Carston Company\'s comparative balance sheet and income statement for last year

Question

Carston Company's comparative balance sheet and income statement for last year appear below

The company declared and paid $18,500 in cash dividends during the year. It did not dispose of any property, plant, and equipment during the year.

Required:

Prepare the operating activities section of the company's statement of cash flows for the year using the direct method. (Enter all amounts as positive values except for adjustments to cash basis that are deducted. Omit the "$" sign in your response.)

Carston Company
Comparative Balance Sheet Ending
Balance Beginning Balance   Assets:   Cash $ 73,000 $ 43,000   Accounts receivable 79,000 83,000   Inventory 84,000 66,000   Prepaid expenses 29,000 57,000   Long-term investments 390,000 350,000   Property, plant and equipment 685,000 630,000   Less accumulated depreciation 304,000 287,000   Total assets $ 1,036,000 $ 942,000   Liabilities and stockholders' equity:   Accounts payable $ 96,000 $ 64,000   Accrued liabilities 60,000 56,000   Income taxes payable 65,000 66,000   Bonds payable 388,000 440,000   Common stock 85,000 50,000   Retained earnings 342,000 266,000   Total liabilities and stockholders' equity $ 1,036,000 $ 942,000

Explanation / Answer

Answer:

Carston Company Statement of cash flow Operating Activities: Sales 930000 Adjustment to cash basis: Decrease in accounts receivable 4000 934000 Cost of goods sold 355000 Adjustment to cash basis: Increase in inventory 18000 Increase in accounts payable -32000 341000 Operating expenses 440000 Adjustment to cash basis: Incraese in accrued liabilities -4000 Decrease in prepaid expenses -28000 Dep charges -17000 391000 Income tax expenses 40500 Adjustment to cash basis: Decrease in deferred taxes 1000 41500 Net cash provided by operating activities 160500

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