The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods. The amounts for income statement elements are missing. Sales Income Statement Net income Adjustments: Cash Flows from Operating Activities Indirect Method $ ? Decrease in accounts receivable ? Increase in inventory Decrease in accounts payable ? Increase in salaries payable ? Depreciation expense $ ? Direct Method 12 Cash received from customers (24) (36) Cash paid to suppliers 12 Cash paid to employees $ 612 (420) (66) (24) (42) $ ? Net cash flows from operating activities $ 60 Net cash flows from operating activities $ 60 ? Decrease in prepaid insurance ? Loss on sale of land Cost of goods sold Salaries expense Depreciation expense Insurance expense Loss on sale of land Income tax expense Net income Required: Deduce the missing amounts and prepare the income statement. ? Increase in income tax payable 18 (Not reported-no cash effect) 18 Cash paid for insurance 12 (Not reported-no cash effect) 12 Cash paid for income taxes Income Statement 0 $ 0
The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods. The amounts for income statement elements are missing. Sales Income Statement Net income Adjustments: Cash Flows from Operating Activities Indirect Method $ ? Decrease in accounts receivable ? Increase in inventory Decrease in accounts payable ? Increase in salaries payable ? Depreciation expense $ ? Direct Method 12 Cash received from customers (24) (36) Cash paid to suppliers 12 Cash paid to employees $ 612 (420) (66) (24) (42) $ ? Net cash flows from operating activities $ 60 Net cash flows from operating activities $ 60 ? Decrease in prepaid insurance ? Loss on sale of land Cost of goods sold Salaries expense Depreciation expense Insurance expense Loss on sale of land Income tax expense Net income Required: Deduce the missing amounts and prepare the income statement. ? Increase in income tax payable 18 (Not reported-no cash effect) 18 Cash paid for insurance 12 (Not reported-no cash effect) 12 Cash paid for income taxes Income Statement 0 $ 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The following schedule relates the income statement with
| Cash Flows from Operating Activities | |||||
| Income Statement | Indirect Method | Direct Method | |||
|---|---|---|---|---|---|
| Net income | $ ?question mark | ||||
| Adjustments: | |||||
| Sales | $ ?question mark | Decrease in |
12 | Cash received from customers | $ 612 |
| Cost of goods sold | ?question mark | Increase in inventory | (24) | ||
| Decrease in accounts payable | (36) | Cash paid to suppliers | (420) | ||
| Salaries expense | ?question mark | Increase in salaries payable | 12 | Cash paid to employees | (66) |
| ?question mark | Depreciation expense | 18 | (Not reported—no cash effect) | ||
| Insurance expense | ?question mark | Decrease in prepaid insurance | 18 | Cash paid for insurance | (24) |
| Loss on sale of land | ?question mark | Loss on sale of land | 12 | (Not reported—no cash effect) | |
| Income tax expense | ?question mark | Increase in income tax payable | 12 | Cash paid for income taxes | (42) |
| Net income | $ ?question mark | Net cash flows from operating activities | $ 60 | Net cash flows from operating activities | $ 60 |
Required:
Deduce the missing amounts and prepare the income statement
Transcribed Image Text:The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect
methods. The amounts for income statement elements are missing.
Sales
Income Statement
Net income
Adjustments:
Cash Flows from Operating Activities
Indirect Method
$ ? Decrease in accounts receivable
? Increase in inventory
Decrease in accounts payable
? Increase in salaries payable
? Depreciation expense
$ ?
Direct Method
12 Cash received from customers
(24)
(36) Cash paid to suppliers
12 Cash paid to employees
$ 612
(420)
(66)
(24)
(42)
$ ? Net cash flows from operating activities
$ 60
Net cash flows from operating activities
$ 60
? Decrease in prepaid insurance
? Loss on sale of land
Cost of goods sold
Salaries expense
Depreciation expense
Insurance expense
Loss on sale of land
Income tax expense
Net income
Required:
Deduce the missing amounts and prepare the income statement.
? Increase in income tax payable
18
(Not reported-no cash effect)
18
Cash paid for insurance
12 (Not reported-no cash effect)
12 Cash paid for income taxes
Income Statement
0
$
0
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 6 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education