(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_forwardSuper Grocers, Inc., provided the following financial information for the quarter ending September 30, 2006: Depreciation and amortization – $133,414 Net income – $341,463 Increase in receivables – $112,709 Increase in inventory – $81,336 Increase in accounts payables – $62,411 Decrease in marketable securities – $31,225 What is the cash flow from operating activities generated during this quarter by the firm? a. -$308,458 b. -$374,468 c. $308,458 d. $374,468arrow_forwardUse the following information to compute net change in cash for a firm: Net income for the year is $43,900 Account receivable increased by $10,420 Inventory increased by $1,875 Depreciation expense for the year is $8,000 Account payable decreased by $5,782 Other current liabilities increased by $3,500 Taxes payable decreased by $1,970 Old equipment with a book value of $2,200 was sold for $1,325 Old appliances were sold for $24,000 at a gain of $4,800 A new machine was purchased for $10,000 1,000 shares of common stock were issued at par value of $10 each and sold at par (for $10 each) Declared and paid dividends of $5,000 Reimbursed $7,000 of an outstanding loan’s capitalarrow_forward
- Blue Company's net income last year was $35,000. Changes in selected balance sheet accounts for the year appear below: Increases (Decreases) Debit balances: Accounts receivable $(7,000) Inventory 8,000 Prepaid expenses (6,000) Credit balances: Accumulated depreciation 10,000 Accounts payable 13,000 Accrued liabilities (5,000) Taxes payable 5,000 Based solely on this information, net cash flow from operating activities under the indirect method on the statement of cash flows would be: a. $63,000. b. $81,000. c. $45,000. d. $29,000.arrow_forwardAnnual Income Statement Data Selected Year - End Balance Sheet Data Sales $ 50,000 Wages payable decrease $ 3,000 Expenses: Inventory increase 500 Cost of goods sold 30,000 Accounts payable decrease 1,000 Wages expense 10,000 Amortization expense 1,500 Net income $ 8,500 Prepare the operating activities section of the statement of cash flows for GreenGarden using the indirect method. Note: Amounts to be deducted should be indicated with a minus sign.]arrow_forwardOriole Company reports a $22000 increase in inventory and a $5600 decrease in accounts payable during the year. Cost of Goods Sold for the year was $315800. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were?arrow_forward
- Cairns Consulting Corp. company records revealed the following for the current year: Increase in inventory $7,000 Depreciation expense Decrease in accounts payable Decrease in accounts receivable Net loss 24,000 3,000 9,000 25,000 What was the net cash flow from operating activities for the year? O cash flow from (inflow) $8,000 cash flow from (inflow) $0 O cash flow used (outflow) $2,000 O cash flow used (outflow) $4,000arrow_forwardPrepare a cash flow statement (indirect method) from the given information. please include explanation for each step/line itemarrow_forwardBrandon, Inc. reported the following items in its balance sheet and income statement: Net Income $105,600 Gain on Disposal of Equipment 10,800 Increase in Accounts Receivable 6,200 Decrease in Accounts Payable 14,900 Increase in Common Stock 50,000 Based on this information, what is the cash flow from Operating Activities?arrow_forward
- OllyPop Beverage Company reported the following items in the most recent year. Net income $41,700 Dividends paid 5,060 Increase in accounts receivable 10,640 Increase in accounts payable 7,220 Purchase of equipment (capital expenditure) 8,300 Depreciation expense 4,220 Issue of notes payable 21,440 Compute net cash provided by operating activities, the net change in cash during the year.arrow_forwardFree Cash Flow Ratio Problem Instructions: Calculate the Free Cash Flow Ratio for Lucas Company. Lucas Company had net sales for the year of $450,500, cost of goods sold of $145,500, net income of $65,400, net cash provided by operating activities of $115,000, net cash used by investing activities of $55,200, capital expenditures of $40,500, and cash dividends of $24,500 in dividends for the year. What is the free cash flow for the year? Free Cash Flow Ratioarrow_forwardDuke Company reported cost of goods sold last year of $270,000 on its income statement. Additional information concerning the company's closing and opening account balances last year follows: Inventory $60,000 $45,000 Accounts payable $26,000 $39,000 Duke Company uses the direct method to determine the net cash provided by operating activities on its statement of cash flows. What amount should Duke report as cash paid to suppliers in its statement of cash flows for last year?arrow_forward
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