Statement of Cash flows: The comparative balance sheet for Mott Campany appears
ID: 2482954 • Letter: S
Question
Statement of Cash flows:
The comparative balance sheet for Mott Campany appears below:
Mott Company:
Dec 31, 2016 Dec 31 2015
Current Assets :
Account receivable.............................................................. 7000 9000
Inventory............................................................................ 11,000 7000
Prepaid expenses............................................................... 3000 2000
Current Liabilities:
Account payable............................................ $5000 $ 4000
Mott Company
Income Statement
For the Year Ended December 31, 2016
Sales( all on credit)........................................................... $280,000
Expenses and losses
Cost of goods sold............................................ $184,000
Operating expenses, exculsive of depreciation ... 42,300
Depreciation expense........................... 1000
Interst expense ................................. 1,200
Loss on sale of land................... 2,500
Income taxes............................... 9000
Total expenses and loss..................................... $240,000
Net income............................................................... $40,000
Instructions:
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect metod. (hint: for balance sheet items, you first need to compute the changes, either increase or decreases, in each account)
Explanation / Answer
Cash flow statement - Indirect Method Cash flow from operating Income Net Income 40000 Add Depriciation 1000 Loss on sale of land 2500 Decrease in accounts receivable 2000 Increase in accounts payable 1000 6500 Less Increase in Inventory 4000 Increase in prepaid expenses 1000 5000 Net cash flow from operating activity 41500
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