In: Accounting
Lansing Company’s current-year income statement and selected
balance sheet data at December 31 of the current and prior years
follow.
LANSING COMPANY Income Statement For Current Year Ended December 31 |
|||||||
Sales revenue | $ | 157,200 | |||||
Expenses | |||||||
Cost of goods sold | 62,000 | ||||||
Depreciation expense | 22,000 | ||||||
Salaries expense | 38,000 | ||||||
Rent expense | 11,000 | ||||||
Insurance expense | 5,800 | ||||||
Interest expense | 5,600 | ||||||
Utilities expense | 4,800 | ||||||
Net income | $ | 8,000 | |||||
LANSING COMPANY Selected Balance Sheet Accounts |
|||||||||
At December 31 | Current Year | Prior Year | |||||||
Accounts receivable | $ | 7,600 | $ | 9,800 | |||||
Inventory | 3,980 | 2,540 | |||||||
Accounts payable | 6,400 | 8,600 | |||||||
Salaries payable | 1,280 | 900 | |||||||
Utilities payable | 620 | 360 | |||||||
Prepaid insurance | 460 | 680 | |||||||
Prepaid rent | 620 | 380 | |||||||
Required:
Prepare the operating activities section of the statement of cash
flows using the indirect method for the current year.
(Amounts to be
Solution:
LANSING COMPANY | ||
Statement of Cash Flows (Indirect Method) | ||
For the Current Year Ended December 31 | ||
Cash flows from operating activities: | ||
Net Income | $ 8,000 | |
Adjustments to reconcile to operating cash flow | ||
Depreciation expense | $ 22,000 | |
Changes in operating assets and liabilities: | ||
Decrease in Account Receivables | $ 2,200 | |
Increase in inventory | $ (1,440) | |
Decrease in accounts payable | $ (2,200) | |
Increase in salaries payable | $ 380 | |
Increase in utilities payable | $ 260 | |
Decrease in prepaid insurance | $ 220 | |
Increase in prepaid rent | $ (240) | |
Net cash flows from operating activities | $ 29,180 |