Stuart Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Stuart's Year 2 and Year 1 year-end balance sheets: Account Title Year 2 Year 1 Accounts $23,000 $27,500 receivable Merchandise 57,400 51,000 inventory Prepaid insurance 15,500 27,100 Accounts payable 26,100 Salaries payable Unearned service 18,400 4,200 4,950 2,950 800 revenue The Year 2 income statement is shown below: Income Statement Sales $616,000 Cost of goods sold (374,000) Gross margin Service revenue 242,000 4,400 (40,000) (142,000) Insurance expense Salaries expense Depreciation (5,800) expense Operating income Gain on sale of 58,600 4,900 equipment 63,500 Net income Required a Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method. Complete this question by entering your answers in the tabs below. Required Required A В Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) STUART BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Add: Deduct Add: noncash expenses Net cash flow from operating activities
Stuart Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Stuart's Year 2 and Year 1 year-end balance sheets: Account Title Year 2 Year 1 Accounts $23,000 $27,500 receivable Merchandise 57,400 51,000 inventory Prepaid insurance 15,500 27,100 Accounts payable 26,100 Salaries payable Unearned service 18,400 4,200 4,950 2,950 800 revenue The Year 2 income statement is shown below: Income Statement Sales $616,000 Cost of goods sold (374,000) Gross margin Service revenue 242,000 4,400 (40,000) (142,000) Insurance expense Salaries expense Depreciation (5,800) expense Operating income Gain on sale of 58,600 4,900 equipment 63,500 Net income Required a Prepare the operating activities section of the statement of cash flows using the direct method. b. Prepare the operating activities section of the statement of cash flows using the indirect method. Complete this question by entering your answers in the tabs below. Required Required A В Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) STUART BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Add: Deduct Add: noncash expenses Net cash flow from operating activities
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Stuart Brands, Inc., presents its statement of cash flows using the indirect method. The following accounts and
corresponding balances were drawn from Stuart's Year 2 and Year 1 year-end balance sheets:
Account Title
Year 2
Year 1
Accounts
$23,000 $27,500
receivable
Merchandise
57,400
51,000
inventory
Prepaid
insurance
15,500
27,100
Accounts payable 26,100
Salaries payable
Unearned service
18,400
4,200
4,950
2,950
800
revenue
The Year 2 income statement is shown below:
Income Statement
Sales
$616,000
Cost of goods sold (374,000)
Gross margin
Service revenue
242,000
4,400
(40,000)
(142,000)
Insurance expense
Salaries expense
Depreciation
(5,800)
expense
Operating income
Gain on sale of
58,600
4,900
equipment
63,500
Net income
Required
a Prepare the operating activities section of the statement of cash flows using the direct method.
b. Prepare the operating activities section of the statement of cash flows using the indirect method.
Complete this question by entering your answers in the tabs below.
Required Required
A
В
Prepare the operating activities section of the statement of cash flows using the indirect
method. (Amounts to be deducted should be indicated with a minus sign.)
STUART BRANDS, INC.
Statement of Cash Flows (Operating
Activities)
For the Year Ended December 31, Year 2
Cash flows from operating
activities:
Add:
Deduct
Add: noncash expenses
Net cash flow from operating
activities
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