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The following accounts and corresponding balances were drawn from Rooney Company’s Year 2 and Year 1...

The following accounts and corresponding balances were drawn from Rooney Company’s Year 2 and Year 1 year-end balance sheets.

Account Title Year 2 Year 1
Accounts receivable $ 74,300 $ 79,700
Prepaid rent 630 1,020
Utilities payable 1,640 850
Other operating expenses payable 32,100 35,600

The Year 2 income statement is shown as follows.

Income Statement
Sales $ 292,000
Rent expense (22,900 )
Utilities expense (34,700 )
Other operating expenses (167,400 )
Net Income $ 67,000

Required

  1. Prepare the operating activities section of the statement of cash flows using the direct method.

  2. Prepare the operating activities section of the statement of cash flows using the indirect method.

Prepare the operating activities section of the statement of cash flows using the direct method. (Cash outflows should be indicated with minus sign.)

Cash Flows from Operating Activities—Direct Method
Cash flows from operating activities:
Net cash flow from operating activities $0

Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Cash Flows from Operating Activities—Indirect Method
Cash flow from operating activities:
Plus:
Less:
Net cash flow from operating activities $0

Solutions

Expert Solution

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

ekkarill92 answered 1 year ago
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