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 $27,500 51,000 27,100 18,400 4,200 2,950 Accounts receivable Merchandise inventory Prepaid insurance Accounts payable Salaries payable Unearned service revenue $23,000 57,400 15,500 26,100 4,950 800 The Year 2 income statement is shown below: Income Statement $616,000 (374,000) 242,000 4,400 (40,000) (142,000) (5,800) 58,600 4,900 Sales Cost of goods sold Gross margin Service revenue Insurance expense Salaries expense Depreciation expense Operating income Gain on sale of 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 B Required A Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows should be indicated with minus sign.) STUART BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Cash collections from customers for sales Cash collections from customers for services Cash payments for: 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 $27,500 51,000 27,100 18,400 4,200 2,950 Accounts receivable Merchandise inventory Prepaid insurance Accounts payable Salaries payable Unearned service revenue $23,000 57,400 15,500 26,100 4,950 800 The Year 2 income statement is shown below: Income Statement $616,000 (374,000) 242,000 4,400 (40,000) (142,000) (5,800) 58,600 4,900 Sales Cost of goods sold Gross margin Service revenue Insurance expense Salaries expense Depreciation expense Operating income Gain on sale of 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 B Required A Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows should be indicated with minus sign.) STUART BRANDS, INC. Statement of Cash Flows (Operating Activities) For the Year Ended December 31, Year 2 Cash flows from operating activities: Cash collections from customers for sales Cash collections from customers for services Cash payments for: 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
$27,500
51,000
27,100
18,400
4,200
2,950
Accounts receivable
Merchandise inventory
Prepaid insurance
Accounts payable
Salaries payable
Unearned service revenue
$23,000
57,400
15,500
26,100
4,950
800
The Year 2 income statement is shown below:
Income Statement
$616,000
(374,000)
242,000
4,400
(40,000)
(142,000)
(5,800)
58,600
4,900
Sales
Cost of goods sold
Gross margin
Service revenue
Insurance expense
Salaries expense
Depreciation expense
Operating income
Gain on sale of 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 B
Required A
Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows should be
indicated with minus sign.)
STUART BRANDS, INC.
Statement of Cash Flows (Operating Activities)
For the Year Ended December 31, Year 2
Cash flows from operating activities:
Cash collections from customers for sales
Cash collections from customers for services
Cash payments for:
Net cash flow from operating activities
<Required A
Required B
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