F. Prepare a statement of cash flow on both direct and indirect method 2017 2016
ID: 2526899 • Letter: F
Question
F. Prepare a statement of cash flow on both direct and indirect method 2017 2016 Assets: Cash Accounts receivable, net Inventory Prepaid expenses Property, palnt & equipment Accumulated depreciation 215,000 87,000 74,000 12,000 780,000 (110,000) 1,058,000 70,000 65,000 60,000 20,000 600,000 (60,000) 755,000 Total Assets Liabilities & Equity Accounts payable Accrued liabilities Taxes payable Long-term Notes Payable Common stock Additional paid in capital Retained earnings 40,000 40,000 4,000 32,000 26,000 15,000 100,000 200,000 326,000 359,000 1,058,000 200,000 276,000 195,000 755,000 Total liabilities and equity Sales Cost of goods sold Gross profit 1,400,000 780,000 620,000 Operating exoeaSes Pre-tax income Income taxes Net income 290,000 330,000 66,000 264,000 a. Stock option expense of $50,000 was recognized in 2017 b. Equipment of $180,000 was purchased using $100,000 note payable and cashExplanation / Answer
Workings:
Statement of Cash Flows (Indirect Method) For the Year Ended 2017 Cash Flows from Operating Activities Net income 264000 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense (110000 - 60000) 50000 Stock option expense 50000 Increase in Accounts Receivable -22000 Increase in Inventory -14000 Decrease in Prepaid expenses 8000 Decrease in Accounts payable -8000 Decrease in Accrued liabilities -14000 Increase in Taxes payable 11000 61000 Net cash provided by operating activities 325000 Cash Flows from Investing Activities Purchase of equipment -80000 Net cash used by investing activities -80000 Cash Flows from Financing Activities Payment of cash dividends -100000 Net cash used by financing activities -100000 Net increase (decrease) in cash 145000 Cash balance at beginning of year 70000 Cash balance at end of year 215000Related Questions
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