Galley Corp., a merchandiser, recently completed its 2011 operations. For the ye
ID: 2623529 • Letter: G
Question
Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company
Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company
Explanation / Answer
Cash Flow Statement as per Indirect Method:-
PARTICULARS
AMOUNT($)
Cash Flow from OPERATING Activities:-
Net income
133,000
Add:- Depreciation expense
56,000
Adjustment for working capital changes:-
Less:- Increase in Accounts receivable
( 9,000)
Less:- Increase in Merchandise inventory
(110,000)
Add:- Increase in Accounts payable
64,000
Add:- Increase in Income taxes payable
3,000
Net Cash InFlow From OPERATING Activities:-
137,000
CAsh Flow from FINANCING Activities:-
Purchase of equipment
(92000)
Net Cash OutFlow From FINANCING Activities:-
(92000)
Cash Flow from INVESTING activities:-
Issue of common stock [14000*5]
70000
Dividend paid
(85000)
Net Cash OutFlow From INVESTING activities:-
(15000)
Net Cash Inflow during the year [137000
Cash Flow Statement as per Indirect Method:-
PARTICULARS
AMOUNT($)
Cash Flow from OPERATING Activities:-
Net income
133,000
Add:- Depreciation expense
56,000
Adjustment for working capital changes:-
Less:- Increase in Accounts receivable
( 9,000)
Less:- Increase in Merchandise inventory
(110,000)
Add:- Increase in Accounts payable
64,000
Add:- Increase in Income taxes payable
3,000
Net Cash InFlow From OPERATING Activities:-
137,000
CAsh Flow from FINANCING Activities:-
Purchase of equipment
(92000)
Net Cash OutFlow From FINANCING Activities:-
(92000)
Cash Flow from INVESTING activities:-
Issue of common stock [14000*5]
70000
Dividend paid
(85000)
Net Cash OutFlow From INVESTING activities:-
(15000)
Net Cash Inflow during the year [137000
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