Presented below is the income statement of Debra, Inc.: Sales revenue $380,000 Cost of goods sold 222,000 Gross profit $158,000 Operating expenses 94,100 Income before income taxes 63,900 Income taxes 22,900 Net income $ 41,000 In addition, the following information related to net changes in working capital is presented: Debit Credit Cash $11,800 Accounts receivable 24,300 Inventories $19,700 Salaries payable (operating expenses) 8,400 Accounts payable 14,100 Income taxes payable 3,100 The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,900. Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows: (a) using the indirect method. (b) using the direct method.
Presented below is the income statement of Debra, Inc.: Sales revenue $380,000 Cost of goods sold 222,000 Gross profit $158,000 Operating expenses 94,100 Income before income taxes 63,900 Income taxes 22,900 Net income $ 41,000 In addition, the following information related to net changes in working capital is presented: Debit Credit Cash $11,800 Accounts receivable 24,300 Inventories $19,700 Salaries payable (operating expenses) 8,400 Accounts payable 14,100 Income taxes payable 3,100 The company also indicates that depreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,900. Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of cash flows: (a) using the indirect method. (b) using the direct method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Presented below is the income statement of Debra, Inc.:
In addition, the following information related to net changes inworking capital is presented:
The company also indicates thatdepreciation expense for the year was $16,700 and that the deferred tax liability account increased $2,900.
| Sales revenue | $380,000 | |
| Cost of goods sold | 222,000 | |
| Gross profit | $158,000 | |
| Operating expenses | 94,100 | |
| Income before income taxes | 63,900 | |
| Income taxes | 22,900 | |
| Net income | $ 41,000 |
In addition, the following information related to net changes in
| Debit | Credit | |||
| Cash | $11,800 | |||
| 24,300 | ||||
| Inventories | $19,700 | |||
| Salaries payable (operating expenses) | 8,400 | |||
| Accounts payable | 14,100 | |||
| Income taxes payable | 3,100 |
The company also indicates that
Prepare a schedule computing the net cash flow from operating activities that would be shown on a statement of
(a) using the indirect method.
(b) using the direct method.
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