Portions of the financial statements for Parnell Company are provided below. Pre
ID: 2578820 • Letter: P
Question
Portions of the financial statements for Parnell Company are provided below.
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.)
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.)
Portions of the financial statements for Parnell Company are provided below.
Explanation / Answer
PARNELL COMPANY: STATEMENT OF CASH FLOWS (DIRECT METHOD) Cash flows from operating activities: Cash collected from receivables (890+207-342) 755 Cash paid to suppliers (345+108-228+312-443) -94 Cash for operating expenses (129+84-120+53+57-106) -97 Interest paid (59-37) -22 Income taxes paid (85+61-78) -68 Net cash provided by operating activities 474 STATEMENT OF CASH FLOWS (INDIRECT METHOD) Cash flows from operating activities: Net income 85 Adjustments to reconcile net income with cash flow from operating activities: Depreciation 132 Amortization of bond discount (included in interest expense) 37 Increase in deferred income tax liability 17 Gain on sale of buildings -11 Loss on sale of machinery 13 Increase in accounts receivable -135 Decrease in inventories 131 Decrease in prepaid insurance 49 Increase in accounts payable 120 Increase in salaries payable 36 389 Net Cash provided by operating activities 474