In: Accounting
Benson Brands, Inc. Benson, presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from Benson’s 2017 and 2016 year-end balance sheets:
Account Title | 2017 | 2016 | ||||
Accounts receivable | $ | 20,000 | $ | 30,000 | ||
Merchandise inventory | 56,000 | 49,600 | ||||
Prepaid insurance | 16,500 | 24,700 | ||||
Accounts payable | 26,800 | 18,500 | ||||
Salaries payable | 4,700 | 4,000 | ||||
Unearned service revenue | 1,000 | 2,900 | ||||
The 2017 income statement is shown below:
Income Statement | |||
Sales | $ | 610,000 | |
Cost of goods sold | (380,000 | ) | |
Gross margin | 230,000 | ||
Service revenue | 4,900 | ||
Insurance expense | (39,000 | ) | |
Salaries expense | (157,000 | ) | |
Depreciation expense | (4,100 | ) | |
Operating income | 34,800 | ||
Gain on sale of equipment | 3,600 | ||
Net income | $ | 38,400 | |
Required
Prepare the operating activities section of the statement of cash flows using the direct method.
Prepare the operating activities section of the statement of cash flows using the indirect method.
Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows should be indicated with minus sign.)
|
Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
|