College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Chapter 23, Problem 4SEA
To determine
Compute the cash from operating activities under indirect method.
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Using the Exhibit below, assume that the depreciation expense on the Income Statement for the year was $38,000. When preparing the Statement of Cash Flow using the indirect method for the current year, which of the following statements would describe the proper presentation of depreciation expense on the Cash flow from operating activities section?
EXHIBIT
Increase
(Decrease)
Net Income (loss) $XXX
Adjustments to reconcile net income to net cash flow
from operating activities:
Depreciation of fixed assets XXX
Losses on disposal of assets XXX
Gains on disposal of assets (XXX)
Changes in current operating assets and liabilities:…
Cash Flows from (Used for) Operating Activities
The income statement disclosed the following items for the year:
Depreciation expense
$42,700
Gain on disposal of equipment
24,890
Net income
328,300
The changes in the current asset and liability accounts for the year are as follows:
Increase
(Decrease)
Accounts receivable
$6,650
Inventory
(3,780)
Prepaid insurance
(1,420)
Accounts payable
(4,510)
Income taxes payable
1,420
Dividends payable
1,000
a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus
sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
Statement of Cash Flows (partial)
Cash Flows from (Used for) Operating Activities
The income statement disclosed the following items for the year:
Depreciation expense
$41,700
Gain on disposal of equipment
24,350
Net income
312,200
The changes in the current asset and liability accounts for the year are as follows:
Increase(Decrease)
Accounts receivable
$6,500
Inventory
(3,700)
Prepaid insurance
(1,390)
Accounts payable
(4,410)
Income taxes payable
1,390
Dividends payable
970
Question Content Area
a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
Statement of Cash Flows (partial)
Cash flows from (used for) operating activities:
$- Select -
Adjustments to reconcile net income to net cash flows from (used for) operating activities:
- Select -
-…
Chapter 23 Solutions
College Accounting, Chapters 1-27
Ch. 23 - True/False The purpose of the statement of cash...Ch. 23 - Investing activities are those transactions...Ch. 23 - An increase in accounts receivable is deducted...Ch. 23 - Prob. 4TFCh. 23 - Prob. 5TFCh. 23 - Prob. 1MCCh. 23 - Prob. 2MCCh. 23 - Prob. 3MCCh. 23 - Prob. 4MCCh. 23 - Prob. 5MC
Ch. 23 - Prob. 1CECh. 23 - Prob. 2CECh. 23 - Prob. 3CECh. 23 - Prob. 4CECh. 23 - Prob. 5CECh. 23 - Prob. 6CECh. 23 - Prob. 7CECh. 23 - Prob. 8CECh. 23 - Prob. 1RQCh. 23 - Prob. 2RQCh. 23 - Prob. 3RQCh. 23 - Prob. 4RQCh. 23 - Prob. 5RQCh. 23 - Prob. 6RQCh. 23 - Prob. 7RQCh. 23 - Prob. 8RQCh. 23 - Prob. 9RQCh. 23 - Prob. 10RQCh. 23 - Prob. 11RQCh. 23 - Prob. 12RQCh. 23 - Prob. 13RQCh. 23 - Prob. 14RQCh. 23 - Prob. 15RQCh. 23 - Prob. 16RQCh. 23 - Prob. 17RQCh. 23 - Prob. 18RQCh. 23 - Prob. 19RQCh. 23 - Prob. 20RQCh. 23 - Prob. 21RQCh. 23 - SERIES A EXERCISES IDENTIFICATION OF OPERATING,...Ch. 23 - CHANGE IN CASH AND CASH EQUIVALENTS Olsen Companys...Ch. 23 - Prob. 3SEACh. 23 - Prob. 4SEACh. 23 - GAINS AND LOSSES ON THE SALE OF LONG-TERM ASSETS...Ch. 23 - Prob. 6SEACh. 23 - Prob. 7SEACh. 23 - CASH PAID FOR INTEREST Ball Companys income...Ch. 23 - Prob. 9SPACh. 23 - Prob. 10SPACh. 23 - COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES Horn...Ch. 23 - EXPANDED STATE MENT OF CASH FLOWS Financial...Ch. 23 - Prob. 1SEBCh. 23 - Prob. 2SEBCh. 23 - Prob. 3SEBCh. 23 - Prob. 4SEBCh. 23 - Prob. 5SEBCh. 23 - Prob. 6SEBCh. 23 - Prob. 7SEBCh. 23 - Prob. 8SEBCh. 23 - Prob. 9SPBCh. 23 - Prob. 10SPBCh. 23 - COMPUTE CASH PROVIDED BY OPERATING ACTIVITIES...Ch. 23 - EXPANDED STATEMENT OF CASH FLOWS Financial...Ch. 23 - MANAGING YOUR WRITING Direct Method A friend of...Ch. 23 - MASTERY PROBLEM Financial statements for...Ch. 23 - CHALLENGE PROBLEM The long-term liabilities...
