Question 36 7 pts Cinderella Company began 2023 with its accounts receivable, inventory, and prepaid expenses of $310,000 and its total current liabilities totaling $90,000. At the end of the year, these same current assets totaled $260,000, while its total current liabilities totaled $190,000. Net income for the year was $100,000. Included in net income were a gain of $6,000 on the sale of equipment and Depreciation Expense of $44,000 for the year ending December 31, 2023. REQUIRED: Using the indirect method, prepare the operating activities section of the statement of cash flows for the year ending December 31, 2023. HINT: Use the following rules for adjusting amounts for current assets other than cash and current liabilities: Begin this section of the statement of cash flows from operating expenses with net income. For an increase in a noncash current asset (from the beginning of the period to the end per the comparative balance sheets) decrease cash (subtraction from net income) For a decrease in a noncash current asset increases cash For a decrease in a current liability decreases cash For an increase in a current liability increases cash Depreciation is an addition to net income. Losses on sale of a long term asset are added to net income. Gains on sale of a long term asset are deducted from net income.
Question 36 7 pts Cinderella Company began 2023 with its accounts receivable, inventory, and prepaid expenses of $310,000 and its total current liabilities totaling $90,000. At the end of the year, these same current assets totaled $260,000, while its total current liabilities totaled $190,000. Net income for the year was $100,000. Included in net income were a gain of $6,000 on the sale of equipment and Depreciation Expense of $44,000 for the year ending December 31, 2023. REQUIRED: Using the indirect method, prepare the operating activities section of the statement of cash flows for the year ending December 31, 2023. HINT: Use the following rules for adjusting amounts for current assets other than cash and current liabilities: Begin this section of the statement of cash flows from operating expenses with net income. For an increase in a noncash current asset (from the beginning of the period to the end per the comparative balance sheets) decrease cash (subtraction from net income) For a decrease in a noncash current asset increases cash For a decrease in a current liability decreases cash For an increase in a current liability increases cash Depreciation is an addition to net income. Losses on sale of a long term asset are added to net income. Gains on sale of a long term asset are deducted from net income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Question 36
7 pts
Cinderella Company began 2023 with its accounts receivable, inventory,
and prepaid expenses of $310,000 and its total current liabilities totaling
$90,000. At the end of the year, these same current assets totaled
$260,000, while its total current liabilities totaled $190,000.
Net income for the year was $100,000. Included in net income were a
gain of $6,000 on the sale of equipment and Depreciation Expense of
$44,000 for the year ending December 31, 2023.
REQUIRED: Using the indirect method, prepare the operating activities
section of the statement of cash flows for the year ending December 31,
2023.
HINT: Use the following rules for adjusting amounts for current assets
other than cash and current liabilities:
Begin this section of the statement of cash flows from operating
expenses with net income.
For an increase in a noncash current asset (from the beginning of the
period to the end per the comparative balance sheets) decrease cash
(subtraction from net income)
For a decrease in a noncash current asset increases cash
For a decrease in a current liability decreases cash
For an increase in a current liability increases cash
Depreciation is an addition to net income.
Losses on sale of a long term asset are added to net income.
Gains on sale of a long term asset are deducted from net income.
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