Computing operating activities cash flow—indirect method
The records of Vintage Color Engraving reveal the following:
Net income $ 36,000
Depreciation expense $ 5,000
Sales revenue 53,000
Decrease in current liabilities 19,000
Loss on sale of land 4,000
Increase in current assets other than cash 10,000
Acquisition of land 35,000
Compute cash flows from operating activities by the indirect method for year ended December 31, 2018.
Net cash provided by operating activities is $16,000.
Indirect method starts with net income and adjustments are made to reconcile net income to net cash provided by operating activities.
Cash flows from operating activities
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Increase in current assets other than cash
Decrease in current liabilities
Loss on sale of land
Net cash provided by operating activities
Question: Computing cash flows from operating activities—indirect method
DVR Equipment, Inc. reported the following data for 2018:
Net Income $ 43,000
Depreciation Expense 6,000
Increase in Accounts Receivable 6,000
Decrease in Accounts Payable 2,000
Compute DVR’s net cash provided by operating activities—indirect method.
Question: Computing cash flows from investing and financing activities Use the data in Short Exercise S14-5 to complete this exercise. Prepare Winding Road Cellular’s statement of cash flows using the indirect method for the year ended April 30, 2018. Assume beginning and ending Cash are $48,000 and $52,200, respectively.
Preparing operating activities using the direct method Amy’s Learning Center has assembled the following data for the year ended June 30, 2018:
Payments to suppliers $ 115,000
Cash payment for purchase of equipment 39,000
Payments to employees 66,000
Payment of notes payable 34,000
Payment of dividends 7,500
Cash receipt from issuance of stock 22,000
Collections from customers 188,000
Cash receipt from sale of land 58,000
Cash balance, June 30, 2017 41,000 Prepare the operating activities section of the business’s statement of cash flows for the year ended June 30, 2018, using the direct method.
Identify each item as operating (O), investing (I), financing (F), or non-cash (N).
1. Cash receipt from the sale of equipment
2. Cash payment for salaries
3. Cash receipt from the collection of long-term notes receivable
4. Purchase of equipment in exchange for notes payable
5. Cash receipt from the issuance of common stock
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