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- Income Statement Information (2021): 1. Net income for the year ending December 31, 2021 is $43,500. 2. Depreciation expense is $6,000. 3. There is a loss of $3,000 resulted from the sale of long-term investment. Additional information (2021): 1. All sales and purchases of inventory are on account (or credit). 2. Received cash for the sale of long-term investments that had a cost of $27,000, yielding a $3,000 loss. 3. Cash dividends paid is $15,000. 4. The company purchased new machines and tools for $7,500 cash. Required: Prepare the FIRST (Operating) and the SECOND (Investing) sections of the statement of cash flows for the year ended December 31, 2021.arrow_forwardDepreciation and accounting cash flow A fim in the thed year of depreciating is only asset, which originally cost $188,000 and has a 5-year MACRS recovery penod has gathered the following data relative to the cument year's operations Aconuals Carentanets interest expense mas Sales revenue inventory Total costs before depreciation, interest and taxes Tas rate on ordinary income Show Transcribed Text Use the relevant data to determine the operating cash flow for the curent year bExplain the impact that depreciation, as well as any other noncash charges, has on a fem's cash flows Recovery year 1 2 3 4 5 6 Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes 7 8 9 10 11 Totals $15.200 110,000 14.000 413.000 09.000 293.000 40% Show Transcribed Text Show Transcribed Text 3 years 33% 45% 3 15% 7% Percentage by recovery year 5 years 20% 32% 19% 12% 12% 5% A 100% 100% 100% 100% These percentages have been rounded to the nearest whole percent to simplify…arrow_forwardCash Flows from (Used for) Operating Activities The income statement disclosed the following items for the year: Depreciation expense $44,100 Gain on disposal of equipment 25,740 Net income 339,800 The changes in the current asset and liability accounts for the year are as follows: Increase(Decrease) Accounts receivable $6,870 Inventory (3,910) Prepaid insurance (1,470) Accounts payable (4,660) Income taxes payable 1,470 Dividends payable 1,030 Question Content Area a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. blankStatement of Cash Flows (partial) Cash flows from (used for) operating activities: $- Select - Adjustments to reconcile net income to net cash flows from (used for) operating activities: - Select -…arrow_forward
- Cash Flow from (used for) Operating Activities The income statement disclosed the following items for the year: Depreciation expense $57,000 Gain on disposal of equipment $24,000 Net Income $542,000 The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) Accounts receivable $9,800 Inventory ($5550) Prepaid insurance ($1,000) Accounts Payable ($3,700) Income taxes payable $1,440 Dividends payable $2,200 Prepare the Cash Flows from…arrow_forwardCash flows from operating activities-indirect methodThe net income reported on the income statement for the current yearwas $93,700. Depreciation recorded on store equipment for the yearamounted to $31,200. Balances of the current asset and current liabilityaccounts at the beginning and end of the year are as follows: End of Year Beginning of Year CashAccounts receivable (net)InventoriesPrepaid expensesAccounts payable (merchandise creditors)Wages payable $24,10065,00047,2003,25023,4005,300 $19,70056,00050,0008,00017,2006,400 a. Prepare the "Cash flows from operating activities" section of thestatement of cash flows, using the indirect methodb. Briefly explain why net cash flow from operating activities isdifferent than net income.arrow_forwardDirection: Study the given data below and compute for (1) the cash generated/used in financing activities, (2) the net change in cash for the year, and (3) prepare the CFS for the year. Learning is Fun Company has presented the following in order to aid the account in preparing CFS during the month. Net income: P200, 000 Depreciation expense: P25, 000 Gain on sale on property and equipment: P100. 000 Decrease in trade and other receivables: P 70, 000 Purchase of property and equipment: P200, 000 Payment of loan from bank: P150, 000 Compute for the cash generated/used in financing activities. Based on the given above, compute for the net change in cash for the year.arrow_forward
