Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 14SEB
To determine
Indicate the adjustment to net income that would be shown in the operating section of the statement of
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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.
The following selected account balances appeared on the financial statements of the Washington Company. Use these balances to answer the questions
that follow.
Accounts Receivable, Jan. 1
Accounts Receivable, Dec. 31
Accounts Payable, Jan. 1
Accounts Payable, Dec. 31
Inventory, Jan. 1
Inventory, Dec. 31
15,279
Sales
66,715
Cost of Goods Sold
36,365
The Washington Company uses the direct method to calculate net cash flow from operating activities. Assume that all accounts payable are owed to
merchandise suppliers.
$13,081
Oa. $73,715
Ob. $70,015
Oc. $66,715
Od. $59,715
6,081
5,652
9,352
7,633
What adjustment(s) should be made to reconcile net income to net cash flows from operating activities using the indirect method, considering the following balances in current assets?
Accounts receivable, beginning of year $19,734
Accounts receivable, end of year $25,278
Prepaid insurance, beginning of year $11,726
Prepaid insurance, end of year $6,229
Chapter 9 Solutions
Financial Accounting
Ch. 9 - Prob. 1YTCh. 9 - Prob. 2YTCh. 9 - Prob. 3YTCh. 9 - Prob. 4YTCh. 9 - Prob. 5YTCh. 9 - Prob. 1QCh. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - Prob. 4QCh. 9 - Prob. 5Q
Ch. 9 - Which types of business transactions would result...Ch. 9 - Prob. 7QCh. 9 - Which types of business transactions would result...Ch. 9 - Prob. 9QCh. 9 - Prob. 10QCh. 9 - Prob. 11QCh. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - Prob. 16QCh. 9 - Prob. 1MCQCh. 9 - Prob. 2MCQCh. 9 - Prob. 3MCQCh. 9 - Prob. 4MCQCh. 9 - Prob. 5MCQCh. 9 - Prob. 6MCQCh. 9 - Depreciation for the year was 50,000 and net...Ch. 9 - Accounts receivable decreased by 12,000....Ch. 9 - Prob. 9MCQCh. 9 - Prob. 10MCQCh. 9 - Prob. 1SEACh. 9 - Prob. 2SEACh. 9 - Calculate and identify cash flows. (LO 3, 6). A...Ch. 9 - Prob. 4SEACh. 9 - Prob. 5SEACh. 9 - Prob. 6SEACh. 9 - Prob. 7SEACh. 9 - Prob. 8SEACh. 9 - Prob. 9SEACh. 9 - Prob. 10SEBCh. 9 - Prob. 11SEBCh. 9 - Prob. 12SEBCh. 9 - Prob. 13SEBCh. 9 - Prob. 14SEBCh. 9 - Prob. 15SEBCh. 9 - Prob. 16SEBCh. 9 - Evaluate adjustments to net income under the...Ch. 9 - Prob. 18SEBCh. 9 - Prob. 19EACh. 9 - Prob. 20EACh. 9 - Prob. 21EACh. 9 - Prob. 22EACh. 9 - Prob. 23EACh. 9 - Prob. 24EACh. 9 - Prob. 25EACh. 9 - Prob. 26EACh. 9 - Prob. 27EACh. 9 - Prob. 28EACh. 9 - Prob. 29EACh. 9 - Calculate cash from operating activities using the...Ch. 9 - Prob. 31EACh. 9 - Prob. 32EACh. 9 - Prob. 33EACh. 9 - Prob. 34EBCh. 9 - Prob. 35EBCh. 9 - Prob. 36EBCh. 9 - Prob. 37EBCh. 9 - Prob. 38EBCh. 9 - Prob. 39EBCh. 9 - Prob. 40EBCh. 9 - Prob. 41EBCh. 9 - Prob. 42EBCh. 9 - Prob. 43EBCh. 9 - Prob. 44EBCh. 9 - Prob. 45EBCh. 9 - Prob. 46EBCh. 9 - Prob. 47EBCh. 9 - Prob. 48EBCh. 9 - Prob. 49PACh. 9 - Prob. 50PACh. 9 - Prob. 51PACh. 9 - Prob. 52PACh. 9 - Prob. 53PACh. 9 - Prob. 54PACh. 9 - Prob. 55PACh. 9 - Prob. 56PACh. 9 - Prob. 57PBCh. 9 - Prob. 58PBCh. 9 - Prob. 59PBCh. 9 - Prob. 60PBCh. 9 - Prob. 61PBCh. 9 - Prob. 62PBCh. 9 - Prob. 63PBCh. 9 - Prob. 64PBCh. 9 - Prob. 1FSACh. 9 - Prob. 2FSACh. 9 - Prob. 3FSACh. 9 - Prob. 1CTPCh. 9 - Prob. 2IE
Knowledge Booster
Similar questions
- Given the following information, convert Robin Companys salaries expense from its income statement into payments to employees for its statement of cash flows.arrow_forwardPrepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $ 667,500 Cost of goods sold 302,000 Gross profit 365,500 Operating expenses (excluding depreciation) $ 149,400 Depreciation expense 37,750 187,150 Other gains (losses) Loss on sale of equipment (22,125) Income before taxes 156,225 Income taxes expense 48,050 Net income $ 108,175 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year…arrow_forwardClark Bell started a personal financial planning business when he accepted $69,000 cash as advance payment for managing the financial assets of a large estate. Bell agreed to manage the estate for a one-year period beginning June 1, Year 1. Required Show the effects of the advance payment and revenue recognition on the Year 1 financial statements using the following horizontal statements model. In the Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. If the account is not affected, leave the cell blank. How much revenue would Bell recognize on the Year 2 income statement? What is the amount of cash flow from operating activities in Year 2?arrow_forward
