Question
In: Accounting
Tidwell Company has provided the following partial comparative balance sheets and the income statement for 20X2....
Tidwell Company has provided the following partial comparative balance sheets and the income statement for 20X2.
|
Tidwell Company |
|
Comparative Balance Sheets |
|
At December 31, 20X1 and 20X2 |
|
1 |
20X1 |
20X2 |
|
|
2 |
Current assets: |
||
|
3 |
Accounts receivable |
$346,000.00 |
$284,000.00 |
|
4 |
Inventories |
122,000.00 |
147,000.00 |
|
5 |
Current liabilities: |
||
|
6 |
Accounts payable |
302,000.00 |
239,500.00 |
|
Tidwell Company |
|
Income Statement |
|
For the Year Ended December 31, 20X2 |
|
1 |
Revenues |
$1,204,000.00 |
|
2 |
Gain on sale of equipment |
49,000.00 |
|
3 |
Cost of goods sold |
(655,000.00) |
|
4 |
Depreciation expense |
(124,000.00) |
|
5 |
Interest expense |
(23,000.00) |
|
6 |
Net income |
$451,000.00 |
| Required: | |
| Compute operating cash flows using the direct method. |
Compute operating cash flows using the direct method. (Note: Begin by entering the applicable income statement amounts. In the Adjustments column, if an account has more than one adjustment, enter the total effect of all adjustments in the applicable cell. Use a minus sign to indicate a negative adjustment or a negative cash outflow.)
|
Tidwell Company |
|
Cash Flows from Operating Activities, Direct Method |
|
For the Year Ended December 31, 20X2 |
|
1 |
Income Statement |
Adjustments |
Cash Flows |
|
|
2 |
Revenues |
|||
|
3 |
Gain on sale of equipment |
|||
|
4 |
Cost of goods sold |
|||
|
5 |
Depreciation expense |
|||
|
6 |
Interest expense |
|||
|
7 |
Net income |
|||
|
8 |
Net cash from operating activities |
Solutions
Expert Solution
| Tidwell Company | ||||
| Cash Flows from Operating Activities, Direct Method | ||||
| For the Year Ended December 31, 20X2 | ||||
| 1 | Income Statement | Adjustments | Cash Flows | |
| 2 | Revenues | 1204000 | 62000 | 1266000 |
| 3 | Gain on sale of equipment | 49000 | -49000 | 0 |
| 4 | Cost of goods sold | -655000 | -87500 | -742500 |
| 5 | Depreciation expense | -124000 | 124000 | 0 |
| 6 | Interest expense | -23000 | -23000 | |
| 7 | Net income | 451000 | ||
| 8 | Net cash from operating activities | 500500 | ||
Notes/Workings:
2. Decrease in accounts receivable = $346000 - $284000 = $62000
3. Gain on sale of equipment is considered under investing cash flows and not under operating cash flows.
4. Increase in inventories = $147000 - $122000 = $25000
Decrease in accounts payable = $302000 - $239500 = $62500
Total adjustment = $25000 + $62500 = $87500
5. Depreciation expense is a non-cash expense that does not result in cash outflow.
ekkarill92 answered 2 years agoRelated Solutions
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Swasey Company
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1
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2
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