The following are comparative balance sheets and income statement for Bahati Cor

Question

The following are comparative balance sheets and income statement for Bahati Corporation:

                                    Bahati Corporation
                            Comparative Balance Sheets
                       as of December 31, 2010 and 2009

                                       Bahati Corporation
                                       Income Statement
                     For the Year Ended December 31, 2010

Cash dividends of $45,000 were paid in 2010. Bahati uses the direct method in preparing its Statement of Cash Flows.

What would Bahati

Assets     2010     2009 Cash $ 37,000 $120,000 Accounts receivable 195,000 105,000 Inventory 180,000 225,000 Long-term investments             0     60,000      Totals                $412,000 $510,000 Liabilities and shareholder's equity Accounts payable $  12,000 $115,000 Salaries and wages payable      8,000      2,000 Interest payable      1,000      3,000 Income taxes payable     20,000    15,000 Notes payable     70,000   100,000 Common stock   125,000   125,000    Retained earnings 176,000 150,000      Totals $412,000 $510,000

Explanation / Answer

Statement of Cash flow from operating activities:-

Particulars

Amount($)

Net Income

71000

Add:- Loss on sale of long-term investment

8000

Adjustments for Working Capital changes:-

Less:- Increase in accounts receivable

(90000)

Add:- Decrease in inventory

45000

Less:- Decrease in Account payable

(103000)

Add:- Increase in Salaries & Wages payable

6000

Less:- Decrease in Interest payable

(2000)

Add:- Increase in Income taxes payable

5000

Net Cash Outflow from Operating Activities

(60000)

Important Note:-

Notes payable are assumed to be Long-term notes payable

Statement of Cash flow from operating activities:-

Particulars

Amount($)

Net Income

71000

Add:- Loss on sale of long-term investment

8000

Adjustments for Working Capital changes:-

Less:- Increase in accounts receivable

(90000)

Add:- Decrease in inventory

45000

Less:- Decrease in Account payable

(103000)

Add:- Increase in Salaries & Wages payable

6000

Less:- Decrease in Interest payable

(2000)

Add:- Increase in Income taxes payable

5000

Net Cash Outflow from Operating Activities

(60000)

Important Note:-

Notes payable are assumed to be Long-term notes payable

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.