- Create a statement of cash flow for the current year using Wright Co's income statement and balance sheet. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Income Statement: Revenue Cost of Goods Sold Gross Margin SG&A EBITDA Depreciation Expense EBIT Interest Expense EBT Taxes Net Income Dividends Addition to Retained Earnings Balance Sheet: Assets Cash Accounts Receivables Inventory Total Current Assets Net Fixed Assets Total Asset Current Year 4,628.00 1,990.04 2,637.96 543.00 2,094.96 516.00 1,578.96 182.90 1,396 488.62 907.44 410 497.44 Prior Year 800 400 300 1,500 5,000 6,500 Current Year ???? 441.00 343.00 ???? 5,016.00 ????arrow_forwardWhat adjustment(s) should be made to reconcile net income to net cash flows from operating activities (indirect method) considering the following balances in current assets? For those boxes in which you must enter subtractive or negative numbers use a minus sign. Accounts receivable, beginning of year $23,000 Accounts receivable, end of year 29,000 Prepaid insurance, beginning of year 16,000 Prepaid insurance, end of year 13,000 Accounts Receivable $fill in the blank 1 Prepaid Insurance fill in the blank 2 Total $fill in the blank 3arrow_forwardThe major classifications of activities reported in the statements of cash flows are operating, investing, and financing. Classify each of the transactions listed below as: choose from this( (-)operating activity / (+)investing Activity/ (-) investing activity/ (+) financing activity/ (+) operating activity/ (-) Financing activity )) - Decrease in accounts receivable during the year. - Decrease of inventory balanace during the year. - Decrease of salaries payable during the year. - Sale of treasury shares. - Increase of prepaid rent during the year - Sale of land - Issurance of Notes payable (long term)arrow_forward
- The major classifications of activities reported in the statements of cash flows are operating, investing, and financing. Classify each of the transactions listed below as: choose from this( (-)operating activity / (+)investing Activity/ (-) investing activity/ (+) financing activity/ (+) operating activity/ (-) Financing activity )) - Decrease in accounts receivable during the year. - Decrease of inventory balanace during the year. - Decrease of salaries payable during the year. - Sale of treasury shares. - Increase of prepaid rent during the year - Sale of land - Issurance of Notes payable (long term) Increase in accounts payable during the year. -depreciation of equipment - Issurance of preference shares - Increase of uneared revenuesduring the year - Purchase of buildings -Net income - Payment of cash dividened - Gain on sale of equipmentarrow_forwardWhen using the Indirect Method of preparing the Statement of Cash Flows, in the operating section, some accounts are added and some costs are subtracted. If you had to explain to someone why an increase in accounts receivable is subtracted and the opposite as to why a decrease In accounts recelvable is added, what information would you relay to them? (Include in your response the concept of accruals, FASB guidelines, sales and net income on the income statement, and the balance sheet). Answer should be in a paragraph form.arrow_forwardStatement of Cash Flows-Indirect Method The comparative balance sheet of Yellow Dog Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows: Dec. 31, Dec. 31, 20Y8 20Υ7 Assets Cash $88,860 $109,240 Accounts receivable (net) 136,550 147,270 Merchandise inventory 195,060 182,530 Prepaid expenses 7,950 5,530 Equipment 397,360 327,030 Accumulated depreciation-equipment (103,310) (80,200) Total assets $722,470 $691,400 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $151,720 $144,500 Mortgage note payable 207,420 Common stock, $1 par 24,000 15,000 Paid-in capital: Excess of issue price over par-common stock 330,000 195,000 Retained earnings 216,750 129,480 Total liabilities and stockholders' equity $722,470 $691,400 Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2OY8 are as follows: a. Net income, $223,410. b. Depreciation reported on the income statement, $50,250. c. Equipment was purchased at…arrow_forward
- The term cash as used on the statement of cash flows includes all the following EXCEPT: A) cash due from customers within 30 days. B) cash on hand. C) cash equivalents. D) cash in bank Which of the following statements accurately describes the statement of cash flows? A) It shows the relative proportion of debt and assets. B) It shows the link between accrual-based income and the cash reported on the balance sheet. C) It indicates when long-term debt will mature. D) It shows the link between book income and earnings per share. Which of the following is NOT a true statement about the statement of cash flows? A) It shows where cash came from and how it was spent. B) It reports why cash increased or decreased. C) It covers a specific span of time the same as the income statement. D) It shows how the profits or losses of the company were generated. Which one of the following is a principal function of the statement of cash flows? A) To predict future net income B) To…arrow_forwardPrepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. Golden Corporation's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. GOLDEN CORPORATION Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 178,000 $ 122,400 Accounts receivable 104,000 85,000 Inventory 622,000 540,000 Total current assets 904,000 747,400 Equipment 372,700 313,000 Accumulated depreciation—Equipment (165,000) (111,000) Total assets $ 1,111,700 $ 949,400 Liabilities and Equity…arrow_forwardThe cash flows from 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 $375,000 and accounts receivable increased by $29,000 during the year, what was the amount of cash received from customers?$fill in the blank 1 b. If income tax expense for the current year was $39,000 and income tax payable decreased by $21,000 during the year, what was the amount of cash payments for income tax?$fill in the blank 2arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub