APPLY THE CONCEPTS: Prepare the operating activities section The income statemen

ID: 2468492 • Letter: A

Question

APPLY THE CONCEPTS: Prepare the operating activities section The income statement and comparative balance sheets for Leonardo Inc. can be viewed by clicking on the links below. No depreciable assets were purchased or sold during the period; therefore, the increase in Accumulated Depreciation is due to depreciation expense for the period. Complete the operating activities section of the statement of cash flows. Use a minus sign (-) to indicate any negative adjustments.

Leonardo Inc. Income Statement For the Year Ended December 31, 2014 Sales $489,600 Cost of goods sold 254,592 Gross profit $235,008 Operating expenses: Depreciation expense $5,120 Other operating expenses 161,344 Total operating expenses 166,464 Income from operations $68,544 Other revenue and expenses: Interest revenue $960 Gain on sale of land 4,480 5,440 Income before taxes $73,984 Income taxes 19,584 Net income $54,400 Leonardo Inc. Balance Sheets December 31, 2014 2014 2013 Assets Cash $57,600 $41,600 Accounts receivable (net) 14,400 20,800 Inventories 152,640 145,600 Current assets $224,640 $208,000 Note Receivable 271,040 118,400 Land 94,080 177,600 Equipment 384,800 384,800 Less: Accumulated depreciation 93,920 88,800 Total assets $880,640 $800,000 Liabilities Accounts payable $8,960 $17,600 Wages payable 41,280 35,200 Current liabilities $50,240 $52,800 Note payable 123,200 123,200 Total liabilities $173,440 $176,000 Stockholders' Equity Common stock $137,600 $124,800 Additional paid-in capital 306,400 280,800 Retained earnings 263,200 218,400 Total stockholders' equity $707,200 $624,000 Total liabilities and stockholders' equity $880,640 $800,000

Explanation / Answer

Cash flow from operating activities

Net income before taxes

$ 73,984.00

Adjustments to income:

Add: Depreciation expense

$ 5,120.00

Less: Gain on sale of land

$ 4,480.00

Decrease in accounts receivables

$ 6,400.00

Increase in inventories

-$ 7,040.00

Decrease in accounts payable

-$ 8,640.00

Increase in wage payable

$ 6,080.00

Net cash flow from operating activities

$ 80,384.00