Question
In: Accounting
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year ended December 31, 2021, appears below:
| Service revenue | $ | 1,020,000 |
| Operating expenses | 760,000 | |
| Income before income taxes | 260,000 | |
| Income tax expense | 65,000 | |
| Net income | $ | 195,000 |
The following balance sheet information also is
available:
| 12/31/2021 | 12/31/2020 | ||||
| Cash | $ | 368,000 | $ | 76,000 | |
| Accounts receivable | 132,000 | 106,000 | |||
| Accrued liabilities (for operating expenses) | 82,000 | 66,000 | |||
| Income taxes payable | 16,000 | 27,000 | |||
In addition, the following transactions took place during the year:
- Common stock was issued for $112,000 in cash.
- Long-term investments were sold for $56,000 in cash. The original cost of the investments also was $56,000.
- $86,000 in cash dividends was paid to shareholders.
- The company has no outstanding debt, other than those payables listed above.
- Operating expenses include $36,000 in depreciation expense.
Required:
1. Figure a statement of cash flows for 2021 for
the Diversified Portfolio Corporation. Use the direct method for
reporting operating activities.
2. Figure the cash flows from operating activities
section of Diversified’s 2021 statement of cash flows using the
indirect method.
- Required 1
Figure a statement of cash flows for 2021 for the Diversified Portfolio Corporation. Use the direct method for reporting operating activities. (Amounts to be deducted should be indicated with a minus sign.)
|
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- Required 2
Figure the cash flows from operating activities section of Diversified’s 2021 statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
|
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Solutions
Expert Solution
a)
*Cash Received from Customers = 1020000 - 26000 = 994000
*Cash payment for operating expenses = 760000 - 16000 - 36000 = 708000
*Cash payment for Income tax = 65000 + 11000 = 76000
b)
ekkarill92 answered 1 year agoRelated Solutions
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
Service
revenue
$
1,080,000
Operating
expenses
790,000
Income before
income taxes
290,000
Income tax
expense
72,500
Net income
$
217,500
The following balance sheet information also is
available:
12/31/2021
12/31/2020
Cash
$
399,500
$
79,000
Accounts
receivable
138,000
109,000
Accrued
liabilities (for operating expenses)
88,000
69,000
Income taxes
payable
19,000
33,000
In addition, the following transactions took place...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2018, appears below:
Service revenue
$
1,220,000
Operating expenses
860,000
Income before income taxes
360,000
Income tax expense
72,000
Net income
$
288,000
The following balance sheet information also is
available:
12/31/18
12/31/17
Cash
$
491,000
$
86,000
Accounts receivable
152,000
116,000
Accounts payable (operating
expenses)
102,000
76,000
Income taxes payable
26,000
47,000
In addition, the following transactions took place during...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
Service Revenue
$1,080,000
Operating Expenses
$790,000
Income before Income Tax
$290,000
Income Tax Expense
$72,500
Net Income
$217,500
The following balance sheet information also is available:
12/31/2021
12/31/2020
Cash
$399,500
$79,000
Accounts Receivable
$138,000
$109,000
Accrued Liabilities (for operating expense)
$88,000
$69,000
Income Taxes Payable
$19,000
$33,000
In addition, the following transactions took place during the
year:
Common...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
Service revenue
$
940,000
Operating expenses
720,000
Income before income taxes
220,000
Income tax expense
55,000
Net income
$
165,000
The following balance sheet information also is
available:
12/31/2021
12/31/2020
Cash
$
326,000
$
72,000
Accounts receivable
124,000
102,000
Accrued liabilities (for operating expenses)
74,000
62,000
Income taxes payable
12,000
19,000
In addition, the following transactions took place...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2018, appears below:
Service revenue
$
1,060,000
Operating expenses
780,000
Income before income taxes
280,000
Income tax expense
84,000
Net income
$
196,000
The following balance sheet information also is
available:
12/31/18
12/31/17
Cash
$
375,000
$
78,000
Accounts receivable
136,000
108,000
Accounts payable (operating expenses)
86,000
68,000
Income taxes payable
18,000
31,000
In addition, the following transactions took place during...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2021, appears below:
Service revenue
$
1,160,000
Operating expenses
830,000
Income before income taxes
330,000
Income tax expense
82,500
Net income
$
247,500
The following balance sheet information also is
available:
12/31/2021
12/31/2020
Cash
$
441,500
$
83,000
Accounts receivable
146,000
113,000
Accrued liabilities (for operating expenses)
96,000
73,000
Income taxes payable
23,000
41,000
In addition, the following transactions took place...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2021, appears below: Service revenue $ 1,120,000
Operating expenses 810,000 Income before income taxes 310,000
Income tax expense 77,500 Net income $ 232,500 The following
balance sheet information also is available: 12/31/2021 12/31/2020
Cash $ 420,500 $ 81,000 Accounts receivable 142,000 111,000 Accrued
liabilities (for operating expenses) 92,000 71,000 Income taxes
payable 21,000 37,000 In addition, the following transactions took
place...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2018, appears below: Service revenue $ 1,100,000
Operating expenses 800,000 Income before income taxes 300,000
Income tax expense 60,000 Net income $ 240,000 The following
balance sheet information also is available: 12/31/18 12/31/17 Cash
$ 425,000 $ 80,000 Accounts receivable 140,000 110,000 Accounts
payable (operating expenses) 90,000 70,000 Income taxes payable
20,000 35,000 In addition, the following transactions took place
during...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2018, appears below:
Service revenue
$
940,000
Operating expenses
720,000
Income before income taxes
220,000
Income tax expense
66,000
Net income
$
154,000
The following balance sheet information also is
available:
12/31/18
12/31/17
Cash
$
315,000
$
72,000
Accounts receivable
124,000
102,000
Accounts payable (operating expenses)
74,000
62,000
Income taxes payable
12,000
19,000
In addition, the following transactions took place during...
The Diversified Portfolio Corporation provides investment advice to customers. A condensed income statement for the year...
The Diversified Portfolio Corporation provides investment advice
to customers. A condensed income statement for the year ended
December 31, 2018, appears below:
Service revenue
$
1,220,000
Operating expenses
900,000
Income before income taxes
320,000
Income tax expense
96,000
Net income
$
224,000
The following balance sheet information also is
available:
12/31/18
12/31/17
Cash
$
439,000
$
90,000
Accounts receivable
160,000
120,000
Accounts payable (operating expenses)
110,000
80,000
Income taxes payable
30,000
55,000
In addition, the following transactions took place during...
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