- Cash Flows from (Used for) Operating Activities The income statement disclosed the following items for the year: Depreciation expense Gain on disposal of equipment Net income The changes in the current asset and liability accounts for the year are as follows: Accounts receivable Inventory Prepaid insurance Accounts payable Income taxes payable Dividends payable Increase (Decrease) $5,190 (2,950) (1,110) (3,520) 1,110 780 $33,300 19,440 225,100 a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from (used for) operating activities: 27 Adjustments to reconcile net income to net cash flows from (used for) operating activities: Changes in current operating assets and liabilities: Net cash flows from operating activities b. Why is net cash flows from operating…arrow_forwardCash Flows from (Used for) Operating Activities The income statement disclosed the following items for the year: Depreciation expense Gain on disposal of equipment Net income The changes in the current asset and liability accounts for the year are as follows: Accounts receivable Inventory Prepaid insurance Accounts payable Income taxes payable Dividends payable Increase (Decrease) $5,700 (3,240) (1,220) (3,860) 1,220 850 $36,600 21,330 218,400 a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Us minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.arrow_forwardOperating expenses other than depreciation for the year were $301,000. Accrued expenses decreased by $33,000 during the year. Cash payments for operating expenses to be reported on the statement of cash flows using the direct method would be a.operating expenses other than depreciation, or $301,000. b.operating expenses other than depreciation minus any decrease in current liabilities, or $301,000 – $33,000 = $268,000. c.operating expenses other than depreciation plus any decrease in current liabilities or minus an increase in current liabilities, or $301,000 + $33,000 = $334,000. d.accrued expenses of $33,000.arrow_forward
- Cash Flows from (Used for) Operating Activities The net income reported on the income statement for the current year was $145,100. Depreciation recorded on store equipment for the year amounted to $23,900. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Accounts payable (merchandise creditors) Wages payable Cash flows from operating activities: End of Year a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. $56,730 40,680 55,540 6,240 53,160 29,050 Changes in current operating assets and liabilities: Beginning of Year $51,620 38,150 58,070 4,900 48,830 31,900 Statement of Cash Flows (partial) Net cash flow from operating activities Adjustments to reconcile net income…arrow_forwardReporting changes in Equipment on Statement of Cash Flows An analysis of the general ledger accounts indicates that delivery equipment, which cost $75,000 and on which accumulated depreciation totaled $58,000 on the date of sale, was sold for $20,200 during the year. Using this information, indicate the items to be reported on the statement of cash flows.arrow_forward) Provide an accurate, full and complete explanation and implication of the information presented in (mathematical forms) by explaining the significance of the cash flow statement The net income reported on the income statement for the current year was $128,000. Depreciation recorded on store equipment for the year amounted to $21,100. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $51,200 $47,100 Accounts receivable (net) 36,710 34,810 Merchandise inventory 50,120 52,990 Prepaid expenses 5,630 4,470 Accounts payable (merchandise creditors) 47,970 44,560 Wages payable 26,210 29,110arrow_forward
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