Presented below are the condensed financial statements for the Grand Canyon Comp
ID: 2476401 • Letter: P
Question
Presented below are the condensed financial statements for the Grand Canyon Company:
Year 2
Year 1
Cash
$ 24,600
$ 19,600
Accounts receivable
27,500
29,400
Inventory
33,400
28,400
Marketable securities
25,900
17,400
Equipment, net
145,000
155,000
Total assets
$256,400
$249,800
Accounts payable
$ 21,000
$ 27,000
Income taxes payable
10,000
19,300
Common stock
117,000
109,500
Retained earnings
108,400
94,000
Total liabilities & shareholders' equity
$256,400
$249,800
Sales
$240,000
Cost of goods sold
84,000
Depreciation expense
29,400
Other operating expenses
48,000
Income taxes expense
30,000
Net income
$ 48,600
Prepare Grand Canyon's statement of cash flow for Year 2 using the indirect method.
Year 2
Year 1
Cash
$ 24,600
$ 19,600
Accounts receivable
27,500
29,400
Inventory
33,400
28,400
Marketable securities
25,900
17,400
Equipment, net
145,000
155,000
Total assets
$256,400
$249,800
Accounts payable
$ 21,000
$ 27,000
Income taxes payable
10,000
19,300
Common stock
117,000
109,500
Retained earnings
108,400
94,000
Total liabilities & shareholders' equity
$256,400
$249,800
Sales
$240,000
Cost of goods sold
84,000
Depreciation expense
29,400
Other operating expenses
48,000
Income taxes expense
30,000
Net income
$ 48,600
Explanation / Answer
Grand Canyon Company All Amounts in $ Cash Flows from Operating Activities Net Income 48600 Add : Depreciation 29400 Add : Income Tax 30000 59400 Cash Flows before Working Capital Changes 108000 Add : Decrease in Accounts Receivable 1900 Less : Increase in Inventory -5000 Less : Decrease in Accounts Payable -6000 Less : Decrease in Income Taxes Payable -9300 -18400 Cash Inflows from Operating Activities 89600 Cash Flows from Investing Activities Purchase of Equipment -19400 Purchase of Marketable Securities -8500 -27900 Cash Flows from Financing Activities Issue of Common Stock 7500 Dividends Paid -34200 Income Taxes Paid -30000 -56700 Net Cash Inflows for the year 5000 Opening Cash/Cash Equivalents 19600 Closing Cash/Cash Equivalents 24600
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