The income statement disclosed the following items for 2016:
Depreciation expense $57,600 Gain on disposal of equipment 33,600 Net income 508,000
Balances of the current assets and current liability accountschanged between December 31, 2015, and December 31, 2016, asfollows:
Increase (Decrease) Accounts receivable $8,960 Inventory (5,120) Prepaid insurance (1,920) Accounts payable (6,080) Income taxes payable 1,410 Dividends payable 2,200
Required:
A. Prepare the Cash Flows fromOperating Activities section of the statement of cash flows, usingthe indirect method. Refer to the Amount Descriptions list providedfor the exact wording of the answer choices for text entries. Usethe minus sign to indicate cash outflows, cash payments, decreasesin cash and for any adjustments, if required. B. Briefly explain why net cashflows from operating activities is different than netincome.
The income statement disclosed the following items for 2016:
| Depreciation expense | $57,600 |
| Gain on disposal of equipment | 33,600 |
| Net income | 508,000 |
Balances of the current assets and current liability accountschanged between December 31, 2015, and December 31, 2016, asfollows:
| Increase (Decrease) | |
|---|---|
| Accounts receivable | $8,960 |
| Inventory | (5,120) |
| Prepaid insurance | (1,920) |
| Accounts payable | (6,080) |
| Income taxes payable | 1,410 |
| Dividends payable | 2,200 |
Required:
| A. | Prepare the Cash Flows fromOperating Activities section of the statement of cash flows, usingthe indirect method. Refer to the Amount Descriptions list providedfor the exact wording of the answer choices for text entries. Usethe minus sign to indicate cash outflows, cash payments, decreasesin cash and for any adjustments, if required. |
| B. | Briefly explain why net cashflows from operating activities is different than netincome. |
Related questions
The net income reported on the income statement for the currentyear was $364,000. Depreciation recorded on store equipment for theyear amounted to $14,500. Balances of the current asset and currentliability accounts at the beginning and end of the year are asfollows:
End of Year | Beginning of Year | |
|---|---|---|
| Cash | $43,210 | $38,400 |
| Accounts receivable (net) | 31,360 | 29,020 |
| Merchandise inventory | 39,590 | 45,160 |
| Prepaid expenses | 4,740 | 3,670 |
| Accounts payable (merchandise creditors) | 41,480 | 35,590 |
| Wages payable | 21,910 | 22,970 |
Required:
| A. | Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Refer to theAmount Descriptions list provided for the exact wording of theanswer choices for text entries. Use the minus sign to indicatecash outflows, cash payments, decreases in cash and for anyadjustments, if required. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| B
|
Preppare the Cash Flows from Operating Activites section of thestatement of cash flows, using the indirect method.
The income statement disclosed the following items for 2016:
| Depreciation expense | $24,000 |
| Gain on disposal of equipment | $16,000 |
| Net income | $38,000 |
Changes in current assets and current liabilities betweenDecember 31, 2015 and December 31, 2016, are as follows:
| Increase in accounts receivable | $20,000 |
| Decrease in inventory | 14,000 |
| Increase in prepaid insurance | 2,000 |
| Decrease in accounts payable | 5,000 |
| Decrease in interest payable | 1,000 |
| Increase in incomes taxes payable | 10,000 |
Statement of Cash Flows
| Cash from Operating Activites | |
The comparative balance sheet of Cromme Inc. for December 31,2016 and 2015, is shown as follows:
Question not attempted.
1 | Dec. 31, 2016 | Dec. 31, 2015 | |
2 | Assets | ||
3 | Cash | $626,640.00 | $585,760.00 |
4 | Accounts receivable (net) | 226,900.00 | 208,390.00 |
5 | Inventories | 641,350.00 | 616,130.00 |
6 | Investments | 0.00 | 239,300.00 |
7 | Land | 328,730.00 | 0.00 |
8 | Equipment | 705,940.00 | 553,530.00 |
9 | Accumulated depreciation-equipment | (166,970.00) | (148,000.00) |
10 | Total assets | $2,362,590.00 | $2,055,110.00 |
11 | Liabilities and Stockholdersâ Equity | ||
12 | Accounts payable (merchandise creditors) | $425,140.00 | $404,540.00 |
13 | Accrued expenses payable (operating expenses) | 42,020.00 | 52,750.00 |
14 | Dividends payable | 23,580.00 | 19,500.00 |
15 | Common stock, $4 par | 154,000.00 | 100,000.00 |
16 | Paid-in capital: Excess of issue price over parâcommon stock | 416,600.00 | 279,400.00 |
17 | Retained earnings | 1,301,250.00 | 1,198,920.00 |
18 | Total liabilities and stockholdersâ equity | $2,362,590.00 | $2,055,110.00 |
Additional data obtained from an examination of the accounts inthe ledger for 2016 are as follows:
| A. | The investments were sold for $279,880 cash. |
| B. | Equipment and land were acquired for cash. |
| C. | There were no disposals of equipment during the year. |
| D. | The common stock was issued for cash. |
| E. | There was a $198,010 credit to Retained Earnings for netincome. |
| F. | There was a $95,680 debit to Retained Earnings for cashdividends declared. |
Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities
The section of the statement of cash flows that reports the cashtransactions affecting the determination of net income.
. Refer to the Labels and Amount Descriptions list provided forthe exact wording of the answer choices for text entries. Be sureto complete the heading of the statement. In the operatingactivities section, use the minus sign to indicate cash outflows,decreases in cash and a net cash outflow, if required. In theinvesting and financing activities section, use a minus sign onlyto indicate a NET cash outflow for the section.
| Labels In CengageNOW, a Label is a text entry that does not have anamount associated with it. and Amount DescriptionsIn CengageNOW, an Amount Description is a text entry other thanan Account that has an amount associated with it. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash paid for dividends | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash paid for merchandise | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash paid for purchase of equipment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash paid for purchase of land | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash received from customers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash received from sale of common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash received from sale of investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease in accounts payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease in accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease in accrued expenses payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease in inventories | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Decrease in cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gain on sale of investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase in accounts payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase in accounts receivable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase in accrued expenses payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase in cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase in inventories | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on sale of investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash flow from operating activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash flow used for operating activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash flow from investing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash flow used for investing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash flow from financing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash flow used for financing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income Prepare a statement of cash flows, using the indirect method ofpresenting cash flows from operating activities The section of the statement of cash flows that reports the cashtransactions affecting the determination of net income. . Refer to the Labels and Amount Descriptions list provided forthe exact wording of the answer choices for text entries. Be sureto complete the heading of the statement. In the operatingactivities section, use the minus sign to indicate cash outflows,decreases in cash and a net cash outflow, if required. In theinvesting and financing activities section, use a minus sign onlyto indicate a NET cash outflow for the section. Question not attempted.
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