Cash flow statement identifies and monitors the movement of the cash and its equivalent funds. The statement has three sections namely operating, financing, and investing. To prepare: The cash flow statement using the indirect method.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 4PSA

To determine

Introduction: Cash flow statement identifies and monitors the movement of the cash and its equivalent funds. The statement has three sections namely operating, financing, and investing.

To prepare: The cash flow statement using the indirect method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

A company uses a spreadsheet to prepare its statement of cash flows. Indicate whether each of the followingitems would be recorded in the Debit column or Credit column of the spreadsheet’s statement of cashflows section. Decrease in accounts payable

Cash Flows from Operating Activities-Direct Method The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $496,500 and accounts receivable decreased by $25,300 during the year, what was the amount of cash received from customers? b. If income tax expense for the current year was $53,200 and income tax payable decreased by $6,300 during the year, what was the amount of cash payments for income taxes? c. Briefly explain why the cash received from customers in part (a) is different from sales. Because the customers paid than the amount of sales for the period, cash received from customers sales made on account by $25,300 during the current year.

Prepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $ 667,500 Cost of goods sold 302,000 Gross profit 365,500 Operating expenses (excluding depreciation) $ 149,400 Depreciation expense 37,750 187,150 Other gains (losses) Loss on sale of equipment (22,125) Income before taxes 156,225 Income taxes expense 48,050 Net income $ 108,175 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year…