pS-cF-to-cepital expencli teres=cf frem ops actiutiosAnnuel net cepitel expercldures@ Cambridge Business PublishersChapter 12Statement of Cash FlowsSales revenue. .Cost of goods sold. ..Wages expense.Rent expense. . . .Insurance expense. . .$900,000$470,000120,00050,00015,000655,000Net income ..Janu$245,000...Additional information about the company includes:Beginningof YearEnd ofYear$51,00076,0007,00018,00011,000$54,000Accounts receivable.. ..Inventory. ...60,0008,000Prepaid insurance. .. ...Accounts payable.. . . . .Wages payable. . . .ldo24,000sM7,000omAUse the preceding information to calculate the cash flow from operating activities using the indirectmethod.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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pS-cF-to-cepital expencli teres=cf frem ops actiutio
s
Annuel net cepitel expercldures
@ Cambridge Business Publishers
Chapter 12
Statement of Cash Flows
Sales revenue. .
Cost of goods sold. ..
Wages expense.
Rent expense. . . .
Insurance expense. . .
$900,000
$470,000
120,000
50,000
15,000
655,000
Net income ..
Janu
$245,000
...
Additional information about the company includes:
Beginning
of Year
End of
Year
$51,000
76,000
7,000
18,000
11,000
$54,000
Accounts receivable.. ..
Inventory. ...
60,000
8,000
Prepaid insurance. .. ...
Accounts payable.. . . . .
Wages payable. . . .
ldo
24,000
sM
7,000
omA
Use the preceding information to calculate the cash flow from operating activities using the indirect
method.

Expert Solution

Step 1

Statement of cash flows:

This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities. Operating activities include cash inflows and outflows from business operations. Investing activities includes cash inflows and cash outflows from purchase and sale of land or equipment, or investments. Financing activities includes cash inflows and outflows from issuance of common stock and debt, payment of debt and dividends.