Selected balance sheet information and the income statement for Fountainhead Corporation for the current year are...

Selected balance sheet information and the income statement for Fountainhead Corporation for the current year are presented below.

Selected Balance Sheet Accounts
	Prior Year		Current Year
Accounts Receivable	$	26,200	$	18,000
Merchandise Inventory		36,000		39,600
Prepaid Rent		2,600		0
Accounts Payable		20,600		26,800
Salaries and Wages Payable		5,200		7,800

Income Statement
Sales Revenue	$	540,000
Expenses:
Cost of Goods Sold		308,000
Depreciation Expense		36,000
Salaries Expense		54,000
Rent Expense		21,600
Insurance Expense		21,600
Interest Expense		19,800
Utilities Expense		18,000
Net Income	$	61,000

Required:
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. (Enter any deductions and cash outflows as a negative value.)

References

Solutions

Expert Solution

Cash Flow Statement – Partial, as asked

Indirect Method

*Cash Flows from Operating Activities*
Net Income		$ 61,000.00
Adjustments to reconcile Net Income to
Net Cash provided by Operating activities
Depreciation Expense	$ 36,000.00
Decrease in Accounts receivables	$ 8,200.00
Increase in Inventory	$ (3,600.00)
Decrease in prepaid Rent	$ 2,600.00
Increase in Accounts Payable	$ 6,200.00
Increase in salaries & wages payable	$ 2,600.00	$ 52,000.00
Net Cash flows - provided by Operating Activities		$ 113,000.00

Working

No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income

ekkarill92 answered 1 year ago

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