The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below:   Service revenue                                                          $  1,180,000 Operating expenses                                                           840,000 Income before income taxes                                            340,000 Income tax expense                                                              85,000 Net income                                                                  $       255,000   The following balance sheet information also is available:                                                                                                   12/31/2021           12/31/2020 Cash                                                                              $  452,000               $      84,000 Accounts receivable                                                       148,000                     114,000 Accrued liabilities (for operating expenses)                 98,000                       74,000 Income taxes payable                                                       24,000                       43,000   In addition, the following transactions took place during the year:   1.Common stock was issued for $128,000 in cash. 2.Long-term investments were sold for $64,000 in cash/ The original cost of the investments also was $64,000. 3.$94,000 in cash dividends was paid to shareholders. 4.The company has no outstanding debt, other than those payables listed above. 5.Operating expenses include $44,000 in depreciation expense.   Required: Prepare the ash flows from operating activities section of Diversifier’s 2021 statement of cash flows using the indirect method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below:

 

Service revenue                                                          $  1,180,000

Operating expenses                                                           840,000

Income before income taxes                                            340,000

Income tax expense                                                              85,000

Net income                                                                  $       255,000

 

The following balance sheet information also is available:

 

                                                                                                12/31/2021           12/31/2020

Cash                                                                              $  452,000               $      84,000

Accounts receivable                                                       148,000                     114,000

Accrued liabilities (for operating expenses)                 98,000                       74,000

Income taxes payable                                                       24,000                       43,000

 

In addition, the following transactions took place during the year:

 

1.Common stock was issued for $128,000 in cash.

2.Long-term investments were sold for $64,000 in cash/ The original cost of the investments also was $64,000.

3.$94,000 in cash dividends was paid to shareholders.

4.The company has no outstanding debt, other than those payables listed above.

5.Operating expenses include $44,000 in depreciation expense.

 

Required:

Prepare the ash flows from operating activities section of Diversifier’s 2021 statement of cash flows using the indirect method.

 

                                                                                Diversified Portfolio Corporation

                                                                                                 Statement of Cash Flows (Partial)

                                                                                        For the Year Ended December 31, 2021

Cash flows from operating activities:

_____________________________________                            ______________________

Adjustments for noncash effects:

_____________________________________                            _______________________

Changes in operating assets and liabilities:

_____________________________________                            _______________________

_____________________________________                             _______________________

_____________________________________                             _______________________

_____________________________________                             _______________________

_____________________________________                             _______________________

  Net cash flows from operating activities                                                                                                  $            0 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Balance Sheet Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education