Show both direct and indirect methods and workings Portions of the financial sta
ID: 2579241 • Letter: S
Question
Show both direct and indirect methods and workings Portions of the financial statements for Parnell Company are provided below Income Statement For the Year Ended December 31, 2016 Revenues and gains $760 Sales Gain on sale of buildings 10 $ 770 Expenses and loss Cost of goods sold Salaries Insurance Depreciation Interest expense Loss on sale of machinery $280 116 36 119 46 13 610 Income before tax 160 80 Income tax expense Net income $ 80 PARNELL Selected Accounts from Comparative Balance Sheets December 31, 2016 and 2015 (S in 000s) 2016 2015l Change $130 $104 Cash Accounts receivable 320220 32542 7084(14 100 96)11 Prepaid insurance Accounts payable Salaries payable Deferred income tax liability Bond discount 121 97 56 206 110 68 18224111 (22 85 13 12 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.) O Type here to searchExplanation / Answer
Dear Student,
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Statement of Cash Flows for year ended Dec 31, 2016 (A) Operating Activities (Indirect Method) Particulars Amount (in $ 000) Profit before tax 160 Add: Depreciation 119 Add: Interest Expense 46 Add: Loss on sale of Machinery 13 Less: Gain on sale of machinery -10 Net Profit before working Capital changes 328 Changes in Current Assets & Liabilities Less: Increase in Account Receivables -100 Add: Decrease in Inventory 96 Add: Decrease in Prepaid Insurance 14 Add: Increase in Accounts Payable 85 Add: Increase in Salary Payable 13 Add: Bond discount written off 22 Net Profit after working Capital changes 458 Less: Tax paid (56+80-68) -68 Net Cash Flow from Operating Activities 390