).
Sales revenue
Less: Cost of goods sold
Gross margin
Less: Operating expenses (includes $8,625 depreciation and $5,400 bad debts)
Income from operations
Other: Gain on sale of investments
Loss on sale of machinery
Net income
Instructions
a. Compute net cash flow from operating activities using the direct method.
b. Prepare a statement of cash flows using the indirect method.
$3,750
(800)
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