Need assistance with statement of cash flows below Thanks for the help Heads Up
ID: 2427934 • Letter: N
Question
Need assistance with statement of cash flows below
Thanks for the help
Heads Up Company was started several years ago by two hockey instructors. The company's comparative balance sheets and income statement follow, along with additional information. Current Previous Year Year Balance Sheet at December 31 Cash Accounts Receivable Equipment Accumulated Depreciation-Equipment (1,520 1,260) $ 6,120 $4,140 1,770 5,100 910 5,610 $11,120 $9,750 Accounts Payable Salaries and Wages Payable Note Payable (long-term) Common Stock Retained Earnings $ 590 1,100 750 500 5,100 2,300 490 1,500 5,100 3,440 $11,120 $9,750 Income Statement Service Revenue Salaries and Wages Expense Depreciation Expense ncome Tax Expense $37,700 35,200 260 1,100 Net Income $ 1,140 Additional Data a. Bought new hockey equipment for cash, $510 b. Borrowed $1,000 cash from the bank during the year. c. Accounts Payable includes only purchases of services made on credit for operating purposes. Because there are no liability accounts relating to income tax, assume that this expense was fully paid in cash.Explanation / Answer
HEADS UP COMPANY
Statement of Cash Flows (Direct Method)
For the year ended December 31
Cash Flows from Operating Activities:
Cash Receipts from Customers =
+
Service revenue
$ 37,700
+
Beginning Accounts Receivable
$ 1,770
Ending Accounts Receivable
$ (910)
$ 38,560
Less: Cash Payments for Operating Expenses
+
Salaries and wages Expenses
$ 35,200
+
Beginning Salaries and wages Payable
$ 750
-
Ending Salaries and wages Payable
$ (490)
+
Beginning Accounts Payable
$ 1,100
Ending Accounts Payable
$ (590)
$ 35,970
Less: Income Tax Payments
$ 1,100
Cash Flows from Operating Activities:
$ 1,490
Cash Flows from Investing Activities:
-
Purchase of Equipment
$ (510)
$ (510)
Cash Flows from Financing Activities:
+
Note payable issued
$ 1,000
$ 1,000
Net Cash flow
$ 1,980
Add: Beginning Cash balance
$ 4,140
Ending Cash Balance
$ 6,120
HEADS UP COMPANY
Statement of Cash Flows (Direct Method)
For the year ended December 31
Cash Flows from Operating Activities:
Cash Receipts from Customers =
+
Service revenue
$ 37,700
+
Beginning Accounts Receivable
$ 1,770
Ending Accounts Receivable
$ (910)
$ 38,560
Less: Cash Payments for Operating Expenses
+
Salaries and wages Expenses
$ 35,200
+
Beginning Salaries and wages Payable
$ 750
-
Ending Salaries and wages Payable
$ (490)
+
Beginning Accounts Payable
$ 1,100
Ending Accounts Payable
$ (590)
$ 35,970
Less: Income Tax Payments
$ 1,100
Cash Flows from Operating Activities:
$ 1,490
Cash Flows from Investing Activities:
-
Purchase of Equipment
$ (510)
$ (510)
Cash Flows from Financing Activities:
+
Note payable issued
$ 1,000
$ 1,000
Net Cash flow
$ 1,980
Add: Beginning Cash balance
$ 4,140
Ending Cash Balance
$ 6,120
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