Question

Use the following information for the Problems below.

[The following information applies to the questions displayed below.]

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

Problem 16-2AB Direct: Computing cash flows from operations LO P5

Required:
Prepare the operating activities section of the statement of cash flows using the direct method for the current year. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Lansing Company				Workings:
Cash Flow Statement (Partial)				Calculation :
For Current Year Ended December 31				Cash collected from customers
Cash Flow from Operating Activities				Beginning AR	9,800
Receipts form customers	159,400			+ Sales	157,200
Payment to suppliers	(65,640)			- Ending AR	(7,600)
Payment of employees	(37,620)				159,400
Payment of rent expenses	(11,240)
Payment of insurance expenses	(5,580)			Purchase from suppliers
Payment of interest expenses	(5,600)			- Beginning Inventory	(2,540)
Payment of utilities expenses	(4,540)			+ cost of goods sold	62,000
Cash flows from operations		29,180		+ Ending Inventory	3,980
					63,440
				Cash paid for suppliers
				Beginning AP	8,600
				+ purchase from suppliers	63,440
				- Ending AP	(6,400)
					65,640
				Cash paid for salaries expenses:
				+ Beginning Salaries payable	900
				+ Salaries expenses	38,000
				- Ending Salaries payable	(1,280)
					37,620
				Cash paid for rent expenses:
				- Beginning prepaid rent	(380)
				+ Rent expenses	11,000
				+ Ending prepaid rent	620
					11,240
				Cash paid for insurance expenses:
				- Beginning prepaid insurance	(680)
				+ Rent expenses	5,800
				+ Ending prepaid insurance	460
					5,580
				Cash paid for utilities expenses:
				+ Beginning utilities payable	360
				+ Utilities expenses	4,800
				- Ending utilites payable	(620)
					4,540