In: Finance
Based on the class text book- Principles of Managerial Finance
by Gitman & Zutter - Chapter 4-Cash Flow and Financial Planning
other additional readings, Solve the following problem on Cash Flow
Statement.
The income statement and a partial balance sheet for Jefferson
Company is presented below.
Jefferson Company
Income Statement
For the Year Ended December 31, 2014
Sales $500,000
Cost of goods sold 390,000
Gross profit $ 110,000
Operating expenses:
Salaries$ 70,000
Depreciation expense 20,000
Miscellaneous 10,000 100,000
Net income $10,000
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Jefferson Company
Partial Balance Sheet
December 31, 2014
12/31/2014 12/31/2013 |
Cash $80,000 $65,000
Accounts receivable (net) 57,000 50,000
Inventories 102,000 86,000
Prepaid expenses 4,500 4,000
Accounts payable (merchandise) 58,000 51,000
Salaries payable 7,500 6,000
Required: Prepare the operating activities section of the statement of cash flows using the direct method.