Portions of the financial statements for Software Associates are provided below.
ID: 2469361 • Letter: P
Question
Portions of the financial statements for Software Associates are provided below. SOFTWARE ASSOCIATES Income Statement For the year ended December 31, 2012 Revenues $ 820,000 Expenses: Cost of goods sold $ 440,000 Operating expenses 130,000 Depreciation expense 34,000 Income tax expense 51,000 Total expenses 655,000 Net income $ 165,000 SOFTWARE ASSOCIATES Selected Balance Sheet Data December 31, 2012, compared to December 31, 2011 Decrease in accounts receivable $ 6,000 Decrease in inventory 13,000 Increase in prepaid rent 4,000 Decrease in operating expenses payable 4,000 Increase in accounts payable 7,000 Increase in income tax payable 8,000 Required: Prepare the statement of cash flows for Virtual Gaming Systems using the direct method.
Explanation / Answer
Ans-
statement of cash flows for Virtual Gaming Systems using the direct method Cash flows from operating activities Cash receipts from customers 826,000 Cash paid to suppliers (420,000) Cash Payments for Prepaid exp. (4,000) Cash Payments for operating exp. (130,000) Cash generated from operations 272,000 Income taxes paid (43,000) Net cash from operating activities 2,790,000 Cash Receipts from Customers = + Net Sales 820,000 + Decrease In AR 6,000 826,000 Cash Payments to Suppliers = + Purchases 440,000 Decrease in inventory 13,000 Increase in accounts payable 7,000 420,000 Cash Payments for prepaid exp.= + Increase in prepaid rent 4,000 4,000 Income Tax Payments = Increase in income tax payable 8,000 + Income Tax Expense 51,000 43,000