Prepare a statement of cash flows using the DIRECT & INDIRECT method. E23-13B (L
ID: 2574447 • Letter: P
Question
Prepare a statement of cash flows using the DIRECT & INDIRECT method.
E23-13B (L02,3) (SCF Direct Method) Jackson Ski Haus had the following statements prepared as of December 31, 2017 JACKSON SKI HAUS COMPARATIVE BALANCE SHEET As oF DECEMBER 31 2017 2016 $ 4,000 97,000 121,000 54,000 6,000 43,000 (18,000) 83,000 390,000 Cash Accounts receivable $ 2,500 91,000 Prepaid insurance Ski equipment Accumulated depr-equipment Trademarks 89,000 79,000 $441,000 $92,200 21,800 Total assets $ 75,000 15,700 payable Income taxes pavable Wages payable Short-term loans pavable to bank Long-term loans payable Common stock, S1 par Additional paid-in capital Retained earnings 23,500 75,000 20,000 104,500 $441,000 100,000 20,000 45,300 390,000 Total liabilities & equity JACKSON SKI HAUS INCOME STATEMENT FoR THE YEAR ENDING DECEMBER 31, 2017 Sales Cost of goods sold Gross margin Operating expenses Operating income Interest expense Loss on sale of equipment Income before income tax Income tax expense Net income 94,000 144,200 20,500 4,000 24,500 119,700 500 $ 79,.200 Additional information: 1. 2. 3. Dividends in the amount of $20,000 were declared and paid during 2017. Depreciation expense and amortization expense are included in operating expenses. Equipment that had a cost of $25,000 and was 20% depreciated was sold during 2017.Explanation / Answer
STATEMENT OF CASH FLOWS (DIRECT METHOD) Cash flows from operating activities: Cash collected from receivables (540200+97000-103000) 534200 Cash paid to suppliers (302000+75000-92200+91000-54000) -321800 Cash for operating expenses (94000+9000-4000+4000-6000-10500-4000) -82500 Interest paid -20500 Income taxes paid (40500+15700-21800) -34400 Net cash provided by operating activities 75000 Cash flows from investing activities: Purchase of investments (121000-96000) 25000 Sale of equipment 16000 Purchase of equipment (89000-43000+25000) -71000 Net cash used by operating activities -30000 Cash flows from financing activities: Short term loans raised 23500 Long term loans repaid (125000-75000) -50000 Dividends paid -20000 Net cash used by financing activities -46500 Decrease in cash and cash equivalents -1500 Beginning balance of cash and cash equivalents 4000 Ending balance of cash and cash equivalents 2500 STATEMENT OF CASH FLOWS (INDIRECT METHOD) Cash flows from operating activities: Net income 79200 Adjustments to reconcile net income with cash flow from operating activities: Depreciation (23500-18000+25000*20%) 10500 Amortization of trade marks (83000-79000) 4000 Loss on sale of equipment 4000 Increase in accounts receivable (103000-97000)= -6000 Increase in inventories (91000-54000) -37000 Decrease in prepaid insurance (6000-4000) 2000 Increase in accounts payable (92200-75000) 17200 Increase in income taxes payable (21800-15700) 6100 Decrease in wages payable (9000-4000) -5000 -4200 Net Cash provided by operating activities 75000 Cash flows from investing activities: Purchase of investments (121000-96000) 25000 Sale of equipment 16000 Purchase of equipment (89000-43000+25000) -71000 Net cash used by operating activities -30000 Cash flows from financing activities: Short term loans raised 23500 Long term loans repaid (125000-75000) -50000 Dividends paid -20000 Net cash used by financing activities -46500 Decrease in cash and cash equivalents -1500 Beginning balance of cash and cash equivalents 4000 Ending balance of cash and cash equivalents 2500