(a)
In budgetary bookkeeping, a cash flow statement, otherwise called statement of
To compute:
Prepare the net cash flows from operating activities using the indirect method.
(b)
In budgetary bookkeeping, a cash flow statement, otherwise called statement of cash flows, is a fiscal report that demonstrates how changes in monetary record records and pay influence cash and cash reciprocals, and separates the examination to operating, investing, and financing activities.
To discuss:
What are the causes of the major differences between net income and net cash flow from operating activities?
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Cornerstones of Financial Accounting
- In the current year, Harrisburg Corporation had net income of 35,000, a 9,000 decrease in accounts receivable, a 7,000 increase in inventory, an 8,000 increase in salaries payable, a 13,000 decrease in accounts payable, and 10,000 in depreciation expense. Using the indirect method, prepare the operating activities section of its statement of cash flows based on this information.arrow_forwardLast year Lawsby Company reported sales of P120,000 on its income statement. During the year, accounts receivable increased by P10,000 and accounts payable increased by P15,000. The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows. The sales revenue adjusted to a cash basis for the year would be:arrow_forwardHampton Company reports the following Income Statement Data Sales Expenses: Cost of goods sold Salaries expense Depreciation expense Net income information for its recent calendar year. Selected Year-End Balance Sheet Data Accounts receivable increase Inventory decrease $78,000 36,000 Salaries payable increase 8,000 7,000 $27,000 Cash flows from operating activities Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Statement of Cash Flows (partial) $6,000 4,000 700 $arrow_forward
- Vipul karrow_forwardSalud Company reports the following information. Selected Annual Income Statement Data Selected Year-End Balance Sheet Data $ 500,000 Accounts receivable increase 97,500 Prepaid expenses decrease 26,600 Accounts payable increase Wages payable decrease $ 53,200 12,600 Net income Depreciation expense Gain on sale of machinery 7,200 3,500 Use the indirect method to prepare the operating activities section of its statement of cash flows for the year ended December 31. (Amounts to be deducted should be indicated with a minus sign.) Statement of Cash Flows (partial) es Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilitiesarrow_forwardAnalysis reveals that a company had a net increase in cash of $21,540 for the current year. Net cash provided by operating activities was $19,400; net cash used in investing activities was $10,700 and net cash provided by financing activities was $12,840. If the year-end cash balance is $26,100, the beginning cash balance was: $47,640. $16,980. $4,560. $42,080. $43,080.arrow_forward
- 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.arrow_forwardRogers Company reported net income of $33,858 for the year. During the year, accounts receivable increased by $7,052, accounts payable decreased by $2,151 and depreciation expense of $70,819 was recorded. Net cash flows from operating activities for the year is a. $109,578 b. $95,474 c. $33,858 d. $113,880arrow_forwardHampton Company reports the following information for its recent calendar year. Income Statement Data Sales Expenses: Cost of goods sold Salaries expense Depreciation expense Net income Selected Year-End Balance Sheet Data $77,000 Accounts receivable increase Inventory decrease 36,000 Salaries payable increase 9,000 7,000 $ 25,000 Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Statement of Cash Flows (partial) Cash flows from operating activities-indirect method Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities $ 10,000 3,000 900arrow_forward
- The cash flows from (used for) operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $558,800 and accounts receivable decreased by $39,700 during the year, what was the amount of cash received from customers?$fill in the blank 1 b. If income tax expense for the current year was $38,900 and income tax payable decreased by $4,500 during the year, what was the amount of cash paid for income taxes?$fill in the blank 2 c. Briefly explain why the cash received from customers in part (a) is different from sales.Because the customers paid than the amount of sales for the period, cash received from customers sales made on account by $39,700 during the current year.arrow_forwardFilton Company reported net income of $44,204 for the year. During the year, accounts receivable increased by $7,925, accounts payable decreased by $4,003 and depreciation expense of $46,347 was recorded. Find the net cash provided by operating activities for the year. Select the correct answer. $44,204 $78,623 $102,479 $94,473arrow_forwardCash Flow RatiosSpencer Company reports the following amounts in its annual financial statements: Cash flow from operating activities $90,000 Capital expenditures $59,500* Cash flow from investing activities (68,000) Average current assets 136,000 Cash flow from financing activities (8,500) Average current liabilities 102,000 Net income 42,500 Total assets 255,000 * This amount is a cash outflowa. Compute Spencer's free cash flow.b. Compute Spencer's operating-cash-flow-to-current-liabilities ratio.c. Compute Spencer's operating-cash-flow-to-capital-expenditures ratio. Round ratios to two decimal points. a. Free cash flow Answer b. Operating-cash-flow-to-current-liabilities ratio Answer c. Operating-cash-flow-to-current-expenditures ratio Answerarrow_forward
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