Statement of cash flows direct method
Not what you're looking for?
I need to prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities using the following information. I can do it using the indirect method, but i get confused with what should be deducted and what should be added.
Assets Dec 31, 2007 Dec 31, 2006
Cash $ 421,900 $ 456,700
Accounts receivable(net) 397,200 365,700
Inventories 658,900 623,100
Investments -0- 175,000
Land 230,000 -0-
Equipment 590,000 450,000
Accumulated depreciation (282,100) (234,500)
$2,015,900 $1,836,000
Liabilities and Stockholders Equity
Accounts payable $471,200 $456,300
Accrued expenses 40,000 45,300
Dividends payable 61,000 58,000
Common stock, $1 par 23,000 20,000
Paid-in capital in excess of par 195,000 120,000
Retained earnings 1,225,700 1,136,400
$2,015,900 $1,836,000
Sales $4,367,800
Cost of merchandise sold 2,532,000
Gross profit 1,835,800
Operating expenses:
Depreciation expense $47,600
Other operating expenses 1,257,9000
Total operating expenses 1,305,500
Operating Income 503,000
other expense
loss on sale of investments 25,000
Income before income tax 505,300
income tax expense 175,000
Net income 330,300
The following information was also taken from the records
a. Equipment and land were acquired for cash
b. There were no disposals of equipment during the year
c. The investments were sold for $150,000 cash
d. The common stock was issued for cash
e. There was a $241,000 debit to retained Earnings for cash dividends declared
Purchase this Solution
Solution Summary
This solution is comprised of a detailed explanation to prepare the statement of cash flows using direct method.
Solution Preview
I need to prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities using the following information. I can do it using the indirect method, but i get confused with what should be deducted and what should be added.
Assets Dec 31, 2007 Dec 31, 2006 Difference
Cash $ 421,900 $ 456,700 (34,800)
Accounts receivable(net) 397,200 365,700 31,500
Inventories 658,900 623,100 35,800
Investments -0- 175,000 (175,000)
Land 230,000 -0- 230,000
Equipment 590,000 450,000 140,000
Accumulated depreciation (282,100) ...
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Operations Management
This quiz tests a student's knowledge about Operations Management
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.