Question

In: Finance

QUESTION 1 Given the following income statement and balance sheet data, select which items would be...

QUESTION 1

  1. Given the following income statement and balance sheet data, select which items would be included in presenting the cash flow from operating activities section of the statement of cash flows using the indirect method:

    Income Statement ($ millions) 2019
    Sales $40,000
    Less: Cost of goods sold 21,600
    Gross profits 18,400
    Less: Cash operating expenses 12,400
    Less: Depreciation expense 1,100
    Less: Amortization expense 120
    Operating profits (EBIT) 4,780
    Less: Interest expense 300
    Equity in earnings (loss) of affiliate 40
    Gain (loss) on sale of fixed assets 80
    Earnings before tax expense 4,600
    Income tax expense 900
    Net income $3,700
    Balance Sheet ($ millions) 2019 2018 Change 2019 2018 Change
    Cash & equivalents $600 $500 $100 Accounts payable $1,730 $2,050 ($320)
    Net receivables 3,500 3,040 $460 Other accrued expenses 2,480 2,050 $430
    Inventories 6,700 6,930 ($230) Short-term debt 270 540 ($270)
    Prepaid expenses 750 880 ($130) Other current liabilities 520 480 $40
    Total current assets 11,550 11,350 Total current liabilities 5,000 5,120
    Net property, plant, and equipment 12,220 11,650 $570 Long-term debt 4,680 4,450 $230
    Investments in affiliates 180 160 $20 Deferred taxes 910 870 $40
    Goodwill 840 550 $290 Other long-term liabilities 1,950 2,700 ($750)
    Other long-term assets 210 290 ($80) Total stockholders' equity 12,460 10,860 $1,600
    Total assets $25,000 $24,000 Total liabilities and equity $25,000 $24,000

    Add-back depreciation expense of $1,100

    subtract depreciation expense of $1,100

    add-back amortization of intangible assets of $120

    subtract amortization of intangible assets of $120

    add change in receivables of $460

    subtract change in receivables of $460

    add change in inventories of $230

    subtract change in inventories of $230

    add change in prepaid expenses of $130

    subtract change in prepaid expensese of $130

    add change in other long-term assets of $80

    subtract change in other long-term assets of $80

    add change in accounts payable of $320

    subtract change in accounts payable of $320

    add change in accrued expenses of $430

    subtract change in accrued expenses of $430

    add change in deferred taxes of $40

    subtract change in deferred taxes of $40

    add-back interest expense of $300

    add gain on sale of fixed assets of $80

    subtract gain on sale of fixed assets of $80

Solutions

Expert Solution

Ans:

From the above options for calculation of operating activity we have to add followings

Depreciation expenses of $1100

Amortization of intangible assets of $120

Interest expenses of $ 300

Deferred tax of $40

Inventories of $230

Prepaid expenses of $130

Accrued expenses of $430

Notes : 1. Fixed assets sale will not come as it is part of investing activity.

2. Other long term assets will not come as it is part of investing activity.

We have to deduct followings

Receivable of $460

Payable of $320


Related Solutions

Given the following income statement and balance sheet data, select which items would be included in...
Given the following income statement and balance sheet data, select which items would be included in presenting the cash flow from operating activities section of the statement of cash flows using the indirect method: Income Statement ($ millions) 2019 Sales $50,000 Less: Cost of goods sold 33,400 Gross profits 16,600 Less: Cash operating expenses 13,600 Less: Depreciation expense 920 Less: Amortization of intangible assets 80 Operating profits (EBIT) 2,000 Less: Interest expense 290 Equity in earnings (loss) of affiliate (50)...
Which of the following items would appear on a balance sheet? Select one: a. Expenses b....
Which of the following items would appear on a balance sheet? Select one: a. Expenses b. Revenues c. Dividends d. Notes Payable
Arrange the following items in the appropriate income statement and balance sheet formats. Determine in which...
Arrange the following items in the appropriate income statement and balance sheet formats. Determine in which of these two documents each of these items belongs, then include all appropriate items in outlines of an income statement and balance sheet. Prepare your response as a Word document. Sales Cash Depreciation expense Inventory Accounts payable Cost of goods sold Long-term debt Accrued expenses Accounts receivable Income tax payable Income tax expense Retained earnings Accumulated depreciation Prepaid expenses Interest expense Sales tax payable...
Select the balance sheet category where the items given would best typically appear.
Select the balance sheet category where the items given would best typically appear. 1. Cash  2. Copyrights 3. Accounts receivable 4. Notes payable (due in 10 days) 5. Store equipment 6. Franchises 7. Machinery 8. Wages payable
Which of the following items would be found on the balance sheet of a manufacturer?
Which of the following items would be found on the balance sheet of a manufacturer? finished goods work in process raw materials All of these choices are correct
Two items are omitted from each of the following summaries of balance sheet and income statement...
Two items are omitted from each of the following summaries of balance sheet and income statement data for two proprietorships for the year 2020, Pharoah's Goods and Cullumber Enterprises. Determine the missing amounts. Pharoah's Goods Cullumber Enterprises Beginning of year:     Total assets $154,000 $180,600     Total liabilities 119,000 $enter a dollar amount (c)     Total owner’s equity $enter a dollar amount (a) 112,000 End of year:     Total assets 224,000 252,000     Total liabilities 168,000 70,000     Total owner’s equity 56,000 182,000 Changes during year...
Two items are omitted from each of the following summaries of balance sheet and income statement...
Two items are omitted from each of the following summaries of balance sheet and income statement data for two corporations for the year 2019, Blue Spruce Corp. and Ayayai Enterprises. Determine the missing amounts. Blue Spruce Corp. Ayayai Enterprises Beginning of year:     Total assets $137,740 $183,180     Total liabilities 120,700 (c)     Total stockholders’ equity (a) 106,500 End of year:     Total assets 227,200 255,600     Total liabilities 170,400 71,000     Total stockholders’ equity 56,800 184,600 Changes during year in stockholders’ equity:     Additional investment (b)...
Which of the following items would be classified as liabilities on a not-for-profit organization’s balance sheet?...
Which of the following items would be classified as liabilities on a not-for-profit organization’s balance sheet? (select ALL that apply) A. Investments B. Contingent liability C. Prepaid expenses D. Accounts receivable E. Unearned Revenue F. Post-employment benefit obligations
Which of the following items are included on the balance sheet?
the balance sheet is a snapshot of the entity. Which of the following items are included on the balance sheet?A.assetsB.RevemuesC.expensesD.withdrawls
Given the following information please construct a balance sheet and an income statement for the company....
Given the following information please construct a balance sheet and an income statement for the company. It provides software via a cloud subscription. There is no inventory. All information in $000 Total Revenues                                            5,374 Cash                                                                  908 Common Stock                                                651 Cost of Revenues Subscription                     925 Interest Expense                                               16 Additional Paid in Capital                           3,954 Retained Earnings                                       (630) Cost of Revenues Professional Services     365 Gross Margin                                                4,084 Short term securities                                       87 Long term debt                                            2,328 Accounts Receivable                                  ...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT