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The income statement of Skysong Company is shown below. Skysong Company Income Statement For the Year Ended December 31, 2025 Sales revenue $6,910,000 Cost of goods sold Beginning inventory $1,860,000 Purchases 4,820,000 Goods available for sale 6,680,000 Ending inventory 1,560,000 Cost of goods sold 5,120,000 Gross profit 1,790,000 Operating expenses Selling expenses 450,000 Administrative expenses 710,000 1,160,000 Administrative expenses 710,000 1,160,000 Net income $630,000 Additional information: 1. Accounts receivable decreased $340,000 during the year. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $250,000 during the year. 4. Accrued expenses payable decreased $130,000 during the year. 5. Administrative expenses include depreciation expense of $60,000. Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2025, for Skysong Company, using the indirect method. (Show amounts that decrease cash flow with either a-sign eg.-15,000 or in parenthesis e.g. (15,000).) SKYSONG COMPANY Partial Statement of Cash Flows For the Year Ended December 31, 2025 Cash Flows from Operating Activities Net Income 630,000 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses $ 60,000 340,000 -300,000 (150,000) 60,000 340,000 -300,000 (150,000) Decrease in Accounts Payable (250,000) Decrease in Accrued Expenses Payable (130,000) Net Cash Provided by Operating Activities 170,000 $ 800.000

The income statement of Skysong Company is shown below. Skysong Company Income Statement For the Year Ended December 31, 2025 Sales revenue $6,910,000 Cost of goods sold Beginning inventory $1,860,000 Purchases 4,820,000 Goods available for sale 6,680,000 Ending inventory 1,560,000 Cost of goods sold 5,120,000 Gross profit 1,790,000 Operating expenses Selling expenses 450,000 Administrative expenses 710,000 1,160,000 Administrative expenses 710,000 1,160,000 Net income $630,000 Additional information: 1. Accounts receivable decreased $340,000 during the year. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $250,000 during the year. 4. Accrued expenses payable decreased $130,000 during the year. 5. Administrative expenses include depreciation expense of $60,000. Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2025, for Skysong Company, using the indirect method. (Show amounts that decrease cash flow with either a-sign eg.-15,000 or in parenthesis e.g. (15,000).) SKYSONG COMPANY Partial Statement of Cash Flows For the Year Ended December 31, 2025 Cash Flows from Operating Activities Net Income 630,000 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses $ 60,000 340,000 -300,000 (150,000) 60,000 340,000 -300,000 (150,000) Decrease in Accounts Payable (250,000) Decrease in Accrued Expenses Payable (130,000) Net Cash Provided by Operating Activities 170,000 $ 800.000

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter5: Inventories And Cost Of Goods Sold
Section: Chapter Questions
Problem 5.8MCP
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The income statement of Skysong Company is shown below. Skysong Company Income Statement For the Year Ended December 31, 2025 Sales revenue $6,910,000 Cost of goods sold Beginning inventory $1,860,000 Purchases 4,820,000 Goods available for sale 6,680,000 Ending inventory 1,560,000 Cost of goods sold 5,120,000 Gross profit 1,790,000 Operating expenses Selling expenses 450,000 Administrative expenses 710,000 1,160,000 Administrative expenses 710,000 1,160,000 Net income $630,000 Additional information: 1. Accounts receivable decreased $340,000 during the year. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $250,000 during the year. 4. Accrued expenses payable decreased $130,000 during the year. 5. Administrative expenses include depreciation expense of $60,000. Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2025, for Skysong Company, using the indirect method. (Show amounts that decrease cash flow with either a-sign eg.-15,000 or in parenthesis e.g. (15,000).) SKYSONG COMPANY Partial Statement of Cash Flows For the Year Ended December 31, 2025 Cash Flows from Operating Activities Net Income 630,000 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses $ 60,000 340,000 -300,000 (150,000) 60,000 340,000 -300,000 (150,000) Decrease in Accounts Payable (250,000) Decrease in Accrued Expenses Payable (130,000) Net Cash Provided by Operating Activities 170,000 $ 800.000
Transcribed Image Text:The income statement of Skysong Company is shown below. Skysong Company Income Statement For the Year Ended December 31, 2025 Sales revenue $6,910,000 Cost of goods sold Beginning inventory $1,860,000 Purchases 4,820,000 Goods available for sale 6,680,000 Ending inventory 1,560,000 Cost of goods sold 5,120,000 Gross profit 1,790,000 Operating expenses Selling expenses 450,000 Administrative expenses 710,000 1,160,000 Administrative expenses 710,000 1,160,000 Net income $630,000 Additional information: 1. Accounts receivable decreased $340,000 during the year. 2. Prepaid expenses increased $150,000 during the year. 3. Accounts payable to suppliers of merchandise decreased $250,000 during the year. 4. Accrued expenses payable decreased $130,000 during the year. 5. Administrative expenses include depreciation expense of $60,000. Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2025, for Skysong Company, using the indirect method. (Show amounts that decrease cash flow with either a-sign eg.-15,000 or in parenthesis e.g. (15,000).) SKYSONG COMPANY Partial Statement of Cash Flows For the Year Ended December 31, 2025 Cash Flows from Operating Activities Net Income 630,000 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses Net Cash Provided by Operating Activities Depreciation Expense Decrease in Accounts Receivable Decrease in Inventory Increase in Prepaid Expenses $ 60,000 340,000 -300,000 (150,000) 60,000 340,000 -300,000 (150,000) Decrease in Accounts Payable (250,000) Decrease in Accrued Expenses Payable (130,000) Net Cash Provided by Operating Activities 170,000 $ 800.000
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