The income statement of Marigold Company is shown below. MARIGOLD COMPANY INCOME
ID: 2597977 • Letter: T
Question
The income statement of Marigold Company is shown below.
MARIGOLD COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
$6,910,000
$1,900,000
4,440,000
6,340,000
1,620,000
4,720,000
2,190,000
440,000
690,000
1,130,000
$1,060,000
Additional information:
Prepare the operating activities section of the statement of cash flows using the direct method.
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MARIGOLD COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
$6,910,000
Cost of goods sold Beginning inventory$1,900,000
Purchases4,440,000
Goods available for sale6,340,000
Ending inventory1,620,000
Cost of goods sold4,720,000
Gross profit2,190,000
Operating expenses Selling expenses440,000
Administrative expenses690,000
1,130,000
Net income$1,060,000
Explanation / Answer
Marigold Company
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31,2017
$
$
CASH FLOW FROM OPERATING ACTIVITIES
Net Income
10,60,000.00
Adjustment For non cash items and working capital changes:
Increase in prepaid expenses
-1,80,000.00
Decrease in Accounts receivable
3,50,000.00
Decrease in inventory
-2,80,000.00
Decrease in Accounts payable
-2,80,000.00
Decrease in Accrued Expenses payable
-90,000.00
Depreciation
70,000.00
NET CASH FROM OPERATING ACTIVITIES (A)
6,50,000.00
Marigold Company
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31,2017
$
$
CASH FLOW FROM OPERATING ACTIVITIES
Net Income
10,60,000.00
Adjustment For non cash items and working capital changes:
Increase in prepaid expenses
-1,80,000.00
Decrease in Accounts receivable
3,50,000.00
Decrease in inventory
-2,80,000.00
Decrease in Accounts payable
-2,80,000.00
Decrease in Accrued Expenses payable
-90,000.00
Depreciation
70,000.00
NET CASH FROM OPERATING ACTIVITIES (A)
6,50,000.00
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