Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 6.14P
Statement of
P6-13. Statement of Cash Flows, Operating Activities Section, Direct Method. Easthoff, Incorporated provided the following balance sheets and income statement for the current year. Prepare the operating activities section of the cash flow statement using the direct method. Accrued expenses relate to Selling, General, and Administrative Expenses.
Easthoff, Incorporated |
||
Assets | Ending | Beginning |
Current Assets | ||
Cash | $ 7,000 | $ 3,500 |
8,500 | 8,000 | |
Merchandise Inventory | 2,300 | 4,000 |
Prepaid Expenses | 1,700 | 2,200 |
Total Current Assets | $ 19,500 | $ 17,700 |
Noncurrent Assets | ||
Investments | $ 12,000 | $ 24,300 |
Property, Plant, and Equipment – net | 75,000 | 58,000 |
Total Noncurrent Assets | $ 12, 000 | $ 82,300 |
Total Assets | $106,500 | $100,000 |
Liabilities | ||
Current Liabilities | ||
Accounts Payable | $ 4,500 | $ 1,000 |
Accrued Expenses | 9,800 | 5,120 |
Income Taxes Payable | 6,000 | 4,850 |
Total Current Liabilities | $ 20,300 | $ 10,970 |
Noncurrent Liabilities | ||
Notes Payable | $ 31,000 | $ 42,630 |
Total Noncurrent Liabilities | 31,000 | 42,630 |
Total Liabilities | $ 51,300 | $ 53,600 |
Stockholders’ Equity | ||
Common Stock, $1 par value | $ 10,000 | $ 9,000 |
Additional Paid-I n Capital | 24,700 | 20,000 |
20,500 | 17,400 | |
Total Stockholders’ Equity | $ 55,200 | $ 46,400 |
Total Liabilities and Stockholders’ Equity | $106,500 | $100,000 |
Easthoff, Incorporated Income Statement For the year ended December 31 | |
Sales | $80,085 |
Cost of Goods Sold | 48,051 |
Gross Profit | 32,034 |
Soiling, General, and Administrative Expenses | 10,700 |
2,400 | |
Total Operating Expenses | 13,100 |
Income Before Interest and Taxes | 18,934 |
Interest Expense | (4,000) |
Income Before Tax | 14,934 |
Income Tax Expense | (7,334) |
Net Income | $ 7,600 |
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Net Cash Provided by Operating Activities
Changes in various accounts and gains and losses on the sale of assets during the year for Argon Company are given below:
Required:
Prepare an answer sheet using the following column headings:
For each item, place an X in the Add or Subtract column to indicate whether the dollar amount should be added to or subtracted from net income under the indirect method when computing the net cash provided by operating activities for the year.
Required information
[The following information applies to the questions displayed below.]
Lansing Company's current-year income statement and selected balance sheet data at December 31 of the current and
prior years follow.
LANSING COMPANY
Income Statement
For Current Year Ended December 31
Sales revenue
Expenses
Cost of goods sold
Depreciation expense
Salaries expense
Rent expense
Insurance expense
Interest expense
Utilities expense
Net income
At December 31
Accounts receivable
$ 97,200
LANSING COMPANY
Selected Balance Sheet Accounts
Current Year
$ 5,600
1,980
4,400
880
220
260
220
Inventory
Accounts payable
Salaries payable
Utilities payable
Prepaid insurance
Prepaid rent
42,000
12,000
18,000
9,000
3,800
3,600
2,800
$ 6,000
Prior Year
$ 5,800
1,540
4,600
700
160
280
180
Selected data derived from the income and balance sheet of National Beverage Co. for a recent year are as follows:
required:
A. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co.
B. Interpret your results in part (a).
Chapter 6 Solutions
Intermediate Accounting (2nd Edition)
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