Suppose the income statement for Goggle Company reports $127 of net income, afte
ID: 2600065 • Letter: S
Question
Suppose the income statement for Goggle Company reports $127 of net income, after deducting depreciation of $27. The company bought equipment costing $100 and obtained a long-term bank loan for $102. Required: 1. Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and/or financing activities (+ for increase and for decrease). (Select "NE" if there is no effect. Enter all amounts as positive values.) 2. Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) 2. Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)6. Are the cash flows typical of a start-up, healthy, or troubled company? A. Start-Up Company
B. Healthy Company
C. Troubled Company 6. Are the cash flows typical of a start-up, healthy, or troubled company? A. Start-Up Company
B. Healthy Company
C. Troubled Company
HBO GO. It's HBO 10.00 points Suppose the income statement for Goggle Company reports $127 of net income, after deducting depreciation of $27. The company bought equipment costing $100 and obtained a long-term bank loan for $102. Required 1. Calculate the change in each balance sheet account and indicate whether each account relates to if there operating, investing, andlor financing activities (+for increase and - for decrease). (Select "NE is no effect. Enter all amounts as positive values.) Previous Year Current Year Change Type Cash Accounts Receivable Inventory 296 191 143 640 (64) 1,206 43 $ 83 300 540 (37) Accumulated Depreciation Equipment Total Salaries and Wages Payable Notes Payable (long-term) Common Stock Retained Eamings $929 S 18 S 453 18 440 18 567 1,206 929 S 17
Explanation / Answer
Answer:
1
Previous
year
Current
year
Change
Type
Cash
43
296
+
253
NE
Accounts Receivables
83
191
+
108
Operating
Inventory
300
143
-
-157
Operating
Equipment
540
640
+
100
Investing
Accumulated depreciation
-37
-64
-
-27
Operating
Total
929
1206
Salary and Wages payable
18
66
+
48
Operating
long term debt
453
555
+
102
Financing
Contributed capital
18
18
0
Financing
Retained earnings
440
567
+
127
NE
Total
929
1206
2
GOGGLE COMPANY
Statement of cash flows
For the year ended December 31, current year
Cash flow from operating activities
Net income
127
Adjustments to reconcile Net income to net cash
provided by Operating activities
Add: Depreciation
27
Changes in current assets and current liabilities
less: Increase in accounts receivables
-108
Add: Decrease in Inventories
157
Add: increase in wages payable
48
124
Cash flow from operating activities
251
Cash flow from Investing activities
Equipment purchased
-100
Cash flow from Investing activities
-100
Cash flow from Financing activities
Long term loan obtained
102
Cash flow from Financing activities
102
Net Cash flows
253
Beginning balance in cash
43
Ending balance in cash
296
6
Are the cash flows typical of a start-up, healthy, or troubled company?
B. Healthy Company
Explanation
because income from operation is large and also company net cash flow is positive
Previous
year
Current
year
Change
Type
Cash
43
296
+
253
NE
Accounts Receivables
83
191
+
108
Operating
Inventory
300
143
-
-157
Operating
Equipment
540
640
+
100
Investing
Accumulated depreciation
-37
-64
-
-27
Operating
Total
929
1206
Salary and Wages payable
18
66
+
48
Operating
long term debt
453
555
+
102
Financing
Contributed capital
18
18
0
Financing
Retained earnings
440
567
+
127
NE
Total
929
1206
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