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In: Accounting

Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities)...

Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities) at December 31, 2016 and 2017, follow.

LANSING COMPANY
Income Statement
For Year Ended December 31, 2017
Sales revenue $ 97,200
Expenses
Cost of goods sold 42,000
Depreciation expense 12,000
Salaries expense 18,000
Rent expense 9,000
Insurance expense 3,800
Interest expense 3,600
Utilities expense 2,800
Net income $ 6,000
LANSING COMPANY
Selected Balance Sheet Accounts
At December 31 2017 2016
Accounts receivable $ 5,600 $ 5,800
Inventory 1,980 1,540
Accounts payable 4,400 4,600
Salaries payable 880 700
Utilities payable 220 160
Prepaid insurance 260 280
Prepaid rent 220 180

Required:
Prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities) at December 31, 2016 and 2017, follow.

LANSING COMPANY
Income Statement
For Year Ended December 31, 2017
Sales revenue $ 97,200
Expenses
Cost of goods sold 42,000
Depreciation expense 12,000
Salaries expense 18,000
Rent expense 9,000
Insurance expense 3,800
Interest expense 3,600
Utilities expense 2,800
Net income $ 6,000

  

LANSING COMPANY
Selected Balance Sheet Accounts
At December 31 2017 2016
Accounts receivable $ 5,600 $ 5,800
Inventory 1,980 1,540
Accounts payable 4,400 4,600
Salaries payable 880 700
Utilities payable 220 160
Prepaid insurance 260 280
Prepaid rent 220 180

Required:
Prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.)
  

Solutions

Expert Solution

Ans:

CASH FLOW FROM OPERATING ACTIVITIES : indirect method

CASH FLOW FROM OPERATING ACTIVITIES

Net income

6,000

Adjustment to reconcile net income

Depreciation

12,000

Decrease account receivable

2,00

Increase inventory

(4,40)

Decrease account payable

(2,00)

Increase salaries payable

180

Increase utilities payable

60

Decrease prepaid insurance

20

Increase prepaid rent

(40)

NET CASH FLOW FROM OPERATING ACTIVITIES

$ 17,780

DIRECT METHOD :

CASH FLOW FROM OPERATING ACTIVITIES

Cash received from customer (97,200+2,00)

97,400

Cash paid to supplier (42,000+440+200)

(42,640)

Cash paid for salaries (18,000 – 180)

(17,820)

Cash paid for rent (9,000+40)

(9,040)

Cash paid for insurance (3,800-20)

(3,780)

Cash paid for interest

(3,600)

Cash paid for utilities (2,800-60)

(2,740)

NET CASH FLOW FROM OPERATING ACTIVITIES

$ 17,780

ekkarill92 answered 4 months ago
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