Portions of the financial statements for Parnell Company are provided below. PAR
ID: 2479106 • Letter: P
Question
Portions of the financial statements for Parnell Company are provided below. PARNELL COMPANY Income Statement For the Year Ended December 31, 2016 ($ in 000s) Revenues and gains: Sales $730 Gain on sale of buildings 10 $ 740 Expenses and loss: Cost of goods sold $265 Salaries 113 Insurance 33 Depreciation 116 Interest expense 43 Loss on sale of machinery 12 582 Income before tax 158 Income tax expense 79 Net income $ 79 PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2016 and 2015 ($ in 000s) Year 2016 2015 Change Cash $127 $107 $20 Accounts receivable 317 223 94 Inventory 328 418 (90 ) Prepaid insurance 68 81 (13 ) Accounts payable 203 124 79 Salaries payable 116 100 16 Deferred income tax liability 74 59 15 Bond discount 176 207 (31 ) Required:
1. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the direct method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)
2. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the indirect method. (Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)
Explanation / Answer
cash flow from operating activity(direct method)
sale 730
COGS (265)
salary (133)
insurance (33)
interest exp (43)
cash flow before WC change 256
change in wc
account receivab le (94)
inventory 90
prepaid insurance 13
acc. payabe 79
salaries payable 16
cash flow from operating 360