Bundle: Accounting, Loose-Leaf Version, 26th + CengageNOWv2, 2 term Printed Access Card
26th Edition
ISBN: 9781305617063
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 16, Problem 16.15EX
a.
To determine
Statement of
Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.
Cash flows from operating activities: These are the cash produced by the normal business operations.
The below table shows the way of calculation of cash flows from operating activities:
| Cash flows from operating activities (Indirect method) |
| Add: Decrease in current assets |
| Increase in current liability |
| |
| Loss on sale of plant assets |
| Deduct: Increase in current assets |
| Decrease in current liabilities |
| Gain on sale of plant assets |
| Net cash provided from or used by operating activities |
Table (1)
The net income reported by C Incorporation for the year ended December 31.
b.
To determine
To Explain: Why from net income is different from net cash flow from operating activities.
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Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flow from operating activities of $357,500 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from operating activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable
$7,700
Decrease in inventories
19,140
Depreciation
29,480
Gain on sale of investments
13,200
Increase in accounts payable
5,280
Increase in prepaid expenses
2,970
Increase in accounts receivable
14,300
a. Determine the net income reported by Curwen Inc. for the year ended December 31.
Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flows from operating activities of $148,200 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from (used for) operating activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable
$3,000
Decrease in inventories
7,400
Depreciation
11,400
Gain on sale of investments
5,100
Increase in accounts payable
2,100
Increase in prepaid expenses
1,300
Increase in accounts receivable
5,600
a. Determine the net income reported by Curwen Inc. for the year ended December 31.$fill in the blank 1
b. Curwen’s net income differed from cash flows from operations because of the following:
Depreciation expense, which has no effect on net cash flows from operating activities.
Gain on the sale of investments is reported in investing activities section of the cash flow…
Determining Net Income from Net Cash Flow from Operating Activities
Curwen Inc. reported net cash flow from operating activities of $199,100 on its statement of cash flows for a recent year ended December 31. The following information was reported in the Cash flows from operating activities section of the statement of cash flows, using the indirect method:
Decrease in income taxes payable
$3,800
Decrease in inventories
9,400
Depreciation
14,500
Gain on sale of investments
6,500
Increase in accounts payable
2,600
Increase in prepaid expenses
1,600
Increase in accounts receivable
7,100
a. Determine the net income reported by Curwen Inc., for the year ended December 31.
b. Curwen’s net income differed from cash flows from operations because of the following:
Depreciation expense, which has no effect on cash flows from operating activities.
Gain on the sale of investments is reported in investing activities section of the cash flow statement.
Changes in current operating…
Chapter 16 Solutions
Bundle: Accounting, Loose-Leaf Version, 26th + CengageNOWv2, 2 term Printed Access Card
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