1. ASSUME MARLIN HAD NO INVESTING OR FINANCING TRANSACTIONS DURING 2007.
DECEMBER 31 2006 2007
CASH $65,000 $107,000
ACCOUNTS RECEIVABLE 75,000 78,000
PREPAID RENT 900 800
ACCOUNTS PAYABLE 33,000 34,000
UTILITIES PAYABLE 1,200 1,500
SALES REVENUE $272,000
OPERATING EXPENSES (168,000)
UTILITIES EXPENSE (36,400)
RENT EXPENSE (24,000)
NET INCOME $43,600
A. PREPARE THE OPERATING ACTIVITIES SECTION OF THE 2007 STATEMENT OF CASH FLOWS USING THE DIRECT METHOD.
B. PREPARE THE OPERATING ACTIVITIES SECTION OF THE 2007 STATEMENT OF CASH FLOWS USING THE INDIRECT METHOD.
2. IDENTIFY WHETHER THE CASH FLOWS IN THE FOLLOWING LIST SHOULD BE CLASSIFIED AS OPERATING ACTIVITIES, INVESTING ACTIVITIES, OR FINANCING ACTIVITIES ON THE STATEMENT OF CASH FLOWS (ASSUME THE USE OF THE DIRECT METHOD).
A. SOLD MERCHANDISE ON ACCOUNT
B. PAID EMPLOYEE SALARY
C. RECEIVED CASH PROCEEDS FROM BANK LOAN
D. PAID DIVIDENDS
E. SOLD USED EQUIPMENT FOR CASH
F. RECEIVED INTEREST INCOME ON A CERTIFICATE OF DEPOSIT
G. ISSUED STOCK FOR CASH
H. REPAID BANK LOAN
I. PURCHASED EQUIPMENT FOR CASH
J. PAID INTEREST ON LOAN.
The solution explains how to prepare the operating activities section of statement of cash flows using the direct and indirect method
Burtric: prepare operating activities section of the statement of cash flows- indirect
Burtric Company's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below:
Cash $ 24,000
Accounts receivable 15,000
Prepaid expenses ( 6,000)
Long-term investments 10,000
Plant and equipment 40,000
Accumulated depreciation 32,000
Accounts payable (14,000)
Accrued liabilities 11,000
Taxes payable ( 8,000)
Bonds payable (40,000)
Deferred taxes 12,000
Common stock 10,000
Retained earnings 62,000
The company declared and paid cash dividends of $36,000 last year.
Construct in good form the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)View Full Posting Details