The following tables provide Income statement for 2015 and partial balance-sheet
ID: 2451799 • Letter: T
Question
The following tables provide Income statement for 2015 and partial balance-sheet of Federer Products Inc (FPI).
Income statement of Federer Product Inc (FPI) for the year ended 12/31/2015
Revenue $1,200,000
Less:
Cost of goods sold $500,000
Depreciation Expense 100,000
Wage expense 120,000
Insurance expense 50,000
Interest expense 40,000
Total operating expense s ( 810,000)
Operating Income $ 390,000
Loss from sale of PPE (80,000)
Income Tax (120,000)
NET INCOME $ 190,000
Assets
12/31/2015
12/31/2014
Change
Cash
$ 113,000
$ 100,000
$ 13,000
Marketable securities
$ 55,000
$ 43,000
$ 12,000
Accounts Receivable
$ 40,000
$ 45,000
$ (5,000)
Inventory
$ 43,000
$ 40,000
$ 3,000
Pre-paid insurance
$ 25,000
$ 23,000
$ 2,000
Liabilities
Accounts Payable
$ 18,000
$ 17,000
$ 1,000
Wages payable
$ 3,000
$ 5,000
$ (2,000)
Interest Payable
$ 5,000
$ 5,000
$ 0
Tax Payable
$ 12000
$ 14,000
$ (2,000)
Dividend payable
$ 1,500
$ 4,500
$ (3,000)
The table above shows current assets and current liabilities of FPI.
Required for FPI Company
(a) What is the net operating cash flow for FPI for 2015? Calculate your answer using indirect method and write your answer in the box provided in Final exam answer sheet.
(b) Provide any additional disclosure information that FPI must provide pertaining to cash flow from operating activities to meet US GAAP reporting requirements. Write it in the space below your answer to part (b).
Assets
12/31/2015
12/31/2014
Change
Cash
$ 113,000
$ 100,000
$ 13,000
Marketable securities
$ 55,000
$ 43,000
$ 12,000
Accounts Receivable
$ 40,000
$ 45,000
$ (5,000)
Inventory
$ 43,000
$ 40,000
$ 3,000
Pre-paid insurance
$ 25,000
$ 23,000
$ 2,000
Liabilities
Accounts Payable
$ 18,000
$ 17,000
$ 1,000
Wages payable
$ 3,000
$ 5,000
$ (2,000)
Interest Payable
$ 5,000
$ 5,000
$ 0
Tax Payable
$ 12000
$ 14,000
$ (2,000)
Dividend payable
$ 1,500
$ 4,500
$ (3,000)
Explanation / Answer
Cash Flow from Operating Activities Amount($) Amount($) Net Operating Income 390000 Add: Depreciation 100000 Less: Interest Expense -40000 Operating cash flows before working capital changes 450000 Working capital changes Increase in Marketable securities -12000 Increase in Inventory -3000 Increase in prepaid insurance -2000 Decrease in wages payable -2000 Decrease in tax payable -2000 Decrease in Dividend payable -3000 Decrease in Accounts receivable 5000 Increase in Accounts payable 1000 -18000 Cash Flow from Operating Activities 468000
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