(a)
Introduction:
To record:
The journal entry.
(b)
Introduction:
Cash flow from operations measure
To identify:
The amount of net cash flow from operating activities.
(c)
Introduction:
Net income is the income that is calculated after the deduction of expenses such as selling and administration expenses, cost of goods sold, operating expenses, depreciation, etc. from the revenue earned.
To calculate:
The amount of net income.
(d)
Introduction:
Cash flow from operations measure cash flows related to day-to-day activities. Operating income and operating expenses for the year forms the part of operating activities. It includes cash flows related to buying and selling of goods and services.
To calculate:
The cash flow from operating activities under the indirect method.
(e)
Introduction:
Cash flow from operations measure cash flows related to day-to-day activities. Operating income and operating expenses for the year forms the part of operating activities. It includes cash flows related to buying and selling of goods and services.
To state:
The general rule that is applied to convert net income to operating cash flows in requirement 4.
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Managerial Accounting
- Suppose your company sells services of $180 in exchange for $110 cash and $70 on account. prepare journal entry a) Record the service revenue of $110 for cash and $70 on account. dentify the amount that should be reported as net cash flow from operating activities. Identify the amount that would be included in net income. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).arrow_forwardSuppose your company sells services of $180 in exchange for $110 cash and $70 on account. Required: 1. Prepare the journal entry to record this transaction. 2. Identify the amount that should be reported as net cash flow from operating activities. 3. Identify the amount that would be included in net income. 4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).arrow_forwardSuppose your company sells services of $180 in exchange for $110 cash and $70 on account. Required: 1. Prepare the journal entry to record this transaction. 2. Identify the amount that should be reported as net cash flow from operating activities. 3. Identify the amount that would be included in net income. 4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). (Amounts to be deducted should be indicated with a minus sign.) Net Income Increase in Accounts Receivable Net Cash Flow from Operating Activitiesarrow_forward
- Suppose your company sells services of $180 in exchange for $110 cash and $70 on account. Required: 1. Prepare the journal entry to record this transaction. 2. Identify the amount that should be reported as net cash flow from operating activities. 3. Identify the amount that would be included in net income. 4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Identify the amount that should be reported as net cash flow from operating activities. Net Cash Flowarrow_forwardSuppose your company sells goods for $300, of which $200 is received in cash and $100 is on account. The goods cost your company $125 and were paid for in a previous period. Your company also recorded salaries and wages of $70, of which only $30 has been paid in cash. Calculate the amount that should be reported as net cash flow from operating activities. Calculate the amount that should be reported as net income. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).arrow_forwardSuppose your company sells services of $270 in exchange for $155 cash and $115 on account. Required: Prepare the journal entry to record this transaction. Identify the amount that should be reported as net cash flow from operating activities. Identify the amount that would be included in net income. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). I have no clue how to work this problemarrow_forward
- Comparative financial statements for Weaver Company follow: Weaver Company Comparative Balance Sheet at Decenber 31 This Year Last Year Ansets Canh and canh equivalents Accounte receivable Inventory Prepaiafexpenses Total chrrent assets Property, plant, and equi pnent Less accumulated depreeiation Net property, plant, and equipnent Long-term investmenta 15 19 430 290 150 7 195 602 509 600 105 490 40 450 495 18 39 Total asseta $1,115 $ 998 Liabilities and Stockholders' Equity Accounts payable Acerued liabilities Income taxes payable Total current liabilitien Bonds payable Total liabilities $ 310 65 76 245 80 69 451 250 394 190 701 584 Common stock Retained earnings Total stockholders equity 338 400 76 14 414 $1,115 414 Total liabilities and stockholders' equity 998 Meaver Company Incone Statement For This Year Ended Decenber 31 Sales $790 Cost of gooda sold Gross margin Selling and administrative expenses Net operating income Nonoperating itema: Gain on sale of investments Loss on sale…arrow_forward10 Suppose your company sells services of $310 in exchange for $175 cash and $135 on account. Required: 1. Prepare the journal entry to record this transaction. 2. Identify the amount that should be reported as net cash flow from operating activities. 3. Identify the amount that would be included in net income. 4. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the journal entry to record this transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the service revenue of $175 for cash and $135 on account. Note Enter debits before credits Transaction General Journal Debit Creditarrow_forwardUse the following information and prepare an Income Statement (to calculate the net profit) and a Statement of Cash Flows (identify each payment separately) for the month. Identify 2 causes for the difference between net profit and cash flow from operating activities. Describe what the Cash Flow Statement reveals. Bank balance beginning of month 15,600 Inventory purchased for cash 28,000 Bank balance, end of month 19,800 Miscellaneous expenses paid 8,000 Cash drawings 30,000 Payment on accounts payable 44,000 Cash sales 72,000 Proceeds from bank loan 93,000 Collections from accounts receivable 40,000 Proceeds from sale of motor vehicle 12,000 Cost of sales 69,000 Purchase of motor vehicle for cash 68,000 Credit sales 58,000 Rent expense 800 Depreciation 3,500 Rent paid in advance for the next 6 months 4,800 Wages paid 30,000arrow_forward
- For each separate case, compute the required cash flow information for BioClean. Case A: Compute cash interest received Interest revenue $5,000 Interest receivable, beginning of year 600 Interest receivable, end of year . 1,700 Case B: Compute cash paid for wages Wages expense $9,000 Wages payable, beginning of year . . . . . . . 2,200 Wages payable, end of year . . . . . . . 1,000arrow_forwardA firm reports subscription fee revenue on the income statement of $200,000. Beginning and ending unearned subscription fee revenues on the balance sheet are $88,000 and $78,000, respectively. What is the amount of cash received from customers for fees? What dollar adjustment is needed in the operating section of the cash flow statement under the indirect method.arrow_forwardThe 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_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning