The income statement of Vince Gill Company is shown below. VINCE GILL COMPANY IN
ID: 2497034 • Letter: T
Question
The income statement of Vince Gill Company is shown below.
VINCE GILL COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
Sales revenue
$6,941,660
Cost of goods sold
Beginning inventory
$1,892,030
Purchases
4,405,640
Goods available for sale
6,297,670
Ending inventory
1,601,980
Cost of goods sold
4,695,690
Gross profit
2,245,970
Operating expenses
Selling expenses
442,500
Administrative expenses
707,900
1,150,400
Net income
$1,095,570
Additional information:
1.
Accounts receivable decreased $314,580 during the year.
2.
Prepaid expenses increased $178,260 during the year.
3.
Accounts payable to suppliers of merchandise decreased $272,080 during the year.
4.
Accrued expenses payable decreased $127,680 during the year.
5.
Administrative expenses include depreciation expense of $69,010.
Prepare the operating activities section of the statement of cash flows for the year ended December 31, 2014, for Vince Gill Company, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
VINCE GILL COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
Sales revenue
$6,941,660
Cost of goods sold
Beginning inventory
$1,892,030
Purchases
4,405,640
Goods available for sale
6,297,670
Ending inventory
1,601,980
Cost of goods sold
4,695,690
Gross profit
2,245,970
Operating expenses
Selling expenses
442,500
Administrative expenses
707,900
1,150,400
Net income
$1,095,570
Explanation / Answer
Cash Flow from operating activities of Vince Gill and Company:
Net Income 1,095,570 Add: Depreciation 69,010 Add: Decrease in Inventory 290,050 Add: Decrease in Account Receivable 314,580 Less: Increase in Prepaid Expenses (178,260) Less: Decrease in Accounts Payable (272,080) Less: Decrease in Accrued Expenses Payable (127,680) Net Cash Inflow From Operating Activities 1,191,190Related Questions
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