Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method.
Rashid Corporation
Income Statement
For Year ended Dec. 31, 2009
Sales 504,000
Cost of goods sold 327,600
Depreciation expense 42000
other operating expenses 125500 (495100)
other gains (losses):
Gain on sale of equipment 7200
Income before taxes 16100
Income tax expense (4800)
Net income 11,300
Rashid Corporation
Balance Sheets
For Year ended Dec. 31, 2009
2009 2008
Assets
Cash 64650 55800
Accounts Receivable 21000 29000
Inventory 58000 52100
Equipment 240000 222000
Accumulated depreciation (106000) (96000)
Total assets 277650 262900
Liabilities:
Accounts Payable 28400 23700
Income taxes payable 1050 1200
Total Liabilities 29450 24900
Equity
Common Stock 106000 106000
Capital in excess of par value 18000 18000
Retained earnings 124200 114000
Total equity 248200 238000
Click here for the solution: Based on the following income statement and balance sheet for Rashid Corporation, determine the cash flows from operating activities using the indirect method
Showing posts with label Indirect Method. Show all posts
Showing posts with label Indirect Method. Show all posts
Monday, October 26, 2015
Friday, September 11, 2015
What is the major advantage of using the indirect method to present the statement of cash flows?
14. What is the major advantage of using the indirect method to present the statement of cash flows?
Click here for the solution: What is the major advantage of using the indirect method to present the statement of cash flows?
Click here for the solution: What is the major advantage of using the indirect method to present the statement of cash flows?
What is the difference between preparing the statement of cash flows using the direct method and using the indirect method?
12. What is the difference between preparing the statement of cash flows using the direct method and using the indirect method?
Click here for the solution: What is the difference between preparing the statement of cash flows using the direct method and using the indirect method?
Click here for the solution: What is the difference between preparing the statement of cash flows using the direct method and using the indirect method?
Wednesday, July 15, 2015
Condensed financial data of Fairchild Company for 2010 and 2009 are presented below
E23-11 (SCF—Indirect Method) Condensed financial data of Fairchild Company for 2010 and 2009 are presented below.
FAIRCHILD COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2010 AND 2009
2011 2010
Cash $1,800 $1,100
Receivables 1,750 1,300
Inventory 1,600 1,900
Plant assets 1,900 1,700
Accumulated depreciation (1,200) (1,170)
Long-term investments (Held-to-maturity) 1,300 1,470
$7,150 $6,300
Accounts payable $1,200 $ 800
Accrued liabilities 200 250
Bonds payable 1,400 1,650
Capital stock 1,900 1,700
Retained earnings 2,450 1,900
$7,150 $6,300
FAIRCHILD COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2010
Sales $6,900
Cost of goods sold 4,700
Gross margin 2,200
Selling and administrative expense 930
Income from operations 1,270
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,350
Income tax expense 540
Net income $ 810
Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2010. Cash dividends were $260.
Instructions
Prepare a statement of cash flows using the indirect method.
Click here for the solution: Condensed financial data of Fairchild Company for 2010 and 2009 are presented below
FAIRCHILD COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2010 AND 2009
2011 2010
Cash $1,800 $1,100
Receivables 1,750 1,300
Inventory 1,600 1,900
Plant assets 1,900 1,700
Accumulated depreciation (1,200) (1,170)
Long-term investments (Held-to-maturity) 1,300 1,470
$7,150 $6,300
Accounts payable $1,200 $ 800
Accrued liabilities 200 250
Bonds payable 1,400 1,650
Capital stock 1,900 1,700
Retained earnings 2,450 1,900
$7,150 $6,300
FAIRCHILD COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2010
Sales $6,900
Cost of goods sold 4,700
Gross margin 2,200
Selling and administrative expense 930
Income from operations 1,270
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,350
Income tax expense 540
Net income $ 810
Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2010. Cash dividends were $260.
Instructions
Prepare a statement of cash flows using the indirect method.
Click here for the solution: Condensed financial data of Fairchild Company for 2010 and 2009 are presented below
Wednesday, June 24, 2015
Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2
Problem 15–9 Prepare a Statement of Cash Flows (Indirect Method); Free Cash Flow
Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2:
Debit Balance Accounts Year 2 Year 1
Cash $4,000 $21,000
A/R $250,000 $170,000
Inventory $310,000 $260,000
Prepaid Exp $7,000 $14,000
Loan to Hymas Company $40,000 $-
Plant & Equp $510,000 $400,000
Total Debits $1,121,000 $865,000
Credit Balance Accounts
Accum Depreciation $132,000 $120,000
A/P $310,000 $250,000
Accrued Liabilities $20,000 $30,000
Bonds Payable $190,000 $70,000
Deferred Income Taxes $45,000 $42,000
Common Stock $300,000 $270,000
Retained Earnings $124,000 $83,000
Total Credits $1,121,000 $865,000
The company’s income statement for Year 2 follows:
Sales . . . . . . . . . . . . . . . . . . . $900,000
Cost of goods sold . . . . . . . . . 500,000
Gross margin . . . . . . . . . . . . . 400,000
Selling and administrative
expenses . . . . . . . . . . . . . . 328,000
Net operating income . . . . . . . 72,000
Gain on sale of equipment . . . 8,000
Income before taxes . . . . . . . . 80,000
Income taxes . . . . . . . . . . . . . 24,000
Net income . . . . . . . . . . . . . . . $ 56,000
Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. Cash dividends totaling $15,000 were declared and paid during Year 2.
Required:
1. Using the indirect method, compute the net cash provided by operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash f ow for Year 2.
4. Briefly explain why cash declined so sharply during the year.
Click here for the solution: Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2
Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2:
Debit Balance Accounts Year 2 Year 1
Cash $4,000 $21,000
A/R $250,000 $170,000
Inventory $310,000 $260,000
Prepaid Exp $7,000 $14,000
Loan to Hymas Company $40,000 $-
Plant & Equp $510,000 $400,000
Total Debits $1,121,000 $865,000
Credit Balance Accounts
Accum Depreciation $132,000 $120,000
A/P $310,000 $250,000
Accrued Liabilities $20,000 $30,000
Bonds Payable $190,000 $70,000
Deferred Income Taxes $45,000 $42,000
Common Stock $300,000 $270,000
Retained Earnings $124,000 $83,000
Total Credits $1,121,000 $865,000
The company’s income statement for Year 2 follows:
Sales . . . . . . . . . . . . . . . . . . . $900,000
Cost of goods sold . . . . . . . . . 500,000
Gross margin . . . . . . . . . . . . . 400,000
Selling and administrative
expenses . . . . . . . . . . . . . . 328,000
Net operating income . . . . . . . 72,000
Gain on sale of equipment . . . 8,000
Income before taxes . . . . . . . . 80,000
Income taxes . . . . . . . . . . . . . 24,000
Net income . . . . . . . . . . . . . . . $ 56,000
Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. Cash dividends totaling $15,000 were declared and paid during Year 2.
Required:
1. Using the indirect method, compute the net cash provided by operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash f ow for Year 2.
4. Briefly explain why cash declined so sharply during the year.
Click here for the solution: Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1 and 2
Wednesday, June 17, 2015
(SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below
ACC 421 Week 5
Exercise 23-11 (E23-11) (SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below
AND SO ON
Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2008.
Instructions
Prepare a statement of cash flows using the indirect method.
Click here for the solution: (SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below
Exercise 23-11 (E23-11) (SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below
AND SO ON
Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2008.
Instructions
Prepare a statement of cash flows using the indirect method.
Click here for the solution: (SCF-Indirect Method) Condensed financial data of Pat Metheny Company for 2008 and 2007 are presented below
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