Presented below is the income statement of Coming Company: Sales Cost of goods sold Gross profit Operating expenses Income before income taxes $305,000 180,000 $125,000 68,000 57,000 21,400 $35,600 Income taxes Net income In addition, the following information related to net changes in working capital is presented: Cash Accounts receivable Inventories Salaries payable (operating expenses) Accounts payable Income tax payable Debit $9,600 10,000 $15,620 6,400 9,500 2,400 Credit The company also indicates that depreciation expense for the year was $12,360 and that the deferred tax liability account increased $3,080. Required: (a) Compute the net cash flow from operating activities that would be shown on a statement of cash flows using the indirect method. (b) Compute the net cash flow from operating activities that would be shown on a statement of cash flows using the direct method. P47 PPT (c) State the major difference between the two methods in handling statement of cash flows.
Presented below is the income statement of Coming Company: Sales Cost of goods sold Gross profit Operating expenses Income before income taxes $305,000 180,000 $125,000 68,000 57,000 21,400 $35,600 Income taxes Net income In addition, the following information related to net changes in working capital is presented: Cash Accounts receivable Inventories Salaries payable (operating expenses) Accounts payable Income tax payable Debit $9,600 10,000 $15,620 6,400 9,500 2,400 Credit The company also indicates that depreciation expense for the year was $12,360 and that the deferred tax liability account increased $3,080. Required: (a) Compute the net cash flow from operating activities that would be shown on a statement of cash flows using the indirect method. (b) Compute the net cash flow from operating activities that would be shown on a statement of cash flows using the direct method. P47 PPT (c) State the major difference between the two methods in handling statement of cash flows.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter2: Financial Statements, Cash Flow,and Taxes
Section: Chapter Questions
Problem 1Q: Define each of the following terms:
Annual report; balance sheet; income statement
Common...
Related questions
Question
![Presented below is the income statement of Coming Company:
Sales
Cost of goods sold
Gross profit
Operating expenses
Income before income taxes
$305,000
180,000
$125,000
68,000
57,000
21,400
$35,600
Income taxes
Net income
In addition, the following information related to net changes in working capital is
presented:
Cash
Accounts receivable
Inventories
Salaries payable (operating expenses)
Accounts payable
Income tax payable
Debit
$9,600
10,000
$15,620
6,400
9,500
2,400
Credit
The company also indicates that depreciation expense for the year was $12,360 and
that the deferred tax liability account increased $3,080.
Required:
(a) Compute the net cash flow from operating activities that would be shown on a
statement of cash flows using the indirect method.
(b) Compute the net cash flow from operating activities that would be shown on a
statement of cash flows using the direct method.
P47 PPT
(c) State the major difference between the two methods in handling statement of
cash flows.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffc751058-f3ec-487a-91ef-293f4c90f2ec%2Feb320afe-7438-4a42-8c21-40f28c26de48%2Fois0i0m_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Presented below is the income statement of Coming Company:
Sales
Cost of goods sold
Gross profit
Operating expenses
Income before income taxes
$305,000
180,000
$125,000
68,000
57,000
21,400
$35,600
Income taxes
Net income
In addition, the following information related to net changes in working capital is
presented:
Cash
Accounts receivable
Inventories
Salaries payable (operating expenses)
Accounts payable
Income tax payable
Debit
$9,600
10,000
$15,620
6,400
9,500
2,400
Credit
The company also indicates that depreciation expense for the year was $12,360 and
that the deferred tax liability account increased $3,080.
Required:
(a) Compute the net cash flow from operating activities that would be shown on a
statement of cash flows using the indirect method.
(b) Compute the net cash flow from operating activities that would be shown on a
statement of cash flows using the direct method.
P47 PPT
(c) State the major difference between the two methods in handling statement of
cash flows.
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