E12-7 Preparing and Evaluating a Simple Statement of Cash Flows (Indirect Method
ID: 2533180 • Letter: E
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E12-7 Preparing and Evaluating a Simple Statement of Cash Flows (Indirect Method) [LO 12-1, LO 12-2, LO 12-5]
Chapter 12 H Cezto.mheducation.com/hm.tpx Digital Resources for 0.50 polnts E12-7 Preparing and Evaluating a Simple Statement of Cash Flows (Indirect Method) [LO 12-1, LO 12-2, LO 12-5] Suppose the income statement for Goggle Company reports $95 of net income, after deducting $70. depreciation of $35. The company bought equipment costing S60 and obtained a long-term bank loan for Required: 1. Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and/or financing activitiesfor increase and there is no effect. Enter all amounts as positive values.) for decrease). (Select "NE" if Previous Year Current Year Change Type 240 175 135 560 Accounts Receivable 75 Equipment 500 Accumulated Depreciation Equipment (45) Total Salaries and Wages Payable Notes Payable (ong-term) Common Stock Retained Eanings 8251,030 50 515 10 10 445 10 360 Total 825$ 1,030 9:37DExplanation / Answer
Balance Sheet Previous year Current year Change Cash $35 $240 $205 Accounts Receivable 75 175 $100 O Inventory 260 135 ($125) O Equipment 500 560 $60 I Acc Dep-Equipment -45 -80 ($35) O Total $825 $1,030 $205 O Salaries & wages payable 10 50 $40 O notes payable 445 515 $70 F common stock 10 10 $0 - Retained Eranings 360 455 $95 F Total 825 1030 $205 ans 2 Statement of cash flow Cash flows from operating activities Net income $95 Adjustments to convert net income to cash basis Depreciation expenses $35 Changes in Current assets & current liabilities Increase in Accounts receivable ($100) Decrease in Inventories $125 Increase in Salaries & wages payable 40 Net cash from operating activities 195.00 Cash flows from investing activities Equipment purchased -60 Net cash used investing activities (60.00) Cash flows from financing activities Bank loan obtained 70 Net cash from financing activities 70.00 Net Increase in cash and cash equivalents 205.00 Cash and cash equivalents at beginning of period 35.00 Ending Balance 240.00 ans Healthy company
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