CP12-2 Computing Cash Flows from Operating Activities (Indirect Method) [LO 12-2
ID: 2579518 • Letter: C
Question
CP12-2 Computing Cash Flows from Operating Activities (Indirect Method) [LO 12-2] The income statement and selected balance sheet information for Hamburger Heaven for the year ended December 31, 2015, are presented below. Income Statement Sales Revenue $1,990 Cost of Goods Sold Depreciation Expense Salaries and Wages Expense Rent Expense Insurance Expense Interest Expense Utilities Expense 880 180 480 230 78 2 Net Income $36 Selected Balance Sheet Accounts Inventory Accounts Receivable Accounts Payable Salaries and Wages Payable Utilities Payable Prepaid Rent Prepaid Insurance 2015 2014 $ 78 $ 58 370 430 210 230 22 56 10 33 14 TIP: Prepaid Rent decreased in 2015 because the amount taken out of Prepaid Rent (and subtracted from net income as Rent Expense) was more than the amount paid for rent in cash during 2015 9Explanation / Answer
HAMBURGER HEAVEN Cash Flow Statement For year ended 31 December 2015 Cash flows from operating activities Net Income $ 36 Adjustments to Reconcile Net income to net cash provided by Operating Activities Depreciation expense $ 180 Increase in inventory $ (20) Decrease in accounts receivable $ 60 Decrease in accounts payable $ (20) Increase in salaries and wages $ 11 Decrease in utilities payable $ (34) Decrease in prepaid rent $ 8 Increase in prepaid insurance $ (9) $ 176 Net cash provided by operating activities $ 212