4:04 AM a edugen.wileyplus.com Pad * 67%. Problem 13-10A a2 W Chapter The income

ID: 2516563 • Letter: 4

Question

4:04 AM a edugen.wileyplus.com Pad * 67%. Problem 13-10A a2 W Chapter The income statement for Cullumber Limited is presented here: CULLUMBER LIMITED Income Statement Year Ended December 31, 2018 lem 13-4A a Service revenue Operating expenses Income from operations Interest expense Income before income tax Income tax expense Net income $950,000 711,000 239,000 Problem 13-6A roblem 13-10A a2 Review Results by Study Objective 74,000 165,000 41,250 $123,750 Cullumber's statement of financial position contained these comparative data at December 31: Accounts receivable Prepaid expenses Accounts payable Salaries payable Unearned revenue Interest payable Income tax payable 2018 $55,800 12,200 36,000 19,000 12,600 6,200 4,400 2017 $46,700 16,600 40,000 20,000 8,750 4,650 8,150 Additional information Operating expenses include depreciation expense, $44,000; amortization expense, $18,000; administrative expenses, $114,000; salaries expense, $511,000; and loss on the disposal of equipment, $24,000 nearned revenue is received from customers 1.

Explanation / Answer

Statement of cash flows (Partial) – Direct method

Cash received from customers

$937050

Cash payments;

Salary paid

$512000

Cash paid for operating expenses

$113600

Cash paid for interest expense

$72450

Cash paid for income tax expense

$45000

Total cash payments

($743050)

Cash flow from operating activities

$194000

Working note;

1. Cash received from cutomers will be calculated as follow;

Service revenue

$950000

Add: Beginning balance of accounts receivable

$46700

Less: Ending balance of accounts receivable

($55800)

Add: Beginning unearned revenue

$8750

Less: Ending balance of unearned revenue

($12600)

Cash received from cutomers

$937050

2. Cash paid for salaries expenses will be calculated as follow;

Salaries expenses

$511000

Add: Beginning balance of salary payable

$20000

Less: Ending balance of salary payable

($19000)

Cash paid for salary expenses

$512000

3. Cash paid for operating expenses will be calculated as follow;

Operating expenses (Except depreciation, amortization, salary expense and loss on disposal)

$114000

Add: Beginning balance of accounts payable

$40000

Less: Ending balance of accounts payable

($36000)

Add: Ending balance of prepaid expenses

$12200

Less: Beginning balance of prepaid expenses

($16600)

Cash paid for operating expenses

$113600

4. Cash paid for interest expenses will be calculated as follow;

Interest expense

$74000

Add: Beginning balance of interest payable

$4650

Less: Ending balance of interest payable

($6200)

Cash paid for interest expenses

$72450

5. Cash paid for income tax expense will be calculated as follow;

Income tax expense

$41250

Add: Beginning balance of income tax payable

$8150

Less: Ending balance of income tax payable

($4400)

Cash paid for income tax expenses

$45000