Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 16, Problem 16.16EX
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)
To Prepare: The cash flows from operating activities sections of the statement of cash flows using indirect method.
b.
To determine
To Interpret: The result in part a.
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Students have asked these similar questions
Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows:
Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co.
Interpret your results in part (a).
Salud Company reports the following information.
Selected Annual Income Statement Data
Selected Year-End Balance Sheet Data
Net income
$ 470,000
Accounts receivable increase
$ 49,600
Depreciation expense
97,000
Prepaid expenses decrease
15,900
Gain on sale of machinery
26,900
Accounts payable increase
7,400
Wages payable decrease
2,100
Use the indirect method to prepare the operating activities section of its statement of cash flows for the year ended December 31.
Note: Amounts to be deducted should be indicated with a minus sign.
Cash Flows from Operating Activities—Indirect Method
Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows:
Income statement data (in thousands):
Net income
$149,774
Loss on disposal of property
(149)
Depreciation expense
13,226
Other items involving noncash expense
837
Balance sheet data (in thousands):
Increase in accounts receivanle
13,041
Increase in inventory
7,565
Increase in prepaid expense
10,548
Increase in accounts payable and other current liabilities
17,464
a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Enter the amounts in thousands of dollars, as shown above.
National Beverage Co.
Cash Flows from Operating Activities
(in thousands)
Cash flows…
Chapter 16 Solutions
Accounting (Text Only